Tag Archive for: #BRRRR method

BRRRR Homes as Investment Properties

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Today we will be discussing BRRRR homes as investment properties. Ever heard of the BRRRR method? It’s one of the smartest ways to build wealth through real estate. BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat. It’s like flipping houses, but instead of selling, you keep the property as a rental.

Here’s how it works:

  1. Buy: Find an undervalued property that needs some TLC.
  2. Rehab: Fix it up to make it safe, functional, and attractive for renters.
  3. Rent: Get tenants to move in and start covering your costs.
  4. Refinance: Pull cash out of the property with a loan based on its new value.
  5. Repeat: Use that cash to do it all over again.

For example, let’s say you buy a fixer-upper for $100,000. You spend $30,000 on repairs, and now it’s worth $180,000. You refinance, take out $50,000, and use that to buy your next property.

The best part? You’re building equity and cash flow at the same time. With every BRRRR deal, your portfolio grows while your tenants help pay down the loans.

It’s not always easy, but if done right, it’s a powerful strategy to grow your investments. 

Contact Us Today! 

Would you like to find out more about BRRRR homes as investment properties? Contact us today to find out more about investment properties!

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Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

Can I Get 100% Financing with Hard Money?

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Can I Get 100% Financing with Hard Money?

While hard money is flexible, can you really achieve 100% financing with hard money? The answer is yes! The beauty of true hard money is that you can achieve 100% financing for flips. While there are some situations where we can’t do 100% financing, it is possible in most cases. For investors who are doing flips or even BRRRR rentals, they are getting the properties at a discount. This is what makes it possible to cover all of the financing for the property. How can you get a hard money loan to cover the purchase, rehab, and closing costs? Let’s take a closer look!

Who can we help?

Here at Hard Money Mike we can help those who do 20 to 30 properties a month, as well as those who are just starting out in real estate investing! Unlike most large lenders that don’t do 100% financing, we are able to as long as it’s a really good deal. A good deal is one that is all in at 70% to 75% ARV, as well as where the property is at. Just to clarify, ARV stands for after repair value or what you can sell the property for after all of the repairs have been done. 

For example:

If you are going to sell something for $400K, we can lend up to 75% of that ARV. You will need to put the purchase price, rehab, and some of the closing costs in there in order to make it work. In situations like these, we would be able to finance at 100%. For investors who have multiple projects going at once, 100% financing can make a huge difference in their success.

What is a good deal?

A good deal is one that you are going to make money on. All lenders want is to have investors make money, pay them back, and do it again. Another important factor that we look at as a hard money lender is where the property is located.  While some properties might be easy to find comps, there are some rural properties that are harder to find comps on. In order to be successful in real estate investing, it is important that you not only make sure the location is good, but that you also create a property that is sellable. A hard money loan can help you achieve your success without requiring money out of your pocket or the need for a partner.

For example:

We had someone call us who had decided to use his dads money to buy and sell a property. When they got to closing, the dad said that he wanted not only his interest rate but 50% as well. While it seemed to be an easy way to get the money he needed for the investment, it ended up costing him more. A hard money lender might have a higher interest rate compared to traditional lenders, however, it is still a lot cheaper than having a partner.

Leveraging hard money at 100% just makes sense!

Keep in mind that these deals are for a shorter period of time for 6 months or less. This is because you are financing the whole amount. We just funded a deal for $120K. After all is said and done, they are going to make between $30K and $40K. Just by paying a hard money lender $6K to $8K for interest and expenses, they can make a really good profit on the property. That’s where leveraging hard money at 100% just makes sense! 

No hard pulls on your credit!

Another benefit to using hard money is that it doesn’t show up on your credit. This is because we don’t do hard pulls. While you don’t need a good credit score in order to be approved, it is important that you have a decent score. We understand that a lot of investors use their personal credit cards to cover their business expenses. As a result, it can quickly drive down their credit score. Unlike traditional lenders, we have the flexibility you need. Our main goal at Hard Money Mike is to help you succeed in real estate investing! 

We are here to help!

If you have a deal that you are interested in, and want to find out more about 100% financing, give us a call. We are happy to run through the numbers with you to determine if the property will be a good investment. There is a quick form on our website that you can fill out to give a little more information on the property that you are looking at. This form would include information about the property, some details about you, what you are trying to do, exit strategy, credit score, and your reserve. In the end, our goal is to determine if the deal is going to make you money. 

