The topic of diversity, equity and inclusion tops the priority list of major organizations’ strategic plans. However, there’s more to DEI than gender and ethnicity. An inclusive workplace also means your organization is welcoming and well-suited for individuals with disabilities, too.

While social consciousness is reason enough for companies to hire disabled employees, there’s another one these profit-seeking entities will find compelling: an improved bottom line. Companies that onboard team members with disabilities benefit from special skills, improved collaboration capabilities and increased marketability. When looking to add to your roster, consider these three ways employees with disabilities can give your business a competitive leg up.

1. You’ll Get Better Work From Team Members With Special Strengths

Job satisfaction is key to employee productivity, but satisfaction is more than just job fit based on one’s education. Job fit encompasses natural tendencies, preferences and the unique way an individual thinks and experiences the world.

Individuals with disabilities learn how to navigate a landscape that doesn’t often keep their needs in mind. However, it’s that type of adaptability that can enable them to fulfill business needs in better ways. For example, Harvard Business Review reports that companies are finding customer service reps with disabilities well suited to soothing angry customers. Their distinctly empathetic approach and problem-solving savvy leads to higher customer satisfaction compared to typically abled CS agents.

Beyond empathy and adaptability, other disability-related skills are worth noting. A person who is blind or has low vision may be well-suited for roles requiring mastery of other senses. Individuals with autism often excel in jobs that demand pattern recognition, extensive focus and attention to detail. Technology roles like cybersecurity and software testing need people whose vigilance stands at the ready.

2. You Can Improve Your Company Culture in Profit-Yielding Ways

Company culture can be a nebulous concept, but business leaders know how essential a good one is to achieving high performance. That same HBR report notes that employing individuals with disabilities can improve company culture in three key respects: collaboration, motivation, and retention.

Collaboration is vital to team success, but achieving it is no cakewalk. Healthy collaboration requires people to keep their egos in check; it also demands psychological safety. Employees with disabilities appear to encourage both. By occasionally requiring additional support, they prompt their fellow team members to offer help more frequently. Furthermore, they make it more acceptable to ask for help, fostering a more cooperative environment overall.

When it comes to motivation, it’s not the needs of disabled team members but rather their strengths that make the difference. Until they work with colleagues with disabilities, many people aren’t aware of the obstacles these individuals routinely overcome. Seeing their co-workers excel despite the barriers in their way can motivate typically abled employees to up their game.

Finally, there’s the matter of retention. Business leaders know that frequent turnover is both costly and bad for team morale. Perhaps because of their sadly high historic unemployment rate, disabled individuals make very loyal employees. Once you hire them, you’re likely to benefit from their skills and collaborative capabilities for a long time to come.

3. Disabled Employees Help You Reach More Customers and Cement Their Loyalty

A diverse team naturally brings in different perspectives and lived experiences, and employees with disabilities can offer valuable insights. An individual who uses a wheelchair might mention that your recent marketing campaigns have inadvertently skewed ableist. She could offer ideas to develop more inclusive and appealing campaigns that just might change the game.

Simple representation matters, too. People with disabilities and their friends and family form a sizable market segment. Companies have discovered that a visible commitment to hiring disabled employees attracts customers with disabilities—and their loved ones. When a disabled customer is served by someone who faces some of the same issues they do, it creates a lasting bond with a brand.

Nor are these bonds limited to those in the disabled community. Experiments by London Business School researchers showed that hiring people with disabilities can become a strong selling point for a business. When consumers learned that a product was made by disabled employees, they liked the company more. That, in turn, made them inclined to pay a premium for the product and more apt to give the company repeat business.

Creating a High-Performing Team of Diverse Players

Your business has a variety of unique needs, and your team’s makeup should be just as unique. With all the competitive advantages employees with disabilities offer, they need to be part of your talent mix.

Make a concerted effort to enhance your recruitment approach to attract individuals with disabilities and modify your business processes as necessary to meet their needs. Show up at targeted hiring events and network with those in the disability community, building relationships and sharing opportunities. By recruiting diverse talent, upgrading your operations and nurturing your people, your diverse team will give you the competitive advantage you seek.

Claiming tax deductions on homeowners association fees allows property investors to reduce the amount they pay on taxes. But you may wonder if all HOA fees are tax deductible on your primary residence or second home, or if you own an investment property.

Some HOA fees qualify as a tax deduction, but only if HOA dues relate to a business expense.

