Should I BRRRR right now with $65k and no job?

Question

I hope you are all doing well, and I appreciate any feedback that you may give.

I am 25 and have been working in commercial real estate for about 3 years.

I have $65k and no job right now. I am from New York and want to BRRRR. My brother has a job and will partner with me. He has approx $100k.

Would you say that it is totally possible to do brrrr as my full time job while my brother is working or do you recommend that I get a paying job and then start my life long brrrr journey?

Thanks again!

Account Closed · Answer

@David A.

I think I may be able to find something on the MLS in certain areas.

Even if the situation were below:

Buy: $200,000

LTV: 65%

Rehab: $67,000

ARV: $350,000

Cash Out: $227,500

I would leave $40,500 in the deal but at a 6% cap rate that give me a NOI of $21,000 and approx 50% return.

Account Closed · Answer

@Brian Beck

Thanks Brian for the response. It helped. Very much appreciated. I did not plan on using my credibility to get the refinance, but my brothers who has a good job and good income.

Evan Polaski · Answer

Account Closed again, I think finding great BRRRR deals today is hard.  Not impossible, but hard.  The fact that you are already looking at not getting all your cash out at refi helps matters, but where is the money coming for the next one, or the one after that?  At $165k of equity to use, if you leave $40k in each deal like your example, you get 4 deals.  I would imagine it will be close to impossible for you to live off the income of 4 rentals, let alone trying to continue to grow your portfolio from the funds of those rentals.

So that alone has me leaning towards, yes you can pursue starting your BRRRR strategy, but you will also need to get a job.

My other suggestion is that if you are willing to BRRRR, and you have the time to manage a project with no job, you can start flipping first to help build your reserves (flipping is the buy, rehab portion of BRRRR)  Assuming you are making smart investments, the flips can be your job that will help fund the BRRRRs.  Using the same example you provided, you have about a $50k net profit if you sell instead of rent and refi.  Do that same deal a couple more times per year, and you have a healthy income to live off of and use to buy BRRRRs.

Whitney Hutten · Answer

Account Closed What does this property rent for?  That is a critical piece of the BRRRR process and being to use the income from the property to offset 125% of the PITI+HOA on the deal.  That is what will allow you to keep getting lending.

Back to your OP.  Can you do it?  Sure.  You'd have to find commercial financing though that underwrites the property and only your credit.  You will have to find a smashing deal that cashflows well (here's a guide to help you qualify).

Another option is to partner on the deals and someone else secures the lending.

The question really then becomes, is it smart to start with only $65K and no job?  Are you in a good financial position otherwise?  Do you have solid reserves otherwise?  If yes, then maybe! Only you can answer that...

Brian Beck · Answer

I would ensure you have a bank/lender who'll do the refinance.  Without W2 income and a limited track record I think you may find it difficult to refinance the property just based on the property's cash flow along, they'll likely want a personal guarantee by yourself and proof that you can support the payments if it goes unrented or your tenant doesn't pay rent, etc...  There are definitely people who do BRRRR w/o a traditional job but many of them have experience or a track record in rental properties that a bank would look favorably upon.   If you have a bank or lender who you have a relationship with I'd run the deal by them and ask them realistically if they'd be able to quality you on the refi.