Here at Hard Money Mike we work with “value at” properties and can offer 100% financing today! Contact us to find out more! 

Watch our most recent video Can I Get 100% Financing with Hard Money to find out more!

Hard Money Vs Banks: Which Lending Option is BEST?

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Hard Money Vs Banks: Which Lending Option is BEST?

Investors are always wondering which lending option is best for their needs and when is it better to use hard money instead of banks? Let’s start by identifying what is hard money. Hard money is asset based lending that real estate investors can use when their credit scores are not up to par with bank requirements. Unlike banks, hard money lenders aren’t looking at the credit scores. Instead, they are looking at the project and the property. Today banks are getting tighter and credit score requirements are increasing. As a result there is a decrease in funding. Have no fear! It is still possible to get 100% financing with a credit score below 700. Let’s compare hard money vs banks to determine which option is best for you.

Who uses hard money?

Hard money is for everyone! From the new investor, to those who have 20 years of experience, everyone can benefit from using hard money. Hard money creates flexibility that many banks can not provide. Whether it’s a small deal in a small community, seconds, thirds, or even land, hard money can help you complete any translation that is asset based. As long as the property is good, with a good exit strategy, then you can negotiate to get hard money lending 

What can we do for you at Hard Money Mike?

Here at Hard Money Mike we are able to provide 100% financing on BRRRR and 100% financing on fix and flips, as long as the ARV is good. For clarification, ARV stands for the after repair value. A hard money lender looks at the value of the property and what it can become based on the ARV. That’s another big difference between hard money and banks. It doesn’t matter when you go to a bank, or what kind of a deal you are getting. Banks will only focus on the LTV or loan to value amount.

Let’s look at an example of hard money vs banks:

 

Property purchase $300K

ARV 600K
Hard Money As a hard money lender, I would feel comfortable lending up to 100% on the deal because it’s a great deal.
Hard money is better than banks when you are basing it on ARV
Banks  If you go to a bank, they will compare the ARV and the purchase price and determine which is lower. In this example, the banks would base their decision on the 300K purchase price. 
From that base amount of 300K, the bank will then require you to put in 20% to 25%.

When you are deciding between hard money and banks, always remember that hard money is best when you have good deals based on the ARV, and when you don’t want to put a lot of money in. This is also true for BRRRR, if you want to find that undervalued property and use a hard money lender to fund 100% of the rehab. Once again, if it’s a good deal based on the ARV in this market at 70% to 75%, and you can refinance it, then hard money has the flexibility that you need. 

Credit score requirements and limitations.

Most hard money lenders do not look at your credit score to make their decision. Instead, they might look at your score to make sure that you are paying, not in bankruptcy, and not in foreclosure. However, hard money lenders will not be concerned by high usage or low scores. These values are not a big deal for hard money lenders. Most importantly, hard money lenders will not kick you out the door because you have a 679 credit score instead of a 680. 

You don’t need to fit into a box.

While banks often have slightly lower rates and longer term options than hard money lenders, banks want you to fit into their box in order to lend. Whether that is meeting their credit score requirements, income requirements, or their coverage ratios, banks do not have the same flexibility as hard money lenders. Flexibility and uniqueness is where you go for your hard money lending. Especially if the property is based on ARV and the value is there. 

3 instances where you should use hard money over banks 

  1. If you want to base your lending off of ARV and have a good deal. 
  2. If you have a credit score that does not hit into the 700s. 
  3. If your income just started or you aren’t 2 years out. 
  4. If you just write everything off. 

What do you need to look for in a hard money lender?

It is imperative that you get a hard money lender who is flexible enough to do your deals when you have a good deal. What is a good deal? A good deal is dependent on whether or not the market is good in the area, if you have a good exit strategy, and a great LTV. Another important factor to consider is if you have a bridge or a lender set up on the other side. Hard money lenders are not looking for deals that are 100% financing with 100% LTV. 

Where do you find hard money lenders?

1. A local person or company: 

This is a local person or company who is lending true hard money. Make sure that they are well established and have a web presence before diving in. Wall Street has taken over the big loans and only accepts investors who can fit into their box. Hard money on the other hand has no box! It provides the flexibility to fit any investor no matter what the deal. 

