Real estate investors have been using the BRRRR method to great effect for years now. But what is it, exactly?
The BRRRR method stands for Buy, Rehab, Rent, Refinance, Repeat. It’s a simple five-step process that can be used to make money in real estate investing.
In this blog post, we’ll discuss the BRRRR method, why it’s so effective, and how you can do it yourself!
The BRRRR method is a simple four-step process for making money in real estate investing. The steps are:
Buy: Find a property that you want to purchase. This can be done through MLS listings, online marketplaces, or working with a real estate agent.
Rehab: Once you have the property under contract, it’s time to rehab it. This usually involves making cosmetic repairs and upgrades but can also include more major renovations like adding an addition or finishing a basement.
Rent: Once the property is repaired and updated, it’s time to find tenants and start collecting rent. You can do this by listing the property on rental websites or working with a property management company.
Refinance: After the property has been rented for a period of time, you can refinance the loan and pull out your original investment plus any profits you’ve made.
Repeat: Once you’ve refinanced, you can repeat the process by finding another property to buy and rehab. Or you can keep the property and continue to collect rent from it.
The BRRRR method is effective because it allows you to use leverage to buy properties. You can put down a small amount of money and finance the rest, which means you can control more properties with less money out of pocket.
Additionally, the rent that you collect from tenants should cover all your expenses (mortgage, taxes, insurance, etc.), so you can pocket any profits that are left over.
If you’re interested in doing the BRRRR method, there are a few things you need to do.
First, you’ll need to find a good deal on a property. You can do this by searching for properties below market value or by finding homes that need significant repairs.
Second, you’ll need to get financing for the property. You can do this through a traditional bank loan or by working with a private lender.
Third, you’ll need to rehab the property and find tenants to rent it from you.
And fourth, once the property has been rented for a while, you’ll need to refinance the loan and pull out your original investment.
Like any real estate investing strategy, there are pros and cons to using the BRRRR method.
Some of the pros include:
You can use leverage to buy properties (i.e., put down a small amount of money and finance the rest)
The rent that you collect enables you to make a profit on your investment
You can repeat the process to build up a portfolio of rental properties
Some of the cons include:
It takes time to find good deals on properties
You need to be able to do the rehab yourself or have the money to invest in the right contractors.
It will take time to rehab the property before you can start making a profit on it
You’ll need to invest time in finding tenants and managing the property
If you’re interested in doing the BRRRR method, here are a few tips to help you get started:
Start by searching for properties that are below market value or that need significant repairs. These will be the best deals that will enable you to make more of a profit.
Secure financing for the property before you start making any repairs. This way, you can use the money from the loan to finance the repairs.
Find a good property management company to help you find tenants and manage the property. This will save you a lot of time and headache.
Be patient when finding deals and repairing properties. It takes time to do it right, but it will be worth it in the end.
The BRRRR method is a great way to build up a portfolio of rental properties. However, it’s not the right strategy for everyone.
If you’re interested in doing the BRRRR method, make sure you have the time and patience to find good deals on properties and rehab them. Additionally, make sure you have the money to finance the property and the repairs.
It’s also crucial that you pay attention to the current market conditions. If the market is hot, it might not be the best time to buy a property. However, if the market is slow, it could be an excellent opportunity to find a deal.
Ultimately, whether the BRRRR method is right for you depends on your goals, financial situation, and current market conditions.
With that said, if you’re not sure if the BRRRR method is right for you, talk to a real estate investing coach or financial advisor. They can help you decide if this strategy is a good fit for your goals and budget.In Closing
The BRRRR method is a great way to buy and finance properties. It’s a simple process that can be repeated to build up your portfolio of rental properties. If you’re patient and follow the tips above, you’ll be well on your way to success with this strategy.
Have you ever used the BRRRR method? What was your experience like? Let us know in the comments below!