Rental Property Investor · NY · Member since 2020 · 20 posts · 6 votes
Should I find a distress small multi and buy it using hard money lender? Then use the BRRRR Strategy, & refinance with a conventional bank. Am I eligible to get the benefit of a first time Home buyer?
@Willy A German if you are trying to buy your own personal home then skip the BRRRR method. That's more for investment properties....I mean, sure you COULD get it to work...but as you mentioned no first time home buyer programs AND higher fees AND higher costs AND higher interest rates, etc. Buying your own primary home provides so much more flexibility that it is vastly more advantageous than trying the BRRRR method. Hope that makes sense.
It's hard to make the BRRRR strategy work with a hard money lender because the cost of funds is so high (usually 3-5 points and 12-15% interest). It just eats up too much equity. If you can get a private loan and offer something like 0-1 points and 8-10% interest, that works a lot better. A partner would also be a possibility to consider.
Make sure you have a lender that you can refinance with prior to using the hard money. Also make sure you have multiple exit strategies so if you aren’t able to refinance you can still sell and make a profit.