BRRR Strategy in Market Crash/Recession

[Howard Soon]

Hey All, Been doing a lot of research and trying to wrap my head around the idea of the BRRR strat right before a recession or economic downturn. I know it'll eventually happen, but how would the numbers work out? I'm thinking that getting a refinance before signs of a downturn would fill your war chest, but at the same time, would the mortgage be too high? The assumption is that rent would be lowered since people would generally be spending less and be more conservative in their finances? Thank you for your thoughts and comments.

[Arpan Patel]

I'd forget the notion of the market altogether in this sense. If the property is cash flowing, let it continue to cash flow. Rents were still good before during and after the crash. There have been crashes where the rents were affected but generally rent numbers are harder to move then ARV because those are very sensitive numbers. The impact of 100 dollars a month can make or break an investment but the difference of 10k for an fha loan is only about 50 dollars per month. Plus, people pay actively rent versus they own passively equity. lastly, the pool of people those two numbers matters to differs. A new home buyer will live there for decades versus a more transient renter population. A bit of tangent but ultimately, as long as it cash flows today, the rental market is generally more robust so I would worry less about the market overall so long as rent is still coming in. If you play the speculative game (as we do as well with flips) then market conditions are more of a factor.