BRRRR method - Financing

[Joe Kern]

Hello All!

Starting out the investment journey, after some research it appears the typical approach to the BRRR method is to use cash or some form of hard money to purchase the property and kick off the BRRRR process. My question is , can you still BRRRR with a 203K FHA, conventional , or really any form of obtaining a loan initially instead of having a large some of cash up front ?

[Kyle Mccaw]

Typically the purchase money will be a hard money loan. The goal is to finance the rehab as much as possible. And then refinance onto a long term loan with better terms. Most properties that investors purchase BRRRR for are too far gone to qualify for conventional financing. The 203K FHA loan is for owner occupied purchases. Yes you can rent it out later but you need to plan to live in the property. Otherwise it seems to me that would be mortgage fraud. You typically would not want to refinance out of the FHA because the rate will be much lower than a rental property mortgage.