Using BRRRR with traditional financing

[Chris Harper]

Hey BP Community,

I want to house hack a multi family home using the BRRRR strategy. I was recently approved for conventional and Fha loans. What are some of the complications that may arise from trying to use BRRRR with traditional financing?

[Mike McCarthy]

It's also hard to BRRRR with traditional financing up-front. Since they will only loan what the house is worth on purchase, you need to come up with the down payment and reno costs on your own. Then if you refi 6-12 months later, you'll have to pay all those closing costs again.

The BRRRR strategy works best when you have cash (or a cash-like loan) to buy and reno the house, then refi it 6-12 months later with a conventional loan at a reasonably low rate.

Not that other strategies won't or can't work, but that's the "typical" BRRRR