BRRRR - financing / loan question

[Alexandra Berman]

Hello - 

Newbie here!!!! Looking into doing my first BRRRR transaction and trying to learn as much as possible.

I have a question on the FINANCING of the first BRRRR purchase. 

can someone explain what is the best way to finance the first transaction - is it a traditional loan with 20% down or should it be all cash / etc?

I would love to learn about all options that are appropriate for BRRRR

[Dan M.]

Hello Alexandra,

Usually a bank wont offer traditional financing on a BRRRR, generally BRRRR properties are unlivable/ in need of a lot of work. THATS how you add the value, by repairing the defects, kicking out squatters, painting over spraypaint etc. In general the worse condition it is in, the better it is for you to add value.

Super important that you know what it will be worth once repairs are made, and that you know what the repairs will actually cost ( many people underestimate and get burned ). Why its so important because the appraisal better come back with at least 20-25% equity left over so you can pull the money you used to purchase it and do the repairs.

That said, you can use cash, get ahold of a hard money lender ( most expensive option), or get seller financing.