BRRRR vs 20% down with declining housing prices

[Keenan Meitner]

Just starting out with real estate investing and have a question.

With interest rates on the rise, our area has had a readjustment with housing prices and they have started to decline.

My question is does the BRRRR strategy still work in a declining housing price situation?

My initial thought on BRRR in declining market, is that we'd be fighting declining housing prices while trying to force value upwards through rehabbing

The plan was to use our own money for purchasing property and rehabbing. (Approximately 150,000.) 

The second question to ask is: Would it make more sense to take the cash and BRRRR or purchase a larger multi family (4+ unit) with 20% down that is currently underpriced for rent, considering declining housing price environment.

Our overall goal is to continue to increase cash flow overtime through acquisitions to achieve financial independence. We are not looking to invest for appreciation.

Thank you for all of your help!

[Scott E.]

You're asking a handful of questions that unfortunately nobody will have the answer to, because nobody has a crystal ball.

With that being said, yes it will be much more challenging to pull off a BRRRR in a declining market.

Doing a BRRRR on a single family home is a very different strategy than getting into multifamily and forcing appreciation through renovations and raising rent rates.

I don't think it is a good plan to rush into anything in this environment. Looks at deals every day, underwrite deals every day, pay close attention to inventory, days on market, price drops, etc. If you're already seeing home prices decline in your area, might make sense to just hang tight. Don't want to catch a falling knife.