using a conventional loan vs. the BRRRR

[Steve Sendldorfer]

Hey BP,

so one of my co-workers asked this question which I thought was a good one and wanted to see what BP thinks.

Ok so he asked me what is the benefits of doing the BRRRR instead of a traditional mortgage? I was under the impression if you used BRRRR you could get a larger portion back out verses the regular loan were you get a percent of the equity? Am I thinking about this right?

[Joe Villeneuve]

You are correct. The best way to use the "cold weather" strategy (BRRRR), is by buying with all cash, then refinancing it all back out. Buying with a mortgage, and a small DP, doesn't help since you won't be able to get the DP back when you refi. It defeats the purpose.

If you split your cash between multiple properties as DP's, you've spent the cash...and it's gone, with only one use.

This is another example of why you're better off paying all cash for one deal, and refinancing it all out to use on the next, and repeating... You are using you cash, not spending it, and you can use it an infinite number of times.