Zipper Test for BRRR Investors COVID-19 and Post COVID-19

[Brian Van Pelt]

This is going to be a trying time for past BRRR Investors, especially for those who have the last R-Refinance to pull equity out for either purchasing properties or for living expenses.

I've never been much of fan of BRRR investing due to the high risk during recessions. I know that it works if you get your portfolio together AND have 10 to 15 years to build equity during a rising real estate market.

I've generally been a pay cash and use the income to save up for the next property investor. Longer build up of inventory, but safer during turbulent economic times.

During the last downturn in Real Estate, many of my BRRR investor clients saw their entire portfolios unzip when a small number of tenants.
Currently I am seeing a huge increase in calls from my investor clients inquiring about unloading their highly leveraged investment properties.

30 - 60 - 90 Day notes called by commercial Lenders (The commercial credit market will probably lock up soon if Banks don't act soon)
Closing of Equity Lines by Residential Lenders (yes, a lot of lenders have it in the small print)
Calling on Equity Lines by Lenders (again, the small print)
Margin Calls on mortgages by lenders especially hard money lenders.
A declining Real Estate Market (Many areas especially Southern CA are seeing dramatic price drops on listed homes)

My questions for current BRRR investors are:
. How prepared are you to weather a downturn in a declining real estate market.
. How many months can your portfolio handle missed Tenant Payments.

Add any other insights you have to help BRRR Investors in the COVID-19 and post COVID-19 investing environment.

The upside is that once things settle there WILL be great investment opportunists especially for those who have equity or cash to pick up discounted properties or from other investors who seek to balance or elimanate their portfolios.