BRRR strategy ..... Put 25% down or use a HML ??

[Michael Dunn]

Just need some advice please, on whether to put 25% down on purchasing an Investment property via using the BRRR strategy ( assumes I use a Portfolio Loan ) vs using a HML ?

I will have the 25% down " Covered " , I.E. technically NO out of pocket on my end, as the $ for the 25% down will come from the Equity from my Primary.

I am just trying to approach this , by going the route with the LEAST amount of Red tape possible

Thanks so much for the help

[Miguel "Mike" Perez]

Buy
Renovate
Rent
Refinance
Repeat

The B in BRRR stand for buy, but it doesn't specify or outline how.

The how just depends on the numbers working. It seems to me that there is technically a step missing since the method implies you buy the next property using the equity you get from the appreciation you force during the renovation step.

If you go with your existing home's equity, it would be cheaper money to start the BRRRR process.

Using HML will cost a lot more and you will still need HML if I'm not mistaken since most will only do 80% LTV so you'll need to come up with some funds anyway.

Lastly, I would say use the calculators on this site to know exactly how much money you will need because in a traditional RE transaction $25k is spent quite fast. If you drop $25k on down payment there is no money left for closing costs that usually hover around 3% of purchase price as the buyer.

Good luck.