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Understanding The BRRRR Real Estate Investment Strategy
As you navigate your real estate investment journey, you’re guaranteed to have heard of the BRRRR Strategy. This method is often used by investors hoping to build a robust framework of passive income through real estate. The framework itself is broken up into five steps: buy, rehab, rent, refinance, and repeat. When used properly, the BRRRR Method can provide passive income and a revolving process of purchasing and owning rental properties.
How The BRRRR Method Works
This investment strategy involves an investor purchasing a distressed property in need of rehabilitation, flipping it, then renting it out to tenants for extended periods. This rent will support the investor in refinancing and fund the purchase of a second rental property.
Check out a breakdown of the BRRRR Method below:
- Buy – Find and purchase a property in need of some updating to make it beautiful and modern. This property will need to be one that those updates will allow the buyer for create equity.
- Rehab – Time to get your hands dirty! Make any necessary repairs, upgrades, and renovations to prepare the property for renters.
- Rent – Now that the property is ready to rent, it’s time to screen and place tenants.
- Refinance – Cash out refinance on this initial property to convert your newly created equity into cash.
- Repeat – Using these funds from your first investment, you can now repeat the process by finding another distressed property, rehabilitating it, renting it out, and refinancing.
Caldwell Client Story
Boise Turnkey is always on the lookout for excellent BRRRR opportunities, and a recent client project of ours provided the perfect example of this method.
This project was on behalf of an out-of-state client focused on building their investment portfolio and increasing their stream of passive income. We found, negotiated, and supported the purchase of the property at $210,000. Many elements go into a purchase of this sort, and it is essential to know the area where the property is located. The property is a historic home residing just outside of Boise in Caldwell, one of the hottest metro markets in the area.
While the property needed some work, the location was unbelievable! This was an incredible find, within walking distance to restaurants, parks, coffee shops, etc. The client invested $30,000 for the rehabilitation, which took six weeks after closing, and was immediately rented out by our in-house property management team for $1,500.
After six months, our client completed the final step in the BRRRR process, refinancing. The property was appraised for $385,000, allowing the client to get a 100 percent return on their investment AND leave closing with a hefty check of roughly $40,000.
Beginner BRRRR investors often face the challenge of determining which investment properties will give them a healthy return on investment and building a reliable team to take the project from “fixer-upper” to a cash-flowing investment. Boise Turnkey already has every member of that team built for you, when you work with us, you tap into our network of contractors, lenders, and vendors that we have spent decades building out. Our client story above is a prime example of how knowing these buyer incentives, like an excellent Caldwell location, could put a property above others and indicate it will sell well. Don’t let uncertainties steer you away from incredible investment opportunities. Contact us today, and we’ll be your feet on the ground.