Are HOA fees tax deductible for your home? This article explains when homeowners can deduct fees paid on their investment properties, second homes, and rental properties.

What Are HOA Fees?

Homeowners associations charge fees to cover expenses relating to the maintenance and upkeep of communal areas. Therefore, homeowners of properties in an HOA community must pay regular dues to the association.

Typically, HOA fees cover the following expenses:

• Trash removal
• Landscaping
• Security in multifamily properties or gated communities
• Utility bills for communal areas
• Snow removal
• General upkeep
• Insurance policy for common areas
• Cleaning
• Building maintenance

Additionally, part of the HOA fee may go toward a fund for emergency expenses, capital improvements, and planned upgrades.

Sometimes, a special assessment may be required in case of unexpected expenses. For example, this commonly happens if the homeowners association lacks sufficient funds to complete a project. Other situations when special assessments are necessary include unforeseen emergencies, major repairs, and capital improvements.

Is It Possible to Deduct HOA Fees From Your Taxes on a Private Home?

Most homeowners cannot deduct HOA fees for their main residence on their tax returns. Even though the HOA fee adds to your monthly housing payments, the IRS views the payment as a personal expense to a private entity. Unlike property taxes, mortgage interest, and medical-related home improvements, you cannot use the homeowners fee to reduce the amount you pay in taxes.

However, a few exceptions exist when HOA fees classify as tax-deductible expenses.

When Are HOA Fees Tax-Deductible?

HOA dues are tax-deductible when you can write them off as a business expense. For example, fees associated with an investment vacation property are tax-deductible. Additionally, you may claim a portion of HOA dues if you work from home.

At what other times are HOA fees tax-deductible? Here are circumstances when lowering your tax bill by deducting HOA fees may be possible.

You run a business from home

You can deduct HOA fees if you are self-employed and work from home. The size of the deduction is based on the percentage of space your home office or store inventory occupies. For example, suppose your office takes up 20% of your home. In that case, you can deduct 20% of your HOA dues.

However, there are a few caveats when making a home office deduction. Here are a few things to keep in mind:

• Your home must be the primary place of business, where most of your administrative tasks occur.
• The space you use for a home office must be the entire room or a dedicated space. A kitchen counter or couch doesn’t count as a dedicated workspace.
• HOA costs are nondeductible if a company employs you to work remotely from home.

Therefore, when tax season comes along, be sure to include the appropriate portion of your homeowners fee in your tax return. However, it’s always a good idea to consult a tax professional when including expenses connected to running a business from home.

Tax-deductible HOA dues on a rental property

HOA fees are deductible if you use your home as a rental property. When you own an investment asset you rent out, the IRS considers all expenses—including HOA fees—as a rental expense. Therefore, you can claim 100% of HOA costs if the property is exclusively a rental unit.

HOA dues are also tax-deductible if you rent out a portion of your home. For example, suppose you rent a basement apartment or a bedroom to tenants. In that case, you can deduct a portion of the HOA costs proportionate to the rented space.

Apart from the deduction for homeowners association fees, you can also write off the following expenses on a rental property:

• The cost of home repairs
• Real estate taxes
• Mortgage interest
• Depreciation
• Advertising
• Most other operating expenses

Deduct HOA fees if you have a vacation home

Certain rules apply if you own a vacation property that you rent out occasionally. You can deduct fees in line with the percentage of time the property is used as a rental home.

For example, suppose you live in your vacation home for five or six weeks of the year. That means you can deduct 90% of the expenses because you only occupy the property for 10% of the year.

Tax-deductible condo fees

Condo fees work on the same principle as HOA fees. In this case, the condo owners association (COA) is the private entity that charges membership fees. Typically, COA fees are used like dues paid to a homeowners association. Additionally, the same rules apply for condo fees as for HOA charges.

Are HOA Dues Tax-Deductible for Special Assessments?

HOA capital improvement assessments are nondeductible for many homeowners. Capital improvements are expenses to increase the overall value of the homeowners association’s assets. They can include energy-efficient upgrades, construction of new amenities, or major renovations.

As a general rule, you cannot deduct these expenses unless the home is a rental home, or you have a home office.

Of course, capital improvements to the HOA assets will have a positive knock-on effect on your home’s value. Therefore, you may be liable for less in capital gains taxes when you sell your home.

How to Deduct HOA Fees?

The way to deduct fees paid to an HOA depends on your circumstances. Landlords list rental income, property taxes, and HOA dues in Part 1 of the Schedule E. Most homeowners who want to deduct payments to their HOA based on a home office include the amount on Form 1040, Schedule C and Form 8829.

