Hard Money & BRRRR - Too much of a squeeze?

[Matthew Askew]

I had planned to use hard money to fund my first BRRRR but after speaking with a hard money lender I am reconsidering this approach due to what seems like excessive costs. I am essentially paying closing costs twice (3.5 points up front on hard money loan and another $3,000 in closing costs when I refinance). Not to mention the 10.99% I'd be paying in interest payments for at least 2-3 months during the rehab plus two separate appraisals ($400-$500 each). It just feels like it would really squeeze a deal and make for a stressful few months even if the rehab went smooth and I were to get 75-80% at refinance and a decent ARV from the second appraisal. Should I just wait until I have enough cash to acquire a BRRRR property? Does hard money make more sense for flips than a BRRRR? Thoughts are appreciated.

[Matt Crusinberry]

@Matthew Askew, I would say this all comes down to your ability to find a property that works with those numbers. I would also recommend looking into an alternative route (i.e. seller financing, partnering, sandwich lease, etc.). While your saving and learning your chosen market, continue to learn the other strategies that you can put into your tool box. I hope this helps, and good luck as you continue down the route of REI.