Does BRRRR work if use bank loan to acquire the property?

[Paul Sterman]

Hi,

It seems that most people use "hard money lenders" or "cash" to acquire BRRRR properties.

Is there a problem with using a traditional interest-only mortgage? The mortgage calculator I have uses regular mortgage by defaut, but I am confused because I don't usually see people using a regular interest-only bank loan to buy the property.

Is there a disadvantage or major problem with using regular bank financing to buy a BRRRR property?

Thanks!
Paul

[John Warren]

@Paul Sterman the BRRRR strategy absolutely can work if you are using traditional financing. The reason most investors use cash or hard money is that the best deals don't tend to wait around for the financing, and so they often get snatched up by the more experienced players. As you begin investing, I would encourage you to focus more on finding deals where you can add value or force the appreciation in some way instead of trying to "BRRRR". If your whole focus is on getting ALL of your cash back then you will probably take an unwise risk at the beginning of your investment journey when you don't have adequate reserves.