Deducting HOA fees for landlords

The IRS views HOA fees on investment properties as maintenance costs. Therefore, you can deduct 100% of the total amount paid to the homeowners or condo association. When submitting your tax return, you include the total in Schedule E (form 1040).

If the rental property is a vacation home, you can deduct the proportion of fees when you rent the property. For example, suppose you rent it out for nine months of the year. You can write off 75% of the HOA fees in that case.

Deducting HOA fees for homeowners with a home office

Working out tax-deductible HOA dues based on home office space can be tricky. First, determine if you qualify for a home office tax deduction. If eligible, you can write off expenses equivalent to the percentage of space your home office occupies.

In addition to HOA charges, you can typically include a percentage of the following expenses on your Schedule C form:

• Interest on mortgage payments
• Utilities
• Home repairs (but not home improvements)
• Property taxes

Additionally, you must determine if you want to use the regular method or the simplified method to claim a deduction. Here’s what each means:

• Regular method: You must divide the home office expenses between business and personal use.
• Simplified method: This is calculated at a rate of $5 per square foot up to 300 square feet. It reduces the paperwork and recordkeeping for small businesses.

Are HOA Fees Tax Deductible? A Takeaway

Depending on your circumstances, you can claim HOA expenses from your taxes. If you own a rental property or have a home office, you can claim some of these expenses as deductions on your tax return.

Reducing your tax liability is one of the key advantages of investing in real estate. Investment property owners can take advantage of many tax breaks while, at the same time, enjoying passive income and property appreciation.

When considering whether to claim HOA fees on your tax return, it always pays to get personalized advice from a tax professional.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

The work world looks vastly different from what it did just a few years ago—with the pandemic forcing many employees and employers to adapt to remote work or else shut their doors potentially for good. And while some companies have made attempts to return their work environments back to a pre-pandemic office structure, many employees have come to appreciate the benefits of a remote-work lifestyle and have shifted their expectations around what they will and will not accept in the workplace.

This evolving attitude, as well as a number of other factors, has made it difficult for some companies to find the talent they need to continue prospering in the market. Here, eight members of Young Entrepreneur Council elaborate on these factors and discuss what employers can do to not only make finding talent easier but also retain that talent once they’ve been brought on board.

1. Ensuring Value Alignment

The hardest thing about finding talent is making sure that the talent aligns with your company values and that people really understand the value you add to the market. That’s why having a great careers page on your website is really important—though most companies completely ignore this. Having a great careers page can help potential employees understand how they fit in and make it more likely that you will connect. – Joe Apfelbaum, Ajax Union

2. Adapting To Shifting Expectations

Finding good talent today is challenging due to shifting job seeker expectations regarding work-life balance, culture and social responsibility. To attract talent, companies should align with these values, offer flexible work conditions and demonstrate commitment to social causes. Leveraging digital recruitment strategies can also widen the talent pool and connect you with like-minded candidates. – Kyle Goguen, Pawstruck

3. Connecting With Candidates Directly

The hardest part about finding good talent is being able to connect with candidates directly. Often, candidates don’t update their online profiles or actively check messages recruiters use to reach out. Companies can do their part to make it easier for candidates by not using complicated portals that require both an engaging online presence and personal information that must be entered twice. – Jack Perkins, CFO Hub

4. Earning Employee Loyalty

The hardest part about finding good talent today is meeting the expectations of the workforce. Loyalty to the company is almost nonexistent, as employees are highly likely to switch companies as soon as they get a better offer. However, one way to find talent easily is to have flexible working hours. Allowing people to work at their own pace to ensure work-life balance is a highly valued perk today. – Stephanie Wells, Formidable Forms

5. Navigating Entrepreneurship Culture

I’d say the hardest part about finding good talent today is navigating the entrepreneurship culture, as the industry’s top talent often prefers to work on their own gig rather than work for someone else. In this scenario, offering an option to work remotely may help you find the right fit for the job, as you get to leverage their skills and they’ll have the freedom to work on their side hustle. It’s a win-win situation. – Chris Klosowski, Easy Digital Downloads

6. Competing With Other Hiring Businesses

The most difficult aspect of discovering good talent nowadays is the intense competition in the employment market. Outstanding candidates are in high demand, making it difficult to attract and retain them. Businesses should prioritize developing a great employer brand, delivering competitive compensation and benefits packages and cultivating a good and inclusive work culture. – Sujay Pawar, CartFlows

