Can you BRRRR anywhere there's flippers? Episode 327 discussion.

[Sean Larsen]

In BP episode 327, they make the point that if there are flippers in a market, then BRRRR will work. Is this appropriate thinking?

For example, let's assume you BRRRR perfectly and refi all you cash invested out of a deal. Market stats: The ARV is $200K and rents are $1,400. At 80% LTV, 5.5% interest rate, $1,600/yr taxes, and $800/yr insurance, you get a PITI of about $1,108. Assuming 8% vacancy and 8% capex, you get cash flow of $68. That's barely breaking even. Yes, you got the equity, but without cash flow would you consider this a workable deal? So does BRRRR really work anywhere flippers can succeed, or do we also need that sweet sweet cash flow?

Thanks for your feedback!

[Michael Noto]

@Sean Larsen Typically loans on the refinance side with the BRRRR strategy will be 70-75% LTV in our experience.