Can I BRRRR My Next Primary Residence?

Can I BRRRR My Next Primary Residence?

New to Real Estate · IA · Member since 2020 · 4 posts · 1 vote

Hey everyone. First time poster here and seeking some advice.

After about 10 years away, my wife and I moved back to our hometown last summer, bought and fixed up a house, and intended to make it our “forever home”. It’s great and all, but now that we’ve settled in, we are starting to become a little concerned about outgrowing it if more kids are in our future. Yes, I know, we probably should’ve thought that through a little more at the time, but we are where we are. 

As we now look for our possible next "forever home", I am toying with the idea of buying a home in the near future using the BRRRR method and renting it out for a year or two. Once we have lived in our current home for at least two years to take advantage of the tax benefits, we will sell it (essentially making it a live in flip) and move into the other home.

Without getting into the numbers, the deal would likely have a slightly negative or break even cashflow while renting. But, after talking to a contact at my local bank, I would likely be able to get most of the money back out of the deal with the refinance.  

Would it be beneficial to go this route, or would it be wiser to go a more traditional route and simply buy a house to move into in a few years?

Thanks for the feedback! 

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  • Real Estate Agent · Sandwich, MA · Member since 2014 · 974 posts · 636 votes
    6y

    @Zach Mueller

    I personally wouldn't buy a BRRR property that will lose money for a few years; I think you would be better off going the traditional route and buying your next home when you're ready to move in (preferably with a live in flip or something you can generate some sweat equity in). When you buy your next "forever home," I'd try to find something with an exit strategy that would allow you to transition it to a rental on the off chance you end up moving again. That way, if the market dips when you go to move, you'll be able to hold on using the cash flow.

    Would your current home work as a rental?

  • New to Real Estate · IA · Member since 2020 · 4 posts · 1 vote
    6y

    @Mason Hickman

    I appreciate the advice, and I agree. Yes, my current home would work as a cash flowing rental, but I don't love the cash on cash ROI based on the money I have in the property, where it might be better to sell and reinvest the proceeds elsewhere.

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