7. Sifting Through The Fluff

In my opinion, the hardest part about finding good talent is recognizing whether someone is adding fluff to their resume or whether they are actually as skilled as they claim. An easy way for companies to sort through applications and discover talented individuals is to give applicants paid tests to complete before they’re hired so you can assess their skills. – Daman Jeet Singh, FunnelKit

8. Navigating A Global Talent Pool

The hardest part about finding good talent today is navigating the vast talent pool that has expanded globally due to remote work models. Companies can simplify this process by using artificial intelligence and data analytics in recruitment, building a strong employer brand and leveraging networking and employee referrals. – Vikas Agrawal, Infobrandz

It’s common knowledge that there’s been a shortage of homes for sale for some time. Part of it is due to chronic underbuilding in the days since the housing crash, but lately, higher mortgage rates, which now hover just below 7%, according to Freddie Mac, are also an issue.

It all boils down to the record-low interest rates that most homeowners are holding on to. According to Zillow, a whopping 80% of homeowners currently have rates under 5%, and 1 in 3 even have rates below 3%. 

For those homeowners, selling a home in today’s market means trading up for a much higher interest rate—and likely giving up a big chunk of their sale profits in the process. In fact, the premise is so unappealing that a recent Zillow survey shows that homeowners with rates under 5% are half as likely to sell their home in the next few years. Of those with rates over 5%, though, nearly 40% say they have plans to sell soon. 

“These homeowners face no or relatively little financial disincentive to trading their current mortgage for a new one,” wrote Zillow’s Treva Tam. “On the flip side, homeowners already paying a lower interest rate may be reluctant.”

What It Means for the Market

The Zillow findings aren’t too surprising, but they don’t bode well for the market’s inventory problem—nor for home prices, both now and later (depending on what side of the closing table you’re on). 

According to the survey, a mere 23% of all homeowners are considering selling their home in the next three years—and that includes people who already have their homes listed right now. 

Though new home construction has picked up steam in recent months, the lack of existing inventory hitting the market—both now and presumably down the line—will likely keep home prices elevated for some time.

Of course, if mortgage rates ever come down, then the listings will follow. Once rates dip below that 5% mark—as Zillow’s data suggests—more homeowners will be more willing to put their house on the market. 

Rates that low probably aren’t in the cards anytime soon, however. Though the Mortgage Bankers Association’s current forecast does call for a 4.9% average 30-year mortgage rate by the end of 2024, they’re an outlier—and both Fannie Mae and the National Association of Realtors think rates will be much higher. 

Even Zillow doesn’t expect it any time soon. As Orphe Divounguy, senior economist at Zillow Home Loans, put it, “We expect mortgage rates may notch down slightly as inflation comes under control, but they are unlikely to return to 5% in the near future.”

Adjusting to Higher Rates

Not all consumers have the luxury of waiting around for rates to drop. Job changes, new babies, and major life events will still push some consumers into selling their properties or buying new ones—even with today’s higher rates. 

As that happens, it could bring things more into balance. Fewer homeowners will have those bargain-basement rates, and existing inventory will, therefore, be more likely to hit the market. This could potentially keep home prices (which jumped steadily over the last four months) from rising or even begin to fall. 

The real key factor will be how inventory shakes out. And with the market currently 4.3 million homes short of demand, according to Zillow, there’s a lot of progress to be made.

“Over time, homeowners will likely accept higher rates as the new normal,” Divounguy says. “But until then, the market could remain challenging for home shoppers, who will see fewer options and higher prices.”

Final Thoughts

What is important to note is that the answers to this survey indicate that the number of homeowners willing to list their property on the market is growing, even with the context that rates will potentially stay in similar territory. Could that mean that the “lock-in” effect could come to an end sooner than later? The reality is that people will adjust to the economic environment, and if that means giving up a lower rate for the sake of moving, they might just do that. But does that mean a growing share of listings, coupled with demand still being suppressed by mortgage rates, equals another correction?

It’s way too early to tell, but it’s possible.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

When your main gig isn’t filling your cup, you might be looking elsewhere for what’s missing. Whether it’s milestones, revenue or just excitement, perhaps a side hustle is the way to go. If your full time venture has hit a ceiling that means it’s no longer worth your time, or you’re looking to change focus and transition away, make sure you’re prepared for venture number two by preparing well in advance.

