How are you funding the next BRRRR while you still have capital tied up?

Question

One thing I don't see talked about much with BRRRRs is what happens when you want to start the next project before you've gotten most of your money back from the last one.

Say you have one property being rehabbed and another waiting on the refinance. Now you've got a pretty good amount of capital sitting in properties that isn't available for the next purchase.

How do you guys approach that part of the process when you're trying to do multiple BRRRRs rather than just one at a time?

I'm more interested in how people are actually handling the capital side of it once they start scaling.

Jimmy Lieu · Answer

This is one of the biggest differences between doing a BRRRR and actually scaling BRRRRs. I’d treat available capital as the limiting factor and work backward from there rather than assuming every refinance will happen on schedule or return all of your cash. Once you have multiple projects going, delays in rehab, seasoning requirements, lower-than-expected appraisals, or lender timelines can leave your money tied up much longer than planned. I prefer keeping a separate liquidity reserve and knowing how many projects I can comfortably carry if a refinance takes an extra few months. Some investors use private or hard money to bridge acquisitions and rehabs, then refinance into long-term debt, but that only works if the deal can support the higher financing costs and you have enough cushion if something goes wrong. I’d rather temporarily slow acquisitions than have three projects dependent on one refinance closing perfectly. Scaling BRRRRs is really a liquidity-management game as much as it is a deal-finding game.

Gregory Acs · Answer

I think this is where having your financing strategy mapped out before the first purchase really starts to matter. It’s easy to focus on finding the next deal, but if too much capital is tied up for longer than expected, it can slow everything down. I’d also build extra time and reserves into the plan because refinances and rehabs don’t always happen on the original timeline. Having a little flexibility makes it much easier to keep scaling without feeling rushed.

Mike Klarman · Answer

To operate at the scale you speak of, capital wouldn't be a problem because the pipeline of Purchase - rehab - refi you need a great team and experience and be making profit which means you probably have a line of credit of 7 figures somewhere by now.

If you're talking about the investor who has 60k, and 50k is tied up in a project, how do they get the money for the next one?  They don't.  Pray you get the money back for the one you are in.  If you start pouring gasoline on a broken process you'll be caught in a blaze that will burn you to the ground.

Anyone with a sourcing network

Team on the ground

Roladex of lenders

Exit experience With that, you can get a line of credit for sure.

Gary Parilis · Answer

I recommend building relationships with multiple private lenders (I'm one). Private lenders are generally more flexible and quicker than hard money lenders, but have finite capital so may not have funds for you when you need it. Having relationships with multiple private lenders is a good solution. I've set up a meetup at the upcoming BPCON specifically for private lenders and flip/BRRRR operators to meet each other.Note that while private lenders are often flexible in terms and deal characteristics, smart ones are very discriminating in who they'll lend to. As a lender, I'd want to evaluate not just the deal , but also the track record and character of the operator. But once you've proven yourself with a successful project or two, I'll bend over backward to accommodate your needs, including finding other lenders from my network if I don't happen to have liquid funds..

Greg Kasmer · Answer

@Ali Najjar - With multiple BRRRR projects going on I've used business lines of credit as well as private money (paying 10-12%) to help fund existing deals. I typically don't do a ton of projects at once, but having a strategy to execute multiple deals at once will certainly allow one to scale faster. Good Luck!

Justin Tulman · Answer

This is one of the bigger challenges investors run into when they start moving from doing individual BRRRRs to building a portfolio. I think it helps to look at the entire capital cycle rather than just the financing on the next acquisition.

I would map out how much cash is tied up in each property, when each property could realistically become refinance-ready, how much equity may be accessible at that point, and how much liquidity you want to maintain for reserves and the next project.

Depending on the properties and the investor's overall profile, the refinance strategy can become an important part of that analysis. Sometimes the best solution isn't simply maximizing the cash-out on every property. It's finding the combination of leverage, cash flow, reserves and available capital that allows you to keep acquiring without stretching the portfolio too far.

If you have an actual example with purchase price, rehab cost, current/expected value, rent and existing debt, I'd be happy to help you think through how I would analyze the capital cycle.

How are you funding the next BRRRR while you still have capital tied up?

How are you funding the next BRRRR while you still have capital tied up?

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