To BRRRR ,or not to BRRRR

[Account Closed]

There's no question that interest rates are at record lows and money is cheap (relatively). Markets have also been on fire and home prices are rising all over the country. How is everyone feeling about using the BRRRR method lately? Have you switched methods from BRRRR to traditional 20% down purchases to lock in these low rates? Or staying the course with buying in cash and planning to refinancing?

[Bonnie Low]

Hmmmm....I'm not sure how to answer that question. To me, it's an either/or situation. Here's what I mean. The properties we find that have BRRRR opportunity are distressed or have some significant value add potential. We focus on the distressed properties and those properties just don't qualify for conventional mortgages that are available at historically low rates. Therefore, we use hard money to purchase them, do the rehab, and then refinance into a conventional, low interest mortgage. I suppose if we were buying properties that could qualify for conventional financing, we might do that, but that's not our niche. And at least in our market properties that could go conventional aren't available cheap enough and/or the ARV doesn't warrant a BRRRR . That's why I say it's not really a toss up for us. We're either buying properties that make good BRRRs but don't qualify for conventional financing, OR we're buying something that will go conventional and won't make a good BRRRR. I will also add that we typically put about 20% down even with a HML, though that number is variable. We do try to do our refi as fast as possible, though, while rates remain low. Hope that makes sense!