Is BRRRR for everyone?

[Jason Collins]

I know BRRRR is one of the key strategies on BP. I just wanted to play devil's advocate and see if my line of thinking makes sense.

I have a professional job that pays well, so I have been taking my extra income and purchasing single family rentals and more recently delving into multi family/commercial properties.

My issue with BRRRR is that there are significant transaction fees, closing costs, stamp taxes, etc every time I refinance a property.

My strategy instead has been to form a relationship with a local bank. They give me loans through a unique LLC that my partner and I guarantee through the equity in our other properties, as well as our relatively high personal income.

Rather than refinancing each property, after every rehab we just have a significantly higher percentage of equity in that property. In the future, the bank will lend to us for new properties based on our existing equity with very little personal money down. That is essentially my ‘repeat’.

Our goal is to pay the properties off in 15 years to lower costly interest payments over time.

In my head, this is synonymous with owning a low cost index fund. We pay less transaction fees up front, less interest over time, and eventually make a higher ROI.

The downside, it seems ,is that I may not to be able to scale as rapidly with new properties. In all honesty I don’t mind being a little more conservative because I look at this more as a long term investment rather than a quick ticket to financial freedom.