Reasons why you WOULD NOT use the BRRRR everytime?

[Lee Cruz]

After learning about the brrrr strategy and its benefits are there any of you that use that every single time? I'd imagine it would help you build up your portfolio quicker by taking your or part of your cash out. What are the reasons why you dont use the BRRRR method excusively?

[JD Martin]

As opposed to what? Keeping all of your cash in the property? Getting a traditional loan? Something else? 

We don't cash everything out. The properties that have all the equity left behind are a hedge against economic troubles. Roughly, our business could survive about a 65% vacancy rate and not require any outside funding to keep it solvent. That's apocalypse type figures, to be sure, but it also helps one sleep at night (that and a lot of liquidity). To be sure, equity sitting in a house is dead equity - it's not making any money - but not all of your money always needs to be making money, because making money always entails risk, and a certain portion of your total net worth should always be easily accessible, easy liquidity, and instantly valued - ie, $10k in your checking account is worth $10k today. 

I like a mix of ~ 50/50, wherein 50% of properties are leveraged @75% or so, the other half are free and clear. For us, it allows controlled growth but also lets the business survive on its own without any additional cash inputs. If everything you own is leveraged, even at 75%, you better have a thick cash cushion.