A question about BRRRR investing

[George Tiglianidis]

Hello Everyone,

So I have been reading real estate books and listening to the BiggerPockets podcasts for a few months now and have a question about BRRRR as I'm getting all my ducks in a row as I'm getting ready to buy my first small multi family deal in the Northeast:

Almost everyone in BP realm knows BRRRR

BUY

REHAB

RENT

REFINANCE

REPEAT

My question is about the refinancing part of the strategy. You’ve successfully Bought a good/great deal. You’ve Rehabbed the units. You’ve Rented your Units. Now it’s time to refinance. What if we have a market correction? Will the Rehab that you have effectively done make up for a market correction thus allowing you to pull equity from the property to properly Repeat the process or do you just have to wait for the market to bounce back before you can refinance?

Thanks in advance!

[Kevin Sobilo]

@George Tiglianidis, nothing is 100% certain when investing. However, if you are rehabbing a property you should be completing it within several months to a year. Except in very volatile markets, you should have some idea the direction things are taking over the next several months.

Even if values decline or if credit markets tighten, you still end up with a good cash-flowing rental unit. You can wait to refi and save some cash-flow to supplement the refi money for the next deal if you need to.

Keep in mind if everything was simple and cookie-cutter, you wouldn't make money doing it. Large companies would automate the BRRRR process and dominate. This kind of investing still requires the kind of decision making and management that is difficult to automate.