2. Real estate groups: 

Connect with the investors in your real estate group. They all know some hard money people who they have worked with in the past. This is especially true if they’ve been in this business for more than three years. By connecting with people in the community, you will find hard money lenders who are reliable.

3. Real estate forums: 

Real estate forums are an excellent place to go and ask questions to find out who the hard money lenders are in your area. There is always a need for hard money in real estate investing. 

What do you look for and what questions should you ask?

First and foremost don’t get involved with a hard money lender who has a lot of up front fees. Some may ask for $1,000 to $5,000 down. Don’t go down that path, because they are just collecting fees, not helping investors. Instead, look for people who have experience within your real estate groups and forums. Do your own research to make sure they are funding deals and have some flexibility with their lending. Whether it is a cross lien, second, or even commercial property. It is also important to ask what they will and won’t lend on. Finally, it is important to start working with them and building that bridge. This will help you in the future if you have another deal that needs hard money lending.

Watch our most recent video to find out more about Hard Money vs Banks to discover which lending option is right for you.

We are here to help you with your hard money needs here at Hard Money Mike. Contact us today to find out more.

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Keep Cash Flowing: Alternatives to BRRRR in 2022

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Cash flow for BRRRR could take a big hit in 2022. Here are some alternatives to try.

We’re probably three to six months out from the really cheap homes getting on the market. How can you plan to finance BRRRRs as values go down but loan requirements go up?

BRRRRs are about getting into value-add properties with little to no money down. But as we’ve mentioned, getting into the properties will be the hard part with money tightening.

Will there be any good alternatives to BRRRR in 2022?

Subject Tos As Alternatives to BRRRR

Here’s another way to look at rental properties with a BRRRR spirit:

What if you could take over someone’s loan and house with no money down, no credit or other requirements, 100% financing, and a great rate?

That’s what subject tos are.

You’ll see more and more subject tos popping up soon. Maybe someone bought their home at 100% last year, but values have come down 10-15% so they can’t sell without losing money or putting more in. People don’t want to go through foreclosure, so in a situation like this, they’d be interested in a subject to.

You can take over the mortgage and put the home in your name. You can do it properly, through title, and create a rental property using someone else’s financing.

This method doesn’t require your income, your credit, or any other qualifications. It only requires a secure set-up, and for you to make the payments on the mortgage.

This is a great way to purchase rental properties as an alternative to BRRRR in 2022 if you don’t have leverage.

Owner Carries in 2022

An owner carry can happen when the seller owns a property free and clear. In this situation, the owner takes on the mortgage.

The seller would likely plan to invest the money they get when the house sells. But the stock market is up and down, and banks only offer 2% maximum interest rates in CDs and accounts.

For the owner, carrying the mortgage when they sell to you is a way to double or triple their interest rate, secured by an asset they already know.

For you, an owner carry is easier, cheaper money. You won’t find a 5% interest rate, with 100% financing and no credit check anywhere else.

Open-Minded Financing Alternatives During Inflation

There’s creative financing available in the real estate investment world.

Whether it’s subject tos, owner carries, or OPM relationships, it’s important to look always into your options for doing zero down investments. Especially now that loans are less likely to cover 100% financing, it’s important to stay open to alternatives to BRRRR in 2022.

Read the full article here.

Watch the video here:

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How Will Changing BRRRR Loan Requirements Affect You?

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Lenders are upping the requirements for a BRRRR loan. Here’s what to know to prepare.

BRRRR has two loans – hard money to buy, long-term to refinance. With inflation, both loans will have lower LTVs.

What else should you expect?

Hard Money BRRRR Loan Requirements

Many private money companies – particularly bigger, national lenders – are requiring 20% down.

Hard Money Mike is a little different. We fund using real private money, so our loans aren’t as dictated by federal rates. We still go up to 100% on financing, as long as you’re approved for your long-term loan up-front.

Smaller lenders can give you a better advantage with BRRRR during inflation. But you should still expect many private lenders to offer lower LTVs.

Bank BRRRR Loans with Inflation

Long-term loans are decreasing, making it harder to cash out. Traditional lenders could go down to 70% or 65% LTVs, or just have tougher requirements.

Money is shrinking, so the pot of money available to you on either BRRRR loan is shrinking.

