BRRRR in a down market

[Steven Barr]

I should preface this by saying that I am not a BRRRR guy, and don't pretend to know anything about it.

However, I have toyed with the idea of doing it. The risk seems large though. If I take out a hard money loan to buy a house and rehab it, what happens if the housing market goes down and I am not able to refinance for my projected ARV? It seems that I am then unable to pay my hard money loan back. If this loan matures in 12-18 months, that seems to be flirting with bankruptcy if I don't have the cash reserves myself to pay it off

Thoughts?