Let's discuss the BRRRR process

[Daniel Brown]

Good morning BP! I wanna talk BRRRR. I understand the basic premise of what brrrr is and how powerful of a strategy it is to use in real estate. I also realize that over paying for a property or over estimating the ARV can really make a BRRRR deal go south quickly.

My question is what are some other hidden costs, pitfalls or hangups that can come with a BRRRR deal that most newbies dont usually think of when starting the process? Any advice or comments are much appreciated!

[Alexander Felice]

Originally posted by @Carson Wilcox:

seasoning is the big hurdle... most think they can buy a turd, take a month to polish it... then refinance and POOF! Done. BRRRR!! many lenders require 6 months of ownership to refi...

Loan costs... no one ever talks about loan costs when in BRRRR... they can be thousands, and need to be taken into account.

That, and issues with appraisals... you have to have your numbers on LOCK if you expect to get all your $ back out... remember that market value and appraisal can be a HUGE difference..

great answer

to add: I do lots of BRRRR and try to teach people how to do it as well. The biggest obstacle people email me with is on the financing side. Don't assume you can refi out, talk to a lender and develop a relationship BEFORE you purchase. Build your exit strategy in from the very start.

2nd biggest obstacle is contractors, but there is no advice that can fix that problem. Contractors are awful, find a good one and marry them, until then it's kinda like finding a wife on tinder.