Pay CASh For The Property & Rehab. Then Refinance Or USE Hardmoney To Buy And Rehab?

[Letricia Steed]

Hello All, 

Im new to the BRRRR model and I've been reading the book. I have a question about a property that backs up to a lake. Is the BRRRR model suggesting that the best way to implement the strategy is to use your own cash to buy the property ($120K) then use your own cash to rehab ($125K) or use a private or hard money lender to buy the property ($120K @12%) & rehab ($125K @12%) then go for the refinance? In short, what I'm asking is which is better? Is using your own cash going to net you better results or will using borrowed funds net you better results? (ARV $335)

[Scott Johnson]

Quote from @Letricia Steed:

Hello All, 

Im new to the BRRRR model and I've been reading the book. I have a question about a property that backs up to a lake. Is the BRRRR model suggesting that the best way to implement the strategy is to use your own cash to buy the property ($120K) then use your own cash to rehab ($125K) or use a private or hard money lender to buy the property ($120K @12%) & rehab ($125K @12%) then go for the refinance? In short, what I'm asking is which is better? Is using your own cash going to net you better results or will using borrowed funds net you better results? (ARV $335)

 I hate to say, "It depends", but... It depends.

If you have all of the cash for the purchase and the repairs then you certainly can! If you prefer to reduce your exposure and leverage someone else's money for a part of the cost, you can do that too!

I did a BRRRR a while back and used hard money to buy it. We then refinanced it and it's being held as a rental.

Totally up to you and how you want to play it.