Can BRRR work as well as BRRRR?....

[Manny Dorticos]

Let's get to it! And apologies in advance if this is an utterly noob and obvious question. Can/does BRRR work as well as BRRRR?! That is, buy-RENT-refinance-repeat (without the rehab).

Why am I asking? I currently own 3 SFH rental properties in Florida. I own these properties under my name, as I have not established any LLCs (separate topic I need assistance with). As I understand it, I likely have 1 or 2 more deals that I could conventionally finance with 20% down before the banks stop lending to me.

In comes private, hard, and crowdsource lending. The BRRRR strategy intrinsically depends on BUYING at a discount to force equity from the get-to, and increase that equity post-rehab through (ARV) and over a year period - significantly enough that a refinance can be executed to cash out at a lower rate and pay off the higher interest loan. Correct?

So, what if the homes I am looking at are fairly new, built in 2000 and up. These homes need little if any rehab done. It is also a seller's market in Southwest Florida whereby these homes are flying off the shelf at pretty much market value. The only equity in these deals are really whatever your downpayment is, and maybe a 1-2K under asking price.

If a bank won't lend to me conventionally - how would I leverage private/hard/crowd source lending to do this? Does it even make sense if I can't refinance after 1 year as I likely won't have gain sufficient equity?

@Brandon Turner, I summon you!! :)

[Bob Okenwa]

@Manny Dorticos

The main reason you need to rehab the property is to force as much equity as you can into through significant improvements. When it's time for a cash-out refinance, depending on the lender, you'll get to refinance at somewhere near 80% LTV. That is why you need to boost equity as much as possible rather than relying simply on market appreciation as the market may not yield the high enough increase in value as a rehab may generate.