Use ChatGPT for advice and guidance on your side hustle journey and see if you learn anything new. Even if you have a plan, its responses could uncover ways forward you hadn’t considered.

Start a side hustle with these insightful ChatGPT prompts

Assess your resources

Start where you are and use what you have, as the saying goes. Anything else doesn’t make sense, so get a grasp on your existing resources and build from there. Take an inventory of what they are and prompt ChatGPT for its assessment. You might be underplaying the assets you already have in front of you, when you should be leading with them.

“Here are the resources I already have available: [include details of any savings or income, time available, network members, specialist skills or knowledge], as well as strong personality traits of [describe the strengths of your personality, for example hard working, tenacious, confident]. Can you list my top five resources in order of how useful they will be in starting a side hustle? For each one, explain why it’s useful and what I should do to make the most of it.”

Get business ideas

Ideas are common, but extraordinary ones are not. The best idea is one that you feel excited to get going with. It’s aligned with your values and fits with the vision you hold for who you are in the world. The side hustle idea that’s right for you solves a specific problem for a specific audience, who will be primed to buy.

“My main interests and passions are [describe your main interests and passions] and my network includes people who [describe the demographics of people in your network]. Given what you know about my resources, can you suggest 10 side hustle ideas I could start? My goal is to spend [number] hours per week on this project and for it to bring in [amount of money] per [frequency] within [goal for achieving this revenue.]”

Plan the first few steps

You know how you’re best-placed to serve and you suspect you’re onto something with how you’re going to do it. Next is making the roadmap to build your venture into reality. Select your favourite idea (which might be one you already had) and get ChatGPT to break this down in a step-by-step process, so you know exactly how to begin. Add to the prompt with things you’ve thought of yourself, and ask for clarification if any part isn’t clear. Keep pushing back until you have your perfect plan.

“I’d like to explore this idea in more detail: [include the idea you like the best]. Outline a 10-point plan that details the exact steps I should take, with an explainer for each, to make this business a success. Base this on me working [number of hours per day or week] on this venture.”

Create financial goals

If you’re starting a side hustle because you want to earn more money, get a grasp on how that looks in practice. Whether you want to top up your income, earn enough to quit your job, or your side project is a passion project that just needs to break even, figure out exactly what you need to hit to stay in the game. The plan isn’t that this side hustle is propped up by your main venture, the plan is that it outperforms it by magnitudes.

“Given my financial goals of [amount of money] per [frequency] within [goal for achieving this revenue], suggest metrics that I should track to ensure I am on target for this goal. Include how often I should report on this metric. Finally, include a revenue and profit forecast by month, in line with my main financial goal.”

Get the confidence to go for it

With the safety net of your main role or business firmly in place, the risks to you of starting a side project are low. Rock bottom is an unlikely scenario. But it’s easy to forget that if you’re surrounded by the negative stories of the media and naysayers. Ask ChatGPT to be your cheerleader, your biggest fan and the voice of reason that helps you tame that voice in your head that tells you it won’t work.

“Play the role of a motivational coach. I am someone who is planning to start a side hustle but I’m having doubts. I’m questioning my abilities and I’m feeling afraid of taking risks, failing, and embarrassing myself. Give me the confidence that I can succeed in my side hustle. Include what you know about my strengths to reinforce what you say.”

Get help starting a side hustle with ChatGPT

Prepare to make a success of your second business with these five prompts. Assess your resources, get ideas, and receive the plan for turning them into revenue. Figure out your revenue goals by month and get the courage to take action. There’s no excuse to not move forward when your side project sidekick is standing by.

This article is presented by Easy Street Capital. Read our editorial guidelines for more information.

The BRRRR method of real estate investing continues to be one of the most-used strategies in 2023. With interest rates elevated yet property values remaining resilient, finding cash flow with a reasonable down payment is an incredible challenge.  

However, the BRRRR strategy (buy, rehab, rent, refinance, repeat) makes sense for a lot of investors, as value can be created through forced appreciation (renovations) and capital recycled through cash-out refinances. With rates high and competition fierce, nailing the financing piece of the BRRRR method has never been more important.  

This article will explore the loan options facing BRRRR strategy investors, with a focus on the all-important third R: refinance. Specifically, we’ll compare DSCR refinance loans to traditional options, namely bank or conventional loans.

The Evolution of Options

With the publication of Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple by David Greene in 2019, the BRRRR method was publicized to real estate investors, and real estate investing was never the same. In the book, each step of the BRRRR method is meticulously explained, and it’s jam-packed with advice, tips, and information, including two chapters all about the crucial refinance portion of the process.

