The BRRRR Stategy (Need Advice From People Doing It)

[Account Closed]

Hello Investors,

I want to putting the BRRRR strategy into effect, is there a process to make it happen with hard money loans only ?

This is my plan

Buy a house that needs rehab cash, fix it up, contact hard money lender, and refinance.

I want to do this with a at least 15 properties and ride appreciation then sell it in about 2-3 years.

The reason I want to do this is to pretty much cashflow a bit from each property and ride appreciation.

Is there any investors that does this ? 

[Christian Bors]

@Account Closed Let me make sure I am understanding this correctly. You want to buy a distressed property, rehab the property, then take it to a hard money lender to refinance? That defeats the whole purpose of the BRRRR strategy. The point of the BRRRR is to get long term financing that is cheap so you can rinse and repeat, aka bank financing or private money. Hard money lenders will charge interest rates 10%+ with points and usually will not extend terms past 12 months. HML will not lend on a speculative deal where it takes 2-3 years to get their money back. Second, I do not know your market, but I understand Arizona is a very volatile market. What you are describing is a horrible idea. You want to fix up a property and finance using hard money, then hope to sell in a couple years based on the appreciation. What if the property depreciates by 30, 40, 50%? Real estate may continue to go up for another 8 years or it may crash tomorrow. Don't count on appreciation! If your strategy is to sell in a couple of years, you may want to consider doing a lease option. I think this would be a better strategy for you.

You want to check out this podcast: Bill Powers uses the lease option strategy for his investing.

https://www.biggerpockets.com/renewsblog/2016/07/28/bp-podcast-185-rent-to-own-increase-cash-flow-maximize-equity-bill-powers/