BRRRR Strategy Investment Help

[David Rutledge]

Hi Everyone,

I am a relatively new investor living in California. I have bought 7 traditional buy and holds in both IN and NC and one in my home country of Australia. I purchased most of these properties with traditional financing and the last two with seller financing.

I am now ready to purchase my next lot of properties and I am looking into options. I would like to get some more information of the BRRRR strategy.

I learned a little about this when I first start investing in the US four years ago but as I was new and inexperienced I went with the very Conservative approach of conventional financing, 20% down, turn key etc... I have no experience with construction and buy all of my deals off the MLS. I am wondering if this strategy may be worth looking into a little more for my next few purchases.

My goals are to slowly build my portfolio to generate cash flow and long term income. I work as a teacher and would like to continue to supplement my income to help support my family in the future. I am not looking to scale my business into a huge operation or anything like that at this point. These modest goals combined with my inexperience in the rehab game have prevented me from looking to seriously into the BRRRR approach as of yet.

I would really like to obtain as many income producing sfr and small multi familys as possible and the two biggest obstacles I have found are being able to secure loans and come up with the down payment (I am sure these are typical struggles for other investors out there too) The fact that securing a hard money loan and then rehabbing is a creative way around these struggles really appeals to me. I would like to get an idea of how it all works.

As I understand it, a typical BRRRR deal would go as follows.

1) Buy fixer upper for below market value using hard money loan.

2) rehab the property

3) find a traditional lender who will refinance the property and pay off hard money loan

3)rent property out to long term tenants

4) repeat this process on another property.

Here are the main concerns or worries I have on this. The main concern I have would be how to be sure I can refinance the property. Is this something that can be done before buying the property? I am worried I will buy something with a hard money loan and then not be able to refi and be stuck with the loan over the property. Can someone help me understand how this works? Would I attempt to get a loan from a bank in this scenario when the property is fixed or try to secure that before I buy?

Thanks so much for your time.

David