BRRRR still? Refi options in current market?

[Mick Murray]

Looking to pull the trigger on my first purchase, and BRRRR appears to be the best strategy for our situation. But I'm running into roadblocks in terms of the financing on the back end and the numbers still making sense. Quotes of mid-high 7s and 2-3pts to originate.

Any input would be greatly appreciated!

[Andrew Postell]

@Mick Murray thanks for posting.  Always great to hear from a fellow Texan.

Now, I might add here that what you are going through is pretty normal right now - rates will show that you likely won't cash flow this year.  And what if rates continue to rise?  That could happen - and it's likely that it will.  Keep in mind that we make money 3 ways with "buy and hold" properties - cash flow, appreciation, and principle buy down.  So even if I don't cash flow this year, I am still earning from the other 2 sources.  A good article to read on this is from Brandon Turner that you can see HERE.

The other concept to understand is that you may not cash flow THIS year.  I have been investing in real estate for 20+ years now - I have never decreased rents!  So when you increase your rent next year, and the year after, and so forth...you will look very good on the property.  

I still want you to buy right.  Meaning, do not make an "over ask offer".  Stay with your numbers.  If the property doesn't cash flow this year, and you were hoping for $200 per month...well, $200 x 12 months = $2400.  So my offer should be $2400 lower because of this.  Maybe even $3,000.  Maybe more.  Still make an offer but balance the risk with a lower offer.  Based on where things are going you should have more opportunities in the month's ahead....so if you in front of a seller, and they aren't willing to negotiate - then go to a different seller.  You will have more opportunities in the month's ahead.

I hope all of that makes sense.  Thanks!