• mpereannor


BRRRR -> Buy, Rehab, Rent, Refinance, Repeat method is a real estate investment strategy that involves flipping distressed property, renting it out, and then cash-out refinancing it in order to fund further rental property investment.

Buy — Find and buy a distressed or under priced home to purchase preferably with cash or get loan from hard money lenders.

Rehab — Bring the home up to code so it’s safe. Then renovate to make it attractive to renters.

Rent — Find and screen a creditworthy, reliable renter to bring in.

Refinance — With the renter in residence, do a cash-out refinance on the property.

Repeat — Use the proceeds from your cash-out refinance to find and buy another distressed home at a low price. And keep repeating as often as you can.

Passive income and equity appreciation is the name of the game.

Pros of the BRRRR method:

- You’re purchasing investment properties at a lower price because they’re run down.

- Rental income can help you pay your mortgages and provide a passive cash flow.

- Rehabbing homes will increase their value, and therefore, your home equity.

- You can use that home equity to buy new properties and build your portfolio.

Cons of the BRRRR method:

- Today’s tough real estate market could make finding affordable, fixer-upper homes difficult.

- If you pay too much for a home or underestimate the rehab costs, rental value, or resale value, you could see big losses

- Rehab timetables are notorious for their overruns. And you’ll be paying for your borrowing as the project drags on.

- Finances can be tight when you’re between tenants — or if a tenant defaults on their rent.

- Being a landlord comes with costs, including repairs, maintenance, and finding and screening tenants.

- Rental and resale markets change all the time. In a worst-case scenario, if you pick a city or neighborhood that is or will be in economic trouble, your rental income could shrink or dry up, while your sale price (the emergency exit) plummets.

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