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Updated over 3 years ago on . Most recent reply

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Mike Schorah
  • Rental Property Investor
188
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416
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Why don't I ever hear about people losing money doing BRRRRs?

Mike Schorah
  • Rental Property Investor
Posted

I always hear about people losing money flipping houses. Why don't I ever hear about people losing money doing BRRRRs?

For instance, I've heard of people losing $5k-$70k on a flip sometimes, but I never hear of someone doing a BRRRR and the property not appraising at the ARV.

If a house flip fails, I've heard of people giving the house to the lender or extending the loan terms. What happens if a BRRRR fails?

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Tony Gunter
  • Investor
  • Canton, GA
500
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727
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Tony Gunter
  • Investor
  • Canton, GA
Replied

@Mike Schorah

How exactly do you loose money on a BRRRR?

You may end up not being able to cash out refinance all the cash you put in, but you’ve not lost anything. Even if you over renovate it’s still not a realized loss unless you sell.

My first BRRRR I had cash in the deal I couldn't get back at refinancing. However, I got all that back in cash flow in the first 3 years of renting it, on top of covering all expenses. Now it's churning out cash, but I don't have a penny in the property now.

You really have to work hard loose money on a BRRRR IMHO. Its like stocks. It's only a paper loss until you sell and make it a realized loss.

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