First BRRRR, Hard Money vs. Traditional Loan

[Lesley Ray]

Hi all,

I'm looking to purchase my first investment property in Cleveland, OH. I plan on utilizing the BRRRR method and am currently feeling torn on whether to obtain the property with hard money vs. a traditional loan. I view the benefits of hard money as being able to purchase a property in cash but obviously with that convenience comes higher interest rates.

I was wondering if others have favorable impressions or experience with one over the other for BRRRRs.

[Michael Simmonds]

Hi Lesley,

My wife and I have recently purchased our first rental property in Cleveland. This was basically a turnkey property. We felt that this was our safest bet as new investors from out of state. However, we are looking to purchase our second one very soon and plan on using BRRRR. I'm assuming you're looking at a distressed property since you want to use BRRRR. I don't have any first hand experience but from what I understand most banks will not offer a traditional loan on a distressed property. This is why most investors go with hard money loans for BRRRR. We are going to start working on building relationships with good real estate agents and contractors to try and make our next deal happen. On a separate note, we have learned a little bit about neighborhoods in Cleveland. Feel free to send me a message if you would like to pick our brain a bit. I'm sure we could learn from you as well!

Best,