Can (or should) first time investors BRRRR?

[Holly Ross]

No preconceived notions here, just want to hear from some different perspectives! Can, or should, first time investors BRRRR?

When I started building a 5 year plan for myself I thought it made sense to buy my first property and BRRRR it since I want to get in at a low price point and force equity/refi so I could buy a second property faster than by saving up with my W2. But after speaking with a local investor-agent, he felt pretty strongly that a first time investor should just scratch BRRRR from their vocab and buy something nearly turnkey, collect the steady drip of cash flow for a few years, and save up for property two via W2, and then start to think about BRRRR. In fact, he's been doing it about 20 years himself and only just started getting into BRRRRing I guess. 

I've consumed enough podcasts, courses, etc to know that there's many paths in and a lot of it is dedication and due diligence. 

But curious if there's any other strong opinions out there. Do you agree? Or do you think BRRRR is feasible for a first timer?

[David M.]

@Holly Ross

Yeah, its a catch -22 position.  If you don't brrr, you basically can't do another deal.  However, brrr still brings on more risk, more complication.  First, you need to find a deal that will get to close to doing a full brrr.  If you can get it, then you actually have to brrr it.  Now, this is like a flip / remodel.  Most newbies don't have the experience, ability, or resources/connections to have the remodel done well or within costs.

So, with doing the brrr you can get yourself into a worse position, e.g.:  the remodel costs underestimated, time to complete under estimated, potentiall poor contractors, switch contractors, etc.  Also, newbies have limited experience in with financing so the refi may be later than planned.

Generally, I think its somewhere between a bad idea and maybe just a "trial by fire" for the newbie to learn about a remodel and don't necessarily expect to do the brr well.  Sure, maybe you'll get lucky...

Also, most people are busy with their existing day jobs and lives.  Many don't have the time to deal with this extensive work.  How many regular homeowners want to deal with remodeling the kitchen in their own home?  Its a weird contracdiction to me how supposedly people are busy with family and work, but hav time to spend so much time "investing," which is supposed to be passive and not a job.

Hope this helps.  Happy to chat. Good luck.