Brrrr strategy going well?

[Roselin G.]

Hello REIs!

Are there new Brrrr folks who are still proceeding despite not being able to pull out most funds?

[Rich Hupper]

The brrrr strategy is great but it is more difficult to achieve with less units. Also you need to get the properties at big discounts especially if there is a lot of rehab needed to get it occupied. Brrrr would work better if lenders made loans up to 95% or 100% ltv but the most they go is 80%. So ......

ARV *.80 - ( rehab + holding) = purchase price. Even if you don't need to leave money in the project, the project might not cashflow because you paid too much on the purchase or rehab.

Its a tricky strategy that works well with single families you get at a huge discount, or multi unit buildings with 5+ units that can service larger loans.

I am trying to brrrr a three family right now and I think I might be able to get by with no money left in the property and still cashflow, but I am utilizing historic tax credits and government grants to offset the costs.