In the book, Greene details all the different options for refinancing, along with the pros, cons, and details of each. However, DSCR loans are not mentioned.

Why? While DSCR loans existed back in 2019, the product was just getting started and not widely developed or available. A lot can change in just four years (as everyone on the planet who lived through 2019-2023 knows).  

Five years ago, BRRRR method investors were generally limited to conventional loans (under government-sponsored enterprise, or GSE, rules and limits), bank portfolio lenders, or other niche options like private money (individuals). While these options still remain solid options for many investors, the growth and development of DSCR loans has truly changed the landscape for BRRRR strategy real estate investors.

Beginning BRRRR: Buy in Cash, or Use Hard Money?

While refinancing is an important part of BRRRR and can make or break many BRRRR method deals, the first two steps, namely buying and rehabbing, are vital to success. Finding deals is one of the most important skills a real estate investor can have, but it’s not always enough. Finding a deal and closing a deal are two different things—making sure you can move fast and execute a close (and beat out potential competitors) is a prerequisite to a successful BRRRR (if someone else is able to purchase the property, your BRRRR investment is dead).

Many BRRRR method investors make property purchases in cash, whether due to not being aware of other options (using a hard money loan) or thinking it’s better financially. In the BRRRR book, Greene generally limits the BRRRR strategy to cash purchases, but hard money loans, or loans that are generally short-term and higher-rate, have also evolved a lot over the last four years.  

For one, while the hard money terms example used in the book is 14% interest rates and four origination points, many hard money loans today will have fees that are half of that and significantly lower interest rates. Additionally, the internet continues to democratize access to information, and hard money lenders can be vetted and compared much more efficiently online, such as here on BiggerPockets.

Advantages of using cash for BRRRR

What are some advantages of using cash to purchase and fund renovations for BRRRR projects?

• Lower interest cost: Simply, funding your purchases and renovations yourself saves you interest expense—typically a few months’ worth.
• More competitive offers: Many sellers prefer cash offers over ones with financing because there is more certainty of closing (financing will typically require lender diligence periods, which causes time, such as waiting for an appraiser to visit the property and produce a report, as well as risks of falling through—that same appraiser finding an issue, etc.).
• Less risk: Without interest or looming maturity dates, investors are less stressed if rehabs or the renting process are delayed.

Advantages of using hard money loans for BRRRR

However, with these advantages, there are many benefits of using hard money loans to finance the first two steps of the BRRRR method that outweigh the cons for many real estate investors. These include:

• Get started faster: Let’s face it—while reading articles like this and absorbing all the podcasts and books on real estate investing is great, jumping in and actually doing your first deal is critical, and what you learn from experience often dwarfs knowledge from all the research sources by far. By buying and rehabbing with only cash, that means saving up all the funds needed for both—often a minimum of $75,000 to $100,000 at current market prices. Most people, let alone real estate investing beginners, don’t have that kind of money lying around and can only get started on the financial freedom journey by getting a good chunk of these costs financed by a hard money lender (typically up to 85% or 90% for beginners).
• Faster portfolio growth: A key advantage of the BRRRR method is to use the smallest amount of capital to build a portfolio as fast as possible. With the power of compounding, doing three deals at a time versus one at a time can mean the difference of hundreds of properties in a portfolio. As such, an investor funding a $120,000 BRRRR buy and rehab in all cash grows the portfolio much slower than an investor who executes three $120,000 projects with $40,000 invested in each (with hard money financing of the remaining $80,000). 
• Higher leverage on the refinance: Believe it or not, a BRRRR method investor who refinances a hard money loan is looked at more favorably by a lender than someone who bought in all cash. While this may not seem logical, many lenders will give more favorable terms to what is called a rate-term refinance versus a cash-out refinance, the difference typically defined as whether you take home greater than $2,000 at closing of the refinance loan (cash-out) or not (rate-term). Many lenders have seasoning, loan amount, and LTV restrictions that are applied to BRRRR method investors only on cash-out refinances, and these don’t apply if it’s a rate-term refinance.

Additionally, some hard money lenders don’t require appraisals for the purchase of a BRRRR property. This allows a BRRRR method investor to be competitive with cash offers and eliminates one of cash buyers’ main advantages.

