BRRRR using Hard Money? Is it possible?

Question

Hey guys had a question about using hard money lender to acquire a property to brrrr, has anyone done it before and how did it turn out? I know most people use “cash” to acquire the property and fund the rehab initially but we want to see if it would be possible to leverage so we can do multiple ones at once. Any insights would be appreciated.

William Collins · Answer

I am of @Michael Noto 's  clients.  I have only bought 1 property without the involvement of hard money in the journey. It is a cost you can plan in.

Ashley Cross · Answer

Hi Johnson! I did a BRRR in Columbus with conventional financing. I don't think the financing part was the tough part. The issue was with the managing the renovation cost during the pandemic. We ended up going wayyyy over budget but we ended up breaking even. Watch the comps!

Wesley B Williams · Answer

@Johnson Yu definitely possible to do. All just comes down to the deal you just have to factor in the cost of the hard money when analyzing the deals.

Nick Belsky · Answer

@Johnson Yu

A broker / lender combo who is familiar with BRRRR is an ideal place to look.  There are countless lenders who will do a short term loan with rehab in them, but fall short to help you convert over to long term financing.  Or vice versa.  There are, however, some lenders who excel at the short term financing and the long term conversions.  Find one of these folks and you will be off to a much smoother financing journey.

Cheers!

Johnson Yu · Answer

Appreciate all the feedback/ insights, will adjust my numbers accordingly.

Michael Noto · Answer

What @Wesley B Williams mentioned as far as factoring the costs of hard money into your numbers is they key part.

Any BRRRR or flip I've done for my personal investments here in CT I have done has been done with the leverage of hard money. Also, the majority of my clients who BRRRR or flip do so using hard money.

Marc Rice · Answer

Yes it happens every day with a majority of investors. If you can find a good deal and have a good rehab team its a no brainer in my opinion. The one caveat is if you have boat loads of cash and can get a higher return than 10% in the market, then it would make sense to self fund your rehabs. Just my opinion.

Nicholas L. · Answer

@Johnson Yu yes.  But anything but your own cash is more expensive - the interest on the HML needs to be added to your cost basis.

Brandon Goldsmith · Answer

It is definitely possible, the hard part is keeping everything on time and on budget. @Johnson Yu

BRRRR using Hard Money? Is it possible?

Most Popular Reply