Brrrr in Minneapolis, MN

[Brandon Capelle]

I'm working on buying another rental property and would like to use the Brrrr method but haven't done it in the past. Looking for a mentor/partner, and advice. Thank you!

[Marc Jolicoeur]

@Brandon Capelle I do the BRRRR strategy in the metro and would be happy to help you figure it out.

The key to the strategy working for more than one deal is to buy right (a deal).  You've got to buy at a good discount to retail.   Buy a fixer upper where you can afford the down payment PLUS the rehab budget.   Your capital will be tied up until to refi to get some of it back out.  If you buy low enough, you could even get all of your original investment out.

Risks are the following:

- appraiser games. They love to be conservative, even where there are good comps that support a higher valuation.  They are anchoring at what you paid for the place 6 months ago.

- A market correction could reduce the number of good comps and stop your strategy in your tracks.

- Rising interest rates.

- refi mortgage payment will be higher than original one.  That eats $150 -$250 into your cash flow so you need to plan for this up front making sure you will have plenty of cash flow AFTER you get the refi.

Its tough to find deals but that's key to being able to make this work.