Refinancing: Conventional or Portfolio Lenders vs. DSCR

There are multiple considerations to optimize the refinancing portion of the BRRRR method. Generally, for the optimal refinance, these are top of mind for BRRRR strategy investors:

• Return of capital: The key “secret sauce” of the BRRRR method is to build portfolios using the same capital over and over—which relies on getting your basis (or more) back on the refinance, where basis refers to the money you invested in the property (down payment and cash used for renovations).
• Speed: Refinance lenders use the term “seasoning” to refer to the amount of time (typically in months) between the purchase of the property and the refinance. Velocity of money, or speed in which you can complete a BRRRR investment and repeat, is key to success, and refinancing with the shortest seasoning requirements is highly important.
• Loan terms and interest: Cash flow is also an important consideration for a refinanced rental property, so attaining a low interest rate, as well as other aspects of loan structure (term, amortization, or interest only, etc.), plays a big role.

Generally, there are three main refinance options for BRRRR method investors: 

• Conventional loans
• Bank/credit union loans
• DSCR loans

Conventional loans are generally defined as loans originated under GSE (Fannie Mae/Freddie Mac) rules and guidelines and securitized. Bank and credit union loans are generally defined as “portfolio lenders,” or lenders that hold the loans on their balance sheets. DSCR loans are loans issued by private lenders with proprietary and differentiated rules and guidelines and are typically included in “non-QM” securitizations.

The advantage of conventional refinance loans is that they typically have the lowest interest rates and fees. However, BRRRR method investors have run into a lot of trouble using conventional loans for refinances for multiple reasons, especially in 2023.  

One issue is the challenge of qualifying, as conventional loans will have DTI requirements, income requirements, loan size limits, and loan amount limits that investors looking to scale a portfolio run into as soon as the financial freedom snowball starts rolling. But most importantly, in April 2023, Fannie Mae changed cash-out refinance seasoning requirements from six months to a full year. This is hugely problematic for the “speed” aspect of BRRRR investing—drastically slowing down the returns and velocity of capital for BRRRR investors using conventional loans.

Portfolio lenders are another option, and they typically offer competitive rates and fees as well. Banks and credit unions can also offer flexibility for investors that engage in strong relationship-building strategies, offering discounts and solid loans in exchange for borrowers willing to use the institution for other purposes (savings accounts, etc.). However, downsides include regulatory restrictions on bank lending, many institutions that restrict concentration and geographies, and other headaches and issues that arise when dealing with a slower-moving bank.

DSCR loans are the option that has completely changed the BRRRR lending landscape in the last few years. While DSCR loans tend to have interest rates a bit higher (generally 0.75% to 1%) than the other two options, which can challenge cash flow, this comes with some advantages that are uniquely suited to the BRRRR method. These advantages of using DSCR loans for refinances using the BRRRR method include:

• More flexible seasoning requirements: As of April 2023, the seasoning requirements for conventional cash-out refinances is now 12 months, but many DSCR lenders are still at just six months (with some even as little as three). Additionally, for rate-term refinances, many DSCR lenders have no seasoning requirements at all.
• Easier qualification: DSCR lenders have much lighter qualification requirements than conventional or portfolio lenders, such as no DTI, income verification, or tax return hurdles that can slow down or disqualify loans
• Flexibility: While conventional and bank lenders are heavily regulated and follow standardized rules, DSCR lenders have much more flexibility and control over their guidelines. This allows DSCR loans to be more adaptable to the market as real estate investing strategies change, including the BRRRR method. Some examples of this include being able to embrace the “AirBnBRRRR” strategy (i.e., not requiring a long-term lease for the “rent” portion of BRRRR before approving the refinance) or allowing investors to borrow in an LLC or other creative structures.

Hopefully, this article helps BRRRR investors navigate the market in 2023, knowing all the financing options available for success.

This article is presented by Easy Street Capital

Easy Street Capital is a private real estate lender headquartered in Austin, Texas, serving real estate investors around the country. Defined by an experienced team and innovative loan programs, Easy Street Capital is the ideal financing partner for real estate investors of all experience levels and specialties. Whether an investor is fixing and flipping, financing a cash-flowing rental, or building ground-up, we have a solution to fit those needs.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

No one wants to be an average entrepreneur. Dreaming up a big idea and taking the leap with starting a business takes courage. Once you’ve done the hard part, see it through. Assemble all the resources at your disposal to reach the heights that very few do.

You can read all the business books, watch all the YouTube how-tos and have coaching sessions with every expert, but improving as an entrepreneur is a constant process. Add another tool to your arsenal by enlisting the help of ChatGPT.

