Newbie BRRRR question

[Jason Henry]

If You BRRRR a property does it matter if I can only pay cash for the acquisition and not the rehab? Or vice versa, can only pay for rehab and not acquisition? Meaning get some other form of lending for the piece missing. Could it still work?

[Kevin Sobilo]

@Jason Henry, yes! It can absolutely work but you need to factor your "cost of money" into your project costs for the rehab phase.

People often use hard money loans to complete BRRRR projects which are expensive loans. So, if their rehab runs long the deal can go south as the loan costs eat up money while you are seeing no income.

One of the reasons hard money loans are common in these situations is that BRRRR renovations are very often starting with properties so distressed that they cannot be bought with conventional mortgages.