How to use the BRRRR Method to Buy Rentals

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  • Great article, Mark.

    I’m about to buy my first rental (small MF) and am trying to figure out a way to pay back the loan for downpayment I might be getting from a family member. Am I understanding it correctly that if after rehab and seasoning I can get 75% of the ARV and that this new loan would replace the original mortgage? Or would it be 75% of ARV minus the original loan amount?

    Thank you
    Paul

    • Mark Ferguson says:

      You would have to pay off any loans you have on the property when you refinance.

  • Hi Mark,

    I’ve given this blog a shout out in my latest post, 10 Ways To Raise Money For A Deposit For An Investment Property – http://bit.ly/raiseadeposit. I think the BRRRR method would be useful for most of my readers.

    Thanks

    Owen

  • The home I currently live in I own outright. Could I take a home equity loan out on it and use that money for a down payment and repairs on an investment property? Then rent it , wait the seasoning period and take a home equity loan on the rental ?

  • Cynthia Gillespie says:

    We’re considering a cash out refi on another one of our rentals, but this time the interest rate will increase from 5.1% to 5.875%. If we take the full amount (~40k) that we can, the mortgage will increase by about $280. We’d still have a positive cash flow of about $300 since we already plan to raise the rent in October. The catcher is that we don’t have another property to invest in yet. When we did this last year..we refi and closed on a new purchase within 2 days of each other. Right now we’re concerned that rates may increase more. What would you do? Refi now Or wait until you’ve found the new property or would you stay put since the rate will be increasing?

    • Mark Ferguson says:

      I would probably refi now

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