BRRRR - Why does that seem so easy?

[Simon Stahl]

Hi everyone

I'm just starting out and looking into BRRRR as a strategy. From what I read so far, his should be really easy. Too easy actually. I feel like I am missing something.

This is how I imagine it would work for me. FYI, I got a management company at hand that would help me find the right property, do the rehab and screen tenants. 

Buy

It looks like I could get 100% of the funds from a hard money lender. They are all over the internet and I think you cannot get much better deals from private lenders. I found some with 1 or 2 points at the beginning and then about 10% to 12% rate per year. I think that is pretty decent.

Rehab

As I mentioned before, the management company would handle the rehab. I would finance it with the initial loan from the hard money lender.

Rent

Also handled by the management company. They even guarantee to find a tenant.

Refinance

Should be no problem. I now got a property that is worth more than it was in the beginning, so I should be able to get enough money out of the refinance to pay off the hard money lender. Only problem that I see here is if it gets appraised lower than what I was hoping for. In worst case, I think I would still be able to pay off at least most of the initial loan.

Repeat

Yay, that was fun, let's do it again :-)

Am I being too naive here? Is there anything that I got wrong? 

Thanks

Simon