BRRRR Pros and Cons

[Aliyyah Carter]

Hey everyone, my name is Aliyyah. I'm a licensed real estate agent who focuses solely on working with investors on their next flip or rental property in the Philadelphia area. I currently have a new investor who is ready to purchase their first rental property using the BRRRR strategy. She is worried about the process of refinancing once the property is rehabbed. I know to qualify for a refinance you need to have a decent credit score, stable income, and the property needs to appraise at a certain LTV. She is concerned, she isn't going to qualify since she is self-employed and her income varies.

What are some pros and cons of using the BRRRR strategy as a new investor? I want to share with her both sides so she can make the best decision that works for her.

[Andrew Syrios]

BRRRR is really hard right now because with rates where they're at and prices more or less flat, it's very hard to hit that 1.2 DSCR that banks want without having to bring a substantial amount of your own cash to close. In other words, your LTV will likely be substantially below 75%.

Right now, the best plays for investors are equity deals (assuming they have cash) or house hacking IMO.