BRRRR Refinance Interest rates

[Jonathan Perez]

Hello all,

I am curious as to what is everyone's experience using the BRRRR method right now that the interest rates are higher? I just completed a BRRRR and left about $8,000 into the deal. I used a DSCR loan on my refi and my rate was 7%.

I've been analyzing SFR, in San Antonio, and it seems like its harder to cash flow with those type of properties because of the interest rates causing the mortgage payment to be higher. What are you guys doing to combat this? Buying lower priced properties or focusing more on multi family units?

This is the second investment property I own, but seems like I've hit a wall due to the higher interest rates. 

Any advice would be greatly appreciated!

[Steven Goldman]

Your questions raises its ugly head every time we enter a period of rising interest rates. Just before rates rise, values rise, signaling a maturing inflationary cycle. So, when rates rise, you have the double whammy of higher prices combined with higher interest rates. This is why the real estate market will have to shake out. Your question is how do I prosper in a market place of higher prices and higher interest rates?  (Well for now at least the rental rates have also risen.)

The current emerging market requires investors to be more savvy. Just going to the MLS and buying a property and rehabbing it will not work. You will have to look for off market properties, estate sales, foreclosures and distressed properties in order to buy at a value which will support a BRRR strategy. Th rising rate environment will wash out all of the Johnny come lately investors who always appear at the end of a long up cycle. Who isn't a real estate investor these days?

Higher rates make it harder for sellers to sell, and buyers to buy. So this will create opportunities to buy distressed properties with seller financing etc. If you learn how to negotiate the rising rate environment than the normal market will seem like kids play. If real estate is your calling than the market forces are just challenges waiting to be met! Good luck.