BRRRR simple explanation.

[Andrew Angerer]

New people, 

If any of you are having problems understanding the BRRRR method, I found this super simple explanation for it. It has helped me out a ton, hopefully it helps you too.

Please explain like I'm stupid (because I am): How does the BRRRR strategy help you pull money