Complete BRRRR Rental From Start to Finish | Real Life BRRRR Method Example
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The BRRRR method is a strategy for leveraging debt and growing wealth using other people's money. It stands for Buy Rehab Rent Refinance and Repeat. The key to this strategy is buying houses at a discount, which usually means they need work. In this case study, the house was purchased for $72,000 from a wholesaler, and the after repair value (ARV) is estimated to be $130,000. The discount percentage is typically between 70%-80%, and the rehab cost for this property is estimated to be $25,000-$30,000. The goal is to rehab the house and refinance it to recapture all of the money invested, creating equity.
The rehab process includes fixing up the kitchen and bathrooms, replacing the kitchen cabinets, and redoing the floors. The exterior of the house is all brick, which is low maintenance, but the tuckpointing needs work. To keep properties low maintenance, it is recommended to avoid having big trees in the yard as their roots can damage the sewer lateral and foundation. Landscaping should also be kept simple to avoid monthly expenses.
The property was rented out for $1,300 a month, and there were 20 applicants over the weekend. Three applicants were approved, and the property was rented out to one of them. The BRRRR strategy involves refinancing the property to recapture all of the purchase and rehab costs. In this case study, the property was appraised for $133,000, and the investors plan to take a loan for 80% of that amount to recapture their costs. The goal is to cash flow about $200 a month, which is the typical goal for every property.
The scalability of the BRRRR method is what makes it so powerful, as it allows investors to quickly find another property, fix it up, get it rented, and refinance it again. Small local banks understand the BRRRR method and strategy, which makes it easier to scale quickly. The investors create equity by finding properties at a discount and rehabbing them. They encourage viewers to check out their detailed video on how to buy your first rental property without using any of your own money and to subscribe to their channel to stay updated on their live sessions.
The BRRRR method is a strategy for leveraging debt and growing wealth using other people's money. It