First Real Estate Investment – BRRRR or Another Strategy?

Question

My husband and I are looking to make our first real estate investment and want to make sure we choose the best method before diving in. We’ve been listening to the Rookie Real Estate Podcast and are strongly considering the BRRRR method, but we wanted to get some input from experienced investors before committing.

Here’s our situation:

• We’re expecting our first baby in less than a month (exciting and nerve-wracking!).
• We both have stable W2 income but also some existing debt.
• We currently own a home in a gated neighborhood near a lake, but the HOA does not allow short-term rentals.
• We’re considering moving to a fixer-upper in a college town about 30 miles away, where both short-term and long-term rentals are in demand.
• We don’t have a large amount of cash reserves for a down payment, so leveraging our current home or another financing strategy might be necessary.

Our main questions:

• 1. Should we sell our current home to fund our investment, or keep it and pursue another financing option?
• 2. Is the BRRRR method the best fit for our situation, or should we be looking at other strategies?
• 3. Any advice on getting started with minimal upfront capital?

We’d love to hear from those who have been in a similar position or have experience investing in college towns. Any insights would be greatly appreciated!

Thanks in advance!

Eric Miller · Answer

Congratulations on your first kiddo!

I've been BRRRRing a house for the last year while having a new baby at home and have a few thoughts. I definitely wouldn't consider living in the property, having a peaceful and quiet place to be will be so valuable. If you start with a place that needs simple cosmetic updates (which I would recommend since you both have W-2 jobs and have that kiddo on the way) and can do those before you move in that might work.

If your current home would cash flow and could become a good medium or long-term rental, try and hold on to it. If your goal is having multiple long-term holds, you automatically already have one!

If you have enough equity, consider a HELOC on your home, just know there is risk involved and there will be some stress worrying about getting it paid off.

If you won't be living in the house you purchase, you'll likely have to do a combination of financing, e.g., HELOC + hard money.

Read through the creative financing threads, there are some pretty interesting ways to structure deals.

I live in a college town and it's great for renting out a property, but the buy-in is pretty painful and makes it hard to cash flow. The college town you're looking at may be different.

Last thought - estimate your rehab costs and then double them, estimate your timeline and double that too. Plan for those figures and you'll be happy if it's cheaper and faster and not in trouble if it isn't.

Good luck on the journey!

Kerry Baird · Answer

Congratulations on the new member of the family!

With a baby very soon to be alongside, respectfully, you don't know what you don't know. I'm thinking about things like, How much energy will I have for a move? When will I feel good about moving us (with new baby) to a new home? How much will it cost to have new baby added to the finances, diapers and childcare?

How much toleration will I have for painting, fixing dirty, dusty, smelling fixer houses? Or buying and delivering consumables, messaging guests at an AirBnb? Or simply gathering-and-uploading financing documents and talking with lenders?

My thoughts are formulated as a look-back on a similar season, and I think that waiting a year is a terrific idea. This additional time allows you to adjust to parenting, get some energy back, pay down debt and make plans.

On the chance you breeze past the "delay" suggestion, we have often moved into fixers and improved them over 2 years, turning the last one into a rental. Then we did that again. And again. And again. I'm the driver of the moving and improving strategy, while hubby provides steady income and W-2 for lending.

All the best to you!  You have a great vision.

Laura Navaquin · Answer

First off, congratulations on the new baby on the way—such an exciting time!

Let me share a little bit about my background. My husband and I started investing in real estate in 2015 through wholesaling and began building our portfolio with conventional financing in 2019. By 2023, we were both still working full-time, had just welcomed our second baby, and were balancing life with a six-year-old and a six-month-old. It was then that I made the decision to go all in on real estate full-time.

Leveraging the BRRRR method and creative financing, we scaled our portfolio from four properties to 21 in just 17 months. Yes, we lived in two of those properties while making light renovations, and during that time, we also welcomed a third baby—now expecting our fourth! The BRRRR strategy, creative financing, and recycling of funds became the key to rapidly scaling while successfully replacing the six-figure salary I walked away from in May 2023.

I’d love to answer any specific questions you have and help in any way I can! Feel free to reach out.

Ashish Acharya · Answer

@Mason White If you sell your home after living there for 2 of the last 5 years, you can exclude up to $250K ($500K if married) of capital gains tax (IRC Section 121). With BRRRR, rental property depreciation reduces taxable income but triggers depreciation recapture (taxed up to 25%) when sold. House hacking allows deductions on rental expenses while keeping homeowner tax benefits.

HELOC or cash-out refinance interest is deductible if used for rental improvements, and mortgage insurance premiums may also be deductible. Long-term rentals qualify for depreciation and capital gains treatment, while short-term rentals (STRs) may be taxed as ordinary income unless you actively manage them. Your tax strategy should align with your investment goals—consult a real estate CPA to maximize deductions and minimize liabilities.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

First Real Estate Investment – BRRRR or Another Strategy?

Most Popular Reply