The Plus Side of BRRRR and Inflation

What’s the good in all of this? If you’re in a bad financial position, you’ll have a hard time continuing your real estate career in inflationary times.

But, if you’re in a good position, you’ll be able to find fantastic properties in your pricepoint. And you’ll be able to find them for 20-40% less money than you could a year ago.

Don’t fight what’s happening with the economy – figure out how to use it.

Understand BRRRR loan requirements now. If you get into a BRRRR, fix it fast and refinance fast. Figure out your BRRRR’s long-term loan first before you look for a short-term loan.

Things are changing rapidly in the real estate investment world. Get yourself in the best position to be able to work with it.

Read the full article here.

Watch the video here:

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What You Need to Know About BRRRR In an Inflationary Market

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How does BRRRR change in an inflationary market? Here’s what to expect.

For real estate investing, including BRRRR, inflation means money tightens up.

Money tightening means there’s less money for all real estate investors. The federal government makes money harder to get to slow down spending.

So how can you expect these effects of inflation to impact BRRRR?

How an Inflationary Market Changes BRRRR Lender Requirements

In the lending world, money tightening looks like lower loan-to-values. Maybe your hard money lender used to give you 75% of the anticipated value of the home, but now they’d give 70%.

LTVs are tightening not just on the front-end BRRRR loan, but the back-end refinance as well. Lenders are:

  • Tightening their cash out requirements
  • Offering lower LTVs
  • Raising income requirements
  • Expecting higher down payments
  • Requiring just plain better deals.

A big qualification to focus on is lenders’ credit score requirements. The minimum acceptable credit score has gone up by 20-40 points.

If your credit is on the border, your main priority should be to raise your score. There’s less money out there. You want to be one of the people who can get leverage once property prices go down.

Lenders and Equity in Inflationary Times

Lenders want to make sure they’re lending to the best of the best. They’re concerned with equity.

Prices are going down. So if they lend at 70% LTV, then in 6 months home prices go down 10%, but then that 70% is no longer 70%.

So lenders will be more conservative with their LTVs. Money in general will be more conservative during this time. Eventually, we’ll land at a “new normal,” and everyone in the money world can work off the same level. For now, things are heading down in an unpredictable way, so money will be harder to get.

If you’re investing in BRRRR in an inflationary market, stay aware of the constant changes. Rates have more than doubled this year, LTVs are going down, and the cash flow on your rental properties will take a hit.

Read the full article here.

Watch the video here:

Text: "What's BRRRR in a down market?"

What Does BRRRR Mean In a Down Market?

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Does BRRRR mean the same thing in a declining market and a rising one?

Let’s start with the basics. What does Buy, Rehab, Rent, Refinance, Repeat mean? Your understanding of this real estate investment method will determine your success when inflation hits.

BRRRR comes down to two key factors.

1) Buying Undermarket Properties

Buying undermarket properties is the crux of BRRRR.

This important point has been confusing to people in the last few years. That’s because truly good undermarket properties have been hard to find.

We’ve been seeing people buy at 80-85% of a property’s ARV. In the near future, those values will come down.

Back in 2010, people were able to buy properties for 60-65% of the ARV. We’re hoping that’s where this next market will take real estate investors.

This method means buying undermarket properties. Inflation should make this part easier, with lower priced BRRRR properties coming back.

2) Using a Two-Loan Strategy

The other foundational concept in BRRRR is its two-step loan process.

The whole point of this method is to get into rentable properties with little to no money down. To do this, you need two loans – one to acquire it, and one to hold it long-term.

Once you own the property (using the first loan), you can refinance it using the appraised value (via the second loan).

If you can buy a property undermarket (with private money) and own it, you capture the equity of the house when you refinance it.

Instead of pulling more money from your pocket for your next deal, you can use the equity you create with one BRRRR to buy more real estate – even with inflation.

Learning More About What BRRRR Means

BRRRR means two things: buying undermarket real estate, and utilizing two loans to do it.

We’ve been doing this rental property strategy for over 15 years – before it even had the acronym to go with it! For more on BRRRR fundamentals, check out these YouTube videos, or reach out to us anytime at HardMoneyMike.com.

Read the full article here.

Watch the video here:

Text: "Attention BRRRR Is Not Dead!"

