Hello everyone, this is a newbie question from a new investor trying to get his feet wet in this method. I wanted opinions on wether it is advisable to use the BRRRR method with no money down out of pocket? Has anyone done this before? What should the numbers look like for this example?
I was looking for private lending for the purchase and rehab and then refinancing to pull money out to repeat.
I think it highly unlikely you'll find a private lender willing to lend you purchase and rehab money without you putting anything down.
If you don't have the cash to come out of pocket, I recommend finding a partner who does and team up with them on some early deals to build up your capital.
I think it highly unlikely you'll find a private lender willing to lend you purchase and rehab money without you putting anything down.
If you don't have the cash to come out of pocket, I recommend finding a partner who does and team up with them on some early deals to build up your capital.
I think it highly unlikely you'll find a private lender willing to lend you purchase and rehab money without you putting anything down.
If you don't have the cash to come out of pocket, I recommend finding a partner who does and team up with them on some early deals to build up your capital.
Thanks for your response. I was thinking of a getting a hard Mo ey loan for down payment and rehab cost. And financing the rest. This property will be a long term STR hold. The STR averages i this highly visited tourist area is an Average nightly stay of $300 and an average occupancy rate of 79%.
The Zillow price of the property is $263k. I’m looking to a full renovation of a cost in the $100k range.
Will it be possible to do this with no skin in the game? If I had to get a partner to invest I will but if I can do it alone w/o no money down, I would prefer that
I think it highly unlikely you'll find a private lender willing to lend you purchase and rehab money without you putting anything down.
If you don't have the cash to come out of pocket, I recommend finding a partner who does and team up with them on some early deals to build up your capital.
Thanks for your response. I was thinking of a getting a hard Mo ey loan for down payment and rehab cost. And financing the rest. This property will be a long term STR hold. The STR averages i this highly visited tourist area is an Average nightly stay of $300 and an average occupancy rate of 79%.
The Zillow price of the property is $263k. I’m looking to a full renovation of a cost in the $100k range.
Will it be possible to do this with no skin in the game? If I had to get a partner to invest I will but if I can do it alone w/o no money down, I would prefer that
Based on the content of your post, I'm going to recommend you do more research before getting into any deal. I don't say this to offend, but I'm not sure you understand what a hard money loan is.
@Alex Morales thanks for the post. Is it possible to come out of pocket with $0? I guess it's "possible"...but not realistic. Even the best, most experienced investors come out of pocket most of the time when doing the BRRRR Method. Either they come out of pocket for the marketing to find properties or they come out of pocket to acquire them. If you are looking for the lowest possible out of pocket method then I would suggest starting with primary home investment methods first. Those will have more options for you to come out of pocket less than most investment properties. If it's within your ability to purchase a primary home, I would suggest starting there if low out of pocket is the prominent need for you.
Even with a HML, there will be costs associated with the loan and most will not loan you 100% of the purchase unless it's under their threshold.
Right now, I have a HML as a first-time flipper and they will only provide 75% ARV (which includes 100% of construction costs). It's been some work trying to find a property, but I'll put something in to get a deal done.
@Alex Morales Its definitely doable, but it will be challenging to find a private lender or a bank that will lend you the money considering you have zero experience. Its usually not a good idea to "get your feet wet" using other people's money. Your best bet would be getting the capital from friends and family that believe in you and are confident you can get them a return. But even still, I wouldn't want to use OPM if I had zero experience - its too risky in my opinion.
Something else to consider: If the project fails, how will you get them their money? Will you just tell them its all gone and you're sorry?
When I started my first BRRRR, I already owned 4 investment properties (one was a primary residence that I rented out, and the other 3 were turnkey investments), so even though I hadn't done a BRRRR yet, I understood the basics of real estate investing.
My sister in law agreed to lend the capital for my first BRRRR - both purchase price and rehab - and it was successful. Had it not been successful, I would have either given her the property, or found a way to get her the capital back, no matter what.
If I were you, I would start by househacking a primary residence, and manage the other units/tenants yourself so you can get some hands-on real estate experience.
You'll have to look into creative financing options like a subject 2 for little to no money down.
Hard money lenders will usually require about 15-20% down. You could also bring on a partner that will help with the down payment and you can be the one who brings the deal.
Going to your original question of finding private money investors (PMI) to fund you 100%.
If those people were friends and or family that would do that then yes.
If you want these PMI to be strangers, you have start making connections by meeting at a real estate meet up or people that you may chat with here on the forums. By doing those I would say you have maybe 1% or less chance. And that would mean you are a really good salesman.
I say it like that because you have no skin in the game. You have nothing to lose and all to gain. Assuming you found a perfect deal the numbers worked, and ROI was amazing. Any number of things could go wrong beyond your control. And you could walk away, and your PMI would lose. When you invest money in a person you need to know that the person you gave it to wants or needs the investment to go well just as much if not more than you do. For that to happen that means they need to have risk.
I would suggest listening to Real Estate Rookie podcast #210. In there they talk PMI and what they look for.