Buying Apartment Buildings Using the BRRRR Strategy | Real Estate Investing
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The hosts discuss their experience using the BRRR method to purchase an apartment complex for $1.1 million. They explain that the BRRR method for an apartment complex looks different than for a single-family home due to the amount of money involved and the longer time frame. They partnered with someone who had the cash and wanted to invest in real estate, and their private lender gave them the 20% down payment. However, they didn't do enough due diligence when they first purchased the property, which led to unexpected expenses and vacancies. They recommend spending a whole day or two going through every single unit with an inspector or trusted contractor to pick apart the units and negotiate a better deal during the inspection period.
The hosts also discuss the financial aspects of their apartment complex purchase using the BRRR method. They were able to fund the rehab costs by cash flowing and reaching out to another private lender. They spent a year and a half to two years getting all their money back and owning the property 100% outright. They recently got the property appraised for $1.6 million and were able to take out a cash-out refinance for 75% of that amount, which is around $1.2 million. They were able to recoup all their rehab costs, pay off their private lenders and partners, and now own the property 50/50.
The hosts note that multifamily properties are appraised based on net operating income, which is how much money is being generated from rent and how low expenses are being kept through management efficiency. They were able to add 32 doors to their portfolio and increase their net worth by $400,000 without using any of their own money. They mention that the BRRR method can be used for storage facilities, duplexes, fourplexes, and pretty much any type of real estate that produces income. They caution that it may not be suitable for beginners and recommend watching their video on how to buy rental property using other people's money for a simpler example.
The hosts discuss their experience using the BRRR method to purchase an apartment complex for $1.1 m