Just starting with BRRRR - How much money down with Private $$$?

Question

I'm loving the BRRRR method, and I think this is definitely the way to go to minimize risk, start with low to no money down, and grow rapidly.

That said, I'm finding it difficult to find out around how much you should put down with private money up-front?  I first figured that I should do an all-cash offer with private money, but then the Refinance step doesn't really kick in, does it?  What have y'all found to be effective?  I wish the BRRRR calculator had more options for private/hard money financing options, as I'm struggling there.

Any input is appreciated!

Thanks!

Chris Ellis · Answer

For a first time investment property you are looking at realistically 20% to 25% that you will have to bring as a down payment. If you are making improvements to the property, the rehab costs and be included in the loan and it will be structured as an interest only bridge for a year or 2. Once you have been in the property for 6 months, done the renovations, and have a tenant in place, it is time to do a refinance and structure it into longer terms.

To get down to a 10% down payment you are going to have to bring prior HUD statements and experience to the table. Usually 3 flips in the last couple years. I'll be happy to bring you to the right source if you'd like to connect.

John Leavelle · Answer

Howdy @Garrett Ellison

You need to learn how to do the calculations and analysis using pencil and paper first.  The BRRRR Calculator does not have the flexibility to account for all the variations that are possible.

Do you have Private Money ready for investing?  If so, you can do an all cash deal.  The down payment amount is normally 20% - 25%.  However, you may be able to work out a different percentage (including nothing down) with your lender.

The Refinance step still is applicable whether you have a Private/Hard Money Loan or paid all cash for the acquisition.  You need to repay the loan or get your cash back.  In either case the Refinance is required.