Does the BRRRR method still work with commercial properties?

[Aaryan Patel]

Does the BRRRR method still work with commercial properties such as apartment buildings, and other large multifamily properties? Why or why not? Do you need to pay all cash for a deal in order for the BRRRR strategy to be successful? Why or why not?

[Christian Ehlers]

BRRRR can work with any asset class as far as I understand, it works especially well in commercial properties though! This is because commercial properties are valued based on the income they bring in and the typical cap rate for the area. By improving the property through Rehab and/or improved management (Ie increasing rents/income and decreasing expenses) you can very quickly raise the value of a commercial property, and then be able to refinance based on the new Net Operating Income (NOI).

You don't need to pay all cash for a BRRRR deal to be successful, and most large multifamily properties aren't bought with cash anyways, as the amount of capital needed from 1 or a few investors would be huge! Also what do you consider a successful BRRRR? Leaving none of your own money in the deal after the refinance? (Very difficult in today's market). Leaving only 10%, 15%? its all perspective.