How do I crunch numbers for BRRR method?

[Luis Valdez]

Hey BP nation,

I am new to the real estate world. 

Can someone please explain how to crunch numbers with the BRRR method for multifamily homes?

[Nicole A.]

Hi! As mentioned, the answer to that question isn't short or even terribly easy to explain. There are so many details behind the general explanation that just comes to you naturally as you research and get to understand it.

You can start by using the search bar at the top of the BP website and type in a keyword like "BRRR" or "BRRRR" (sometimes they use 3 Rs, and sometimes 4 Rs). Read all the previous forum posts. Read any blogs about it and listen to podcasts.

Generally speaking, BRRR formula is a little bit similar to flipping, except that you will be keeping the property rather than selling. You must be able to think ahead and work backwards a bit. I like to think of it this way:

If I know my bank will do a cash-out refi of 80% of the appraisal value (after fix up of course), then I start with that number.

Say, after fix-up, a property should appraise for $150,000. 80% of that is $120,000. So that means, if I want to BRRR this property and get *all* of the cash/hard money/private money/HELOC money that I put in to buy and fix it, then I should not spend more than a total of $120,000.

If I don't mind leaving some money on the table, then I could go over $120,000, but the true idea of BRRRR is to get all (or more) of your initial money back at refinance time.

If you' don't quite follow this just yet, no worries, just keep reading on BP and listening to podcasts! There's also YouTube videos on it.