How ChatGPT can help you up your entrepreneurial game

Establish your values

Without a robust set of values by which you make decisions and frame your actions, you’re at risk of flitting around, copying your friends, and convincing yourself there are easier ways of making money. Your values, once defined, create the blueprint for how you operate. Find out what yours should be by looking at people you admire and dislike. Your reaction to their actions reveals the values that are right for you.

Here’s the prompt to define the values by which your every action should tally: “Please create a set of values for me as an entrepreneur, based on the information I’ll explain. I’ll use these values to make decisions and ensure I’m acting consistently. The things that are most important to me in life are: [describe what they are]. The qualities I most admire in other people are [describe what they are] and the qualities I most detest in other people are [describe what they are]. I do my work in order to achieve [describe your ideal outcomes].”

Identify your main goal

All of your energy focused in one direction will mean you go far. Align your intentions into one goal, and ask ChatGPT to define that goal in simple terms. Over the entire course of your career you can do many things, but for now just focus on one. One mission, one goal, one reason for you to get out of bed every single day.

Edit this prompt with all the details, then let ChatGPT simplify your mission. “I want to achieve lots of things for my business, including: [describe the main things you want to achieve in your career]. Can you help me simplify this into one overarching goal and accompanying mission statement, so I don’t get side-tracked and distracted by other things?”

Consider trade-offs

Optimising for revenue carries a different set of actions to optimising for profit. Maximising your customer experience might come at the expense of your revenue per person. Shorter wait times for customer service might come with more personnel requirements, and so on. Avoid being confused by competing metrics by deciding, in advance, what you’re optimising for and therefore what you’re willing to let slide.

Ask ChatGPT for more detail with this followup prompt: “Within my company we are working on the following projects [outline the projects you’re working on]. We want to achieve our one main goal of [your one main goal], and we’re optimising for [explain what metrics matter the most to you]. Can you help me consider the trade-offs involved in this focus? What should I be prepared to forgo or not focus on in pursuit of my one main goal?”

Subtract the non-essential

Most entrepreneurs are busy doing things that don’t matter. Having a full day gives them a false sense of importance. But with all that rushing around, there’s hardly any time to think about what to work on. But thinking about what to work on is a valuable exercise in itself. Enlist the help of ChatGPT in figuring out where to cut out menial tasks and clear more blank space. Use this blank space to do more of what matters, or just stare out the window and let answers find you.

Figure out where ChatGPT thinks you could subtract. “Here’s what I do within a normal week: [outline your weekly schedule with how long you spend on each item]. Given my one, overarching mission, and what I’m optimising for, can you suggest where I can remove commitments, activities and obligations that don’t contribute towards my goal in a meaningful way? I’m prepared to make big changes to my schedule based on your suggestions.”

Identify blind spots

You don’t know what you don’t know. But those current unknowns are potentially things that could derail your business. ChatGPT can take a bird’s-eye view of your work and professional capability to suggest where you might be missing some intel. By now it knows you pretty well, so it’s well-positioned to offer guidance.

Don’t miss a thing with this simple prompt: “I know my mission and I’m going to start to remove some of the day-to-day tasks that don’t contribute towards it. Given my business of [describe your business], my skills of [describe your five main skills] and my weaknesses of [highlight any potential areas of weakness], can you identify any blind spots that I haven’t considered? Consider internal and external factors and suggest a three-point plan for overcoming each one.”

Design your dream week

Be a better entrepreneur by having a healthy relationship with work. Do this by making the most of your non-work time. When you close your laptop and put your phone on airplane mode, engage in something that makes you feel grateful that you live the life you do. This all comes down to your day-to-day; those elements of a normal week that means it’s a sustainable structure you could happily live on repeat.

Put the components of your dream week into a schedule that works: “For me, a perfect week includes [list the components of your dream week] and by the end I will have achieved [list what you’d like to achieve each week]. My energy is highest [time of day] and lowest at [time of day]. Given that you already know my main goal is [your one main business goal] and that I’m optimising for [what you’re optimising for], can you plan a weekly schedule where each day is filled with my favourite things structured in such a way that I enjoy my time.”

Become a better entrepreneur with these ChatGPT prompts

Become an extraordinary entrepreneur with these six prompts. Define your values, get clear on your goal and know your mission. Identify your blind spots and eliminate the nonessential from your week for a work and life cadence you’re proud to call yours. Ask the questions that the others aren’t asking to achieve the results they can only dream of.