Understanding BRRRR Strategy

[Alejandro Hayden]

Hi BP family,

My name is Alex and I'm very interested in the BRRRR strategy. From listening to a bunch of podcasts, some routine advice seems to be, "choose your niche, become laser focused on how to become great at it, then move on to something else...". Well I want to do that with BRRRR and am just wondering..where do I start? Like the very first step. With the exception of learning how it works because I'm pretty knowledgeable on how the strategy works. What are the first steps to be taken?

[Jason D.]

@Alejandro Hayden you need to be very sure of 4 things.... rehab costs, rent, ARV, and an exit strategy. If you're off base on any of these things it could cost you a lot of money. The rent and ARV portion is usually what trips people up. It's not like flipping where because the margins are thinner.

For example, you have a property that your flipping. You paid $100k, needs $50k in rehab, ARV is $200k. You have a $50k buffer before you lose money.

Because the Refi is based off of 75% of the ARV, you have no buffer there. Your max refi is $150k so if you're over rehab or off on your ARV, its money out of your pocket.