The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) Method is a real estate investment approach that involves buying a distressed property, rehabilitating it, renting it out, and then refinancing it to fund further rental property investments. The method is designed to provide passive income and a revolving method for purchasing and owning rental property. The following are the steps involved in the BRRRR Method:
Buy a property: The property you purchase should be a distressed property that needs some work to get up to code and ready to rent. Because of the home’s condition, it will likely be cheaper to purchase.
Rehab the property: Since the property is distressed, it may require extensive work. In this step, you’ll renovate the property to make structural, safety and aesthetic improvements, and prepare it for renters.
Rent out the property: Determine the rental price and find people to rent the home.
Do a cash-out refinance on the property: With a cash-out refinance, you convert your equity into cash. You access your equity by taking out a bigger mortgage, borrowing more money than you currently owe. The cash can be used for anything, including purchasing another property.
Use funds from refinance to buy another property: In this final step, you’ll start the process all over again. Using the funds from your cash-out refinance, you’ll purchase another distressed property and rehab it, before renting it out and refinancing that property.
The BRRRR Method is an effective way to build a real estate portfolio and generate passive income.
The BRRRR Method is designed to provide passive income and a revolving method for purchasing and owning rental property. It can be an effective way to enter real estate and develop long-term revenue streams. Wealth building is one of the benefits of the BRRRR method. By using the equity and rental income from one property to buy the next, you can potentially increase your returns and build a real portfolio of rental properties over time. However, it is important to note that this method requires a significant amount of capital, time, and effort.
Author
Larry L. Gilmore
President & CEO
ClearBlu Capital Group