All Forum Posts by: Zak Marinko

@Evan Polaski Explaining the BRRRR strategy as a combination of flipping and buying/holding with a refi in the middle is a much less complicated way to think about it, thank you for that!

The challenge definitely seems to be finding a purchase price + rehab that is less than 70% ARV. Also, the extended timeline of 12 months could potentially be difficult. However, if the original loan isn't hard money, then you could actually be cash flowing more in that period! (As long as I'm understanding things correctly)

Thanks for all the info about long term expenses. That is something I need to increase my knowledge on, because if I were to analyze a deal right now I would not know how to estimate those.

@Whitney Hutten Thank you for your reply, the hyperlink definitions were extremely helpful! Did not know bigger pockets had that feature.

I think I have a good understanding of how the strategy would be applied with private or hard money. However, I'm still curious if it would be possible with an FHA loan. I'm going to make up a hypothetical scenario to see if my understand is correct.

I purchase a property for $100,000 with 5% down payment FHA. Now I renovate it with $10,000 to have my total money in be approx. $20,000 (including extra costs, let's assume I partially house hack as well to get mortgage down). If the ARV is now $150,000 and I get 75% ARV back from refinancing, the bank will give me $112,500. I pay off the remaining 90k loan (assuming that's how much is left) and now have $22.5k cash along with a (hopefully!) cash flowing rental.

Does it seem like I’m missing anything there? Because if not, I think I like that strategy a lot!

@Mike McCarthy I agree that BRRRR is very hard without capital. I'm hoping that I can make/save enough in a couple years through househacking to get started. Or working on establishing a good relationship with hard money lenders. I did not know you can do FHA loan multiple times though, I thought it was just a first-time buyer perk. Thank you for that!

I’m new to investing, and currently involved in my first deal (a house flip where I’m just a partial investor).

My current plan is to begin House Hacking after this deal by using an FHA loan for my down payment. (Don't have much capital now, still a college student!)

However, I want to start using BRRRR as my main strategy moving forward from that point. My current understanding of BRRRR is that it works best if you can pay for the house in full, whether that be with cash or private/hard money.

My question is, is there a feasible way to use the BRRRR strategy with a loan? It seems like it wouldn't work because you already have a loan, so refinancing for a different loan wouldn't necessarily put you in a better position.

Any input is helpful, I’m pretty clueless when it comes to loans and refinancing!

I’m in a similar situation as you, looking for a house hack after I finish up my first flip this summer. I think the best locations are Avondale, Irving park, or Mayfair. I’m not an expert on the market but it appears those areas are going to continue to appreciate. They’re affordable now, can provide some cash flow or at least netzero, and if your willing to rehab it can lead to a great cash flowing rental. All of that while the wealth keeps expanding. Sounds pretty solid to me

Rehab costs are very difficult to get exact, there’s almost always going to be some variability when you actually get it done, whether that be for better or for worse. My best advice, and a strategy I’m currently doing, is to get estimates from contractors and look up materials

Guilty! I’m a mechanical engineer, hasn’t proved to be too beneficial yet in real estate investing. However, if I put my talents to use in an HVAC related day job that would be awesome for rehabbing!

@Tim Sipowicz Thanks! It's going to be in Beverly

@Jonathan Klemm Most of my team has more experience than me, so as of now I'm partially relying on them to handle it. Definitely expecting it to take some time, but hopefully connections can help make that quicker. I'm getting together with my team over the weekend so if anyone brings up questions that are unanswered I'll shoot them over. Thanks!

I think Irving park or Avondale are great areas to start house hacking. They’re right on the edge of wealthy areas that seem to be expanding into that area. Can get cheaper housing with great potential for rent to increase

I'm starting a BRRRR type investment on the south side in the next couple of weeks. Going to be my first investment and rehab, although I have seasoned investors and contractors on my team. Any advice on permit laws in Chicago? What is and isn't allowed without one, also any experience people have regarding permits would be helpful