BRRRR - RE market crash before you get to refinance

[Kim Leduff]

Hi BPers!

For those who BRRRR or plan to BRRRR, how do you account for the risk associated with a possible real estate market crash during your rehab stage? For instance, if you take out a 100K short term loan (to cover house purchase plus rehab costs) with comp ARVs of 160K, and the ARV drops to 70K because of a crash.

Is there any protection against that potential loss of value? how do you pay off the short term loan, worst case scenario?

best,

kim