Updated over 5 years ago on . Most recent reply
BRRRR in a downturn market
Hi all, while we are not ready to call a recession or downturn in the RE market just yet, I would like to plan for this eventuality. Obviously it should be easier to find deals in a buyer's market but how about financing?
If the RE market is crashing and banks have to deal with a growing number of foreclosures and lending related losses, they will probably apply stricter limitations and conditions for borrowers and usually this type of limitations are applied to investors first: lower LTV, higher interest rates, more reserves required, etc.
- My expectation is that homes prices will drop faster and further relative to rent prices so a higher interest rate may not inhibit our ability to refinance and make BRRRR work. Do you agree?
- I see risk with appraisals coming in lower than ARV we projected 6 months before when we bought the property, 6 months in a falling market is a long time right?
How can we better plan for BRRRR in a downturn market assuming we have already liquidated all assets we could?