BRRRR Is Not Dead: How to Invest in Real Estate in an Inflation Market

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When inflation hits, BRRRR does not die.

Real estate investment in general is extremely money-dependent. BRRRR in particular totally relies on the availability of funds.

So does that mean BRRRR dies when inflation hits and money tightens?

Absolutely not. You can be successful with BRRRR even during times of uncertainty. But that doesn’t mean BRRRR will look exactly the same as it did in a hot market.

Here’s what to know about BRRRR investments during inflation.

What Does BRRRR Mean?

First, let’s start with the basics. What does BRRRR mean? Your understanding of BRRRR will determine your success when inflation hits.

BRRRR comes down to two key factors.

1) Buying Undermarket Properties

Buying undermarket properties is the crux of BRRRR.

This important point has been confusing to people in the last few years. That’s because truly good undermarket properties have been hard to find.

We’ve been seeing people buy at 80-85% of a property’s ARV. In the near future, those values will come down.

Back in 2010, people were able to buy properties for 60-65% of the ARV. We’re hoping that’s where this next market will take real estate investors.

So, what does BRRRR mean? First of all, it means buying undermarket properties. And with inflation, lower priced BRRRR properties will be coming back.

2) Using a Two-Loan Strategy

The other foundational concept in BRRRR is its two-step loan process.

The whole point of BRRRR is to get into properties with little to no money down. To do this, you need two loans – one to acquire it, and one to hold it long-term. 

Once you own the property (using the first loan), you can refinance it using the appraised value (via the second loan).

If you can buy a property undermarket (with private money) and own it, you capture the equity of the house when you refinance it.

Instead of pulling more money from your pocket for your next deal, you can use the equity you create with one BRRRR to buy more real estate – even with inflation.

Learning More About What BRRRR Means

BRRRR means two things: buying undermarket real estate, and utilizing two loans to do it.

We’ve been doing BRRRR for over 15 years – before this strategy was even called “BRRRR.” For more on BRRRR fundamentals, check out these YouTube videos, or reach out to us anytime at HardMoneyMike.com.

BRRRR In an Inflationary Market

For real estate investors, including BRRRR, inflation means money tightens up.

Money tightening means there’s less money for all real estate investors. The federal government makes money harder to get to slow down spending.

So how can you expect these effects of inflation to impact BRRRR?

How an Inflationary Market Changes BRRRR Lender Requirements

In the lending world, money tightening looks like lower loan-to-values. Maybe your hard money lender used to give you 75% of the anticipated value of the home, but now they’d give 70%. 

LTVs are tightening not just on the front-end BRRRR loan, but the back-end refinance as well. Lenders are:

  • Tightening their cash out requirements
  • Offering lower LTVs
  • Raising income requirements
  • Expecting higher down payments
  • Requiring just plain better deals.

A big qualification to focus on is lenders’ credit score requirements. The minimum acceptable credit score has gone up by 20-40 points. 

If your credit is on the border, your main priority should be to raise your score. There’s less money out there. You want to be one of the people who can get leverage once property prices go down.

BRRRR Lenders and Equity in Inflationary Times

Lenders want to make sure they’re lending to the best of the best. They’re concerned with equity. 

Prices are going down. So if they lend at 70% LTV, then in 6 months home prices go down 10%, but then that 70% is no longer 70%. 

So lenders will be more conservative with their LTVs. Money in general will be more conservative during this time. Eventually, we’ll land at a “new normal,” and everyone in the money world can work off the same level. For now, things are heading down in an unpredictable way, so money will be harder to get.

If you’re investing in BRRRR in an inflationary market, stay aware of the constant changes. Rates have more than doubled this year, LTVs are going down, and the cash flow on your rental properties will take a hit.

New BRRRR Lending Options with Inflation

With rates so good over the last three to four years, all BRRRR investors were looking at one loan product – the 30-year fixed mortgage.

With rates increasing, however, you might need to look beyond the 30-year fixed loan to get into good BRRRR properties. Here are some options that can bridge your properties until rates go down.

ARMs (Adjustable-Rate Mortgages)

You can get three-, five-, or seven-year ARMs. Whichever time length you pick, the rates will be fixed during that period. Afterward, the rates become adjustable.

In rising markets, these loans aren’t that great. In declining markets, though, they can be the perfect loan to bridge you into a rental property.

