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Updated almost 8 years ago on . Most recent reply

User Stats

180
Posts
37
Votes
Matthew Wright
  • Investor
  • Windham, ME
37
Votes |
180
Posts

BRRRR Strategy using commercial loans for 1-4 unit properties

Matthew Wright
  • Investor
  • Windham, ME
Posted

Does anyone acquire rental properties thru BRRRR strategy, using commercial loans for 1-4 units and does it work well? Talking with my commercial broker, it sounds like it would be a nice flexible way to build up my portfolio without having to deal with more rigorous requirements of conventional, but I'm also thinking commercial terms/rates don't really help me replace my W-2 income as quickly, since its more expensive and cash flow takes a hit.

Also, when people refer to the one percent rule of thumb, for acquiring rentals, are they referring to profit after debt service etc. or are they referring to what the property would rent for every month?

Most Popular Reply

User Stats

117
Posts
39
Votes
Tim Holmes
  • Canton Ms. Tacoma Wa.
39
Votes |
117
Posts
Tim Holmes
  • Canton Ms. Tacoma Wa.
Replied

I'll let others help you with your first couple questions but as pertaining to the 1% rule, your rent roll needs to equal 1% of your all-in acquisition cost. So if you buy a fourplex for 300,000 put a hundred thousand into it for renovation, you're all in at 400,000. Your rent roll needs to be 4000 per month to meet the 1% rule. I grew up not far from you in Biddeford. 

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