how might the coronavirus affect the BRRRR Strategy hey what's going on guys
it's Daniel one half of the Kwak brothers and in this video I'm gonna
talk about one of my favorite things and strategies to talk about the BRRRR
strategy now of course we all know that this strategy stands for bi rehab rent
refinance and repeat right it's got no vowels it's only consonants but before
we talk about how this coronavirus pandemic can affect using the BRRRR
strategy and I do have a couple things for you guys to keep in mind and also
possibly one way to make it better in these times of craziness but before we
go on of course guys do not forget to Like subscribe and share this video
again it may be helpful to somebody else and it really helps us with the
algorithms in terms of pushing our videos too many people as we possibly
can so let's go ahead and talk about the BRRRR strategy and well I posted a
couple videos already on this channel talking about the BRRRR and I would
consider myself to be a realist you know I'm not a pessimist I'm not an
optimist but with any real estate strategy whether it's the BRRRR whether
it's house hacking weather whatever it is I like to be a realist because it
many times you look at historically speaking with a lot of different real
estate investors and even in my own personal experience do you lose actually
more money being optimistic than you do being pessimistic or of course being a
realist so I love to be a realist on any strategy whether it's the BRRRR whether
it's not so I'm gonna share with you guys three things that I think that all
of us including myself should keep in mind if we are going to do the BRRRR
strategy right now during these times of pandemic with everything that's going on
with the stock market the economy and of course the coronavirus so number one
thing we got to keep in mind that the process of purchasing and closing on a
home may be slowed down now what does this mean for people who use the
strategy well number one it most likely means that if you're going to use
institutional lending there is most likely going to be holding cost or cost
related to having that financing be longer than what it actually is and what
I'm seeing right now we're talking to a lot of my realtor friends and seeing
what's going on in the market is that the process of buying and closing
on a home is drastically slowing down now that may be contributed from the
fact that a lot of people for on Title companies are working from home a lot of
people have fear a lot of people have anxiety and of course whenever you have
fear and anxiety in any market or any investment class that's going to slow
things down and allow people to move at a speed of caution so again guys if you
guys have financing and capital that costs a lot more the longer you hold on
to it keep that in mind that you may have a longer process in purchasing
buying and closing on that property that you're looking to do the BRRRR strategy
with number two it may take a lot longer as well for the loan processing and
obviously I say that because our channel is predominantly very popular with the
HELOC strategy so we know a thing or two about working with the banks
now obviously refinancing and working with the banks is a huge part of the
BRRRR strategy and the coronavirus surely has done its effect on the
market it's almost like the economy has the coronavirus and is coughing and
begging for hand sanitizer and toilet paper now here's a good thing as well if
you want to increase the value of the home just TP it right it's a little joke
there for you but in all seriousness guys when you're using the BRRRR
strategy and you're looking to do it in the midst of this coronavirus pandemic
don't forget that it may take a little longer for you to process that loan
which again goes back to point number one where that cost of capital may
increase just a little bit so don't forget to put that into your cost guys
and also your holding costs as well as you're looking to refinance because well
you can't refinance something that you don't have ownership in so again guys
put it into your numbers that your taxes insurance and your overall holding cost
maybe a little extra month or possibly an extra two months because of what's
going on with the coronavirus now the last and final third suggestion then for
us to keep in mind is actually is something that's possibly an improvement
a possible slight change that I would make to doing the BRRRR strategy in
these times and it's the fact that maybe instead of renting it out to your tenant
perhaps you would suggest something called a lease option now a lease option
is something that it's a bit of a unique thing it's actually an acquisition
strategy well you're a tenant whether you're an owner
but a lease is simply a Lea's lease option is simply a lease with an option
to purchase at a future date so this works in both ways it possibly it may be
a win-win situation a tenant might possibly be fearful of
having home ownership right now because of you know turbulent times going on
with the economy so you're giving them the benefit in the positivity of being
able to buy at another time now having said that because of the low rates and
because of what's going on right now with the economy and the coronavirus now
it may be beneficial for you to buy at another time because well as we all know
in most cities a lot of properties under $250,000 are in very very high demand
you know a lot of people want to buy homes right now they want to refinance
because we're at historical record lows with the rates so locking in a date for
another time to buy a market at another time may be beneficial and well with the
lease option there is a possibility of the tenant being able to pay off a
little bit of equity so for example if they have a lease payment of $1,000 a
hundred dollars maybe going towards the purchase of their future home I love
that idea because it gives more incentive for the renter to pay their
lease instead of their rent moreso than not because a part of their lease
payment is actually going towards their future it's actually going towards
something that they have to pay a little less in the future then now whereas if
you have a normal renter and they're paying rent in their mind their rent is
going away it's going somewhere completely that's not in their bank
account they're never gonna see that money ever again so they may not be as
incentivized to pay that rent and of course there's a lot of crazy things
going on right now with landlords and tenants right now in the midst of this
coronavirus pandemic so again guys three things for you guys to keep in mind
don't forget to Like and subscribe and share this video have a lot of love for
all of you stay safe out there I'll see you guys in the next one