You can get an ARM for .5-2% lower than a 30-year fixed mortgage. These lower rates can cash flow a property until either prices go up and you can sell, or rates go down and you can refinance.

Interest-Only Loans

With the interest-only BRRRR lending option, you don’t pay any principal for the first ten years. 

An interest-only loan is appealing right now because it keeps cash flowing. Your loan amount doesn’t go down, so it’s not a great option for the long-term. But it is a good lending option to get you into a property during this next market.

40-Year AM (Adjustable Mortgage)

A 40-year AM spreads the loan payments over 40 years instead of the 30 with a traditional fixed mortgage. This adjustable mortgage gives you lower monthly payments… and more cash flow.

What To Keep In Mind with These BRRRR Inflation Lending Options

ARMs give lower rates, 40-year AMs offer lower payments, and interest-only loans postpone the principle.

Keep in mind: these loans won’t help your equity or get a property paid down quickly. But they are good options to get into properties while values are low and funding is tight.

Remember that conditions of BRRRR are ever-changing. Get plugged into the money side of investing, and talk to lenders to see what’s available for you in inflationary times.

BRRRR Loan Requirements with Inflation

BRRRR has two loans – hard money to buy, long-term to refinance. With inflation, both BRRRR loans can expect lower LTVs. What else can you expect?

Hard Money BRRRR Loan Requirements

Many private money companies – particularly bigger, national lenders – are requiring 20% down.

Hard Money Mike is a little different. We fund using real private money, so our loans aren’t as dictated by federal rates. We still go up to 100% on financing, as long as you’re approved for your long-term loan up-front. 

Smaller lenders can give you a better advantage with BRRRR during inflation. But you should still expect many private lenders to offer lower LTVs.

Bank BRRRR Loans with Inflation

Long-term loans are decreasing, making it harder to cash out. Traditional lenders could go down to 70% or 65% LTVs, or just have tougher requirements.

Money is shrinking, so the pot of money available to you on either BRRRR loan is shrinking.

The Plus Side of BRRRR and Inflation

What’s the good in all of this? If you’re in a bad financial position, you’ll have a hard time continuing your real estate career in inflationary times.

But, if you’re in a good position, you’ll be able to find fantastic properties in your pricepoint. And you’ll be able to find them for 20-40% less money than you could a year ago.

Don’t fight what’s happening with the economy – figure out how to use it.

Understand lending requirements now. If you get into a BRRRR, fix it fast and refinance fast. Figure out your BRRRR’s long-term loan first before you look for a short-term loan.

Things are changing rapidly in the real estate investment world. Get yourself in the best position to be able to work with it.

Alternatives to BRRRR in 2022

We’re probably three to six months out from the really cheap homes getting on the market. How can you finance BRRRRs as values go down?

BRRRRs are about getting into value-add properties with little to no money down. But as we’ve mentioned, getting into the properties will be the hard part with money tightening. 

Will there be any good alternatives to BRRRR in 2022?

Subject Tos As an Alternative to BRRRR with Inflation

Here’s another way to look at rental properties with a BRRRR spirit: 

What if you could take over someone’s loan and house with no money down, no credit or other requirements, 100% financing, and a great rate?

That’s what subject tos are.

You’ll see more and more subject tos popping up soon. Maybe someone bought their home at 100% last year, but values have come down 10-15% so they can’t sell without losing money or putting more in. People don’t want to go through foreclosure, so in a situation like this, they’d be interested in a subject to.

You can take over the mortgage and put the home in your name. You can do it properly, through title, and create a rental property using someone else’s financing. 

This method doesn’t require your income, your credit, or any other qualifications. It only requires a secure set-up, and for you to make the payments on the mortgage.

This is a great way to purchase rental properties as an alternative to BRRRR in 2022 if you don’t have leverage.

Owner Carries in 2022

An owner carry can happen when the seller owns a property free and clear. In this situation, the owner takes on the mortgage.

The seller would likely plan to invest the money they get when the house sells. But the stock market is up and down, and banks only offer 2% maximum interest rates in CDs and accounts. 

For the owner, carrying the mortgage when they sell to you is a way to double or triple their interest rate, secured by an asset they already know.

For you, an owner carry is easier, cheaper money. You won’t find a 5% interest rate, with 100% financing and no credit check anywhere else.

