Question about BRRRR - Don't you go DEEP into debt with this?

[Peter Martinson]

Hi, this is something I figure will get answered the more I study (reading Greene's BRRRR book now), but thought I'd take the shortcut with you good people.

I feel like BRRRR is pulling a fast one. Third R is refinance, so you get your cash out to reinvest. Doesn't this just load you up with a mortgage loans? In other words, since you keep the property you just bought, rehabbed, and rented, the money you "get back out" is really just a loan, right?

So, if you go nuts and BRRRR like 100 properties, doesn't that equal a ton of debt servicing? How are you making money, if that money's really just loaned to you?

Thank you for taking the time to answer this remedial question!

[Dominic Rosato]

I think your question is related to mortgage loans in general, rather than just BRRRR. You will almost always be taking on large amounts of debt when you invest in real estate, but that doesn't mean it's BAD debt. This debt allows you to own an appreciating asset and collect rent on it, with a relatively low interest rate. As you probably know, the goal is to have that rent offset your loan payments (cash flow).

Using your example: Fast forward 30 years when all of your debt is paid off and you own 100 homes that are straight cash flow. Will you be happy you used the BRRRR method?