Open-Minded Financing Alternatives During Inflation

There’s creative financing available in the real estate investment world. 

Whether it’s subject tos, owner carries, or OPM relationships, it’s important to look always into your options for doing zero down investments. Especially now that BRRRR loans are less likely to cover 100% financing.

BRRRR Is Not Dead During Inflation

BRRRR isn’t dead! But it may look different.

This is the best time to get prepared – before the housing market completely dips. We can help you get ready.

Whether you have questions about setting up subject tos, or you’re wanting to jump into BRRRR when prices drop, we can help. 

Reach out to us on Facebook, or email us at info@hardmoneymike.com

Use us as a resource – this is the time to be money prepared.

Happy Investing.

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What Is a Good BRRRR Property?

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What makes a good BRRRR property? What is it you should be looking for?

A good BRRRR property follows the 75% rule. But that’s not the only criteria you should follow. What else makes a good BRRRR property?

What to Look for in a BRRRR Property

Here are the factors successful BRRRR investors consider in their properties.

Single-family properties

For multi-family or commercial tenants, lenders have different requirements. They often need you to hold your loan for 12 months after purchase (or even 12 after tenants move in). But that timeline doesn’t work well with the BRRRR method. You’ll have a much easier time with single-family homes.

Rent prices

“Knowing your numbers” also means knowing the rent prices in the area of a property. Cash won’t flow on your investment if you’re unable to charge enough rent.

Desirable Areas

Similarly, find properties people want to live in. If you wouldn’t want to spend time there, good renters probably won’t either.

Vacation Rentals

If you’re doing vacation rentals, do the research on:

  • What areas people want to visit
  • What the rates are in the area
  • What third-party booking sites would be most profitable
  • What fix up levels you’ll need
  • Whether there are good hosts or property managers in the area.

Don’t Rush into Bad BRRRR Properties

Beginners fail at BRRRR when they don’t choose properties wisely. Don’t just buy property to buy property. You can own ten bad rentals and make no money. BRRRR should be a system that builds cash flow.

We see people do one or two BRRRRs then stop because it’s not what they expected. They put too much money in, or the area isn’t good, or their renters aren’t paying, or the rent isn’t enough to generate cash flow.

In short, these issues aren’t BRRRR’s fault. A prepared investor, beginner or experienced, can always succeed with BRRRR properties.

Read the full article here.

Watch the video here:

Text: "BRRRR Method for Beginners"

The BRRRR Method for Beginners: Setting Up for Success

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There are two ways beginners can set themselves up for success using the BRRRR method: focusing on the numbers and putting together a team.

BRRRR Numbers for Beginners

The BRRRR method is all about numbers. Beginners sometimes fail because they make a deal emotional and bid the property up. When buying properties, you have to stick to the math.

Your North Star for BRRRR investments is the 75% rule – the best properties only cost 75% of the after repair value.

The reason for the 75% rule is because that’s the number banks will rate-and-term refinance a conventional loan for. When you can do this type of refinance, you can finish up the deal without putting any of your own money in.

It’s smart to shop around for banks for your refinance loan, though. Some banks may allow you to buy up to 85% of the ARV, under certain conditions.

Setting up a Team for the BRRRR Method

So you need good, low-priced properties. And the best way to find them is to build a good team. Especially as a beginner, you’ll need to know several of these kinds of people:

Realtors and Wholesalers

Knowing wholesalers and realtors can help you locate better properties and close with better deals.

Lenders

You’ll need private lenders for bridge loans and another lender for the long-term refinanced loan. Having relationships with lenders ahead of time speeds up a closing and can earn you a lower price.

Contractors

Ideally, from closing to refinance, BRRRRs are completed in 90 days. This means you’ll need contractors at-the-ready who can work efficiently and reliably to fix up your properties.

Property Managers

If you want your BRRRRs to be passive after the refinance, find a good property manager. A common beginner’s mistake is to take the first tenant who shows an interest – without any background checks or other renting requirements.

A good property manager can both find you better tenants and manage them for you. Many investors overlook this member of their team, but it can truly make or break your BRRRR experience.

Knowing several people from each of these categories gives you options to customize for each of your deals. Putting together a good and broad team will make the BRRRR method much easier and smoother — especially for a beginner.

Read the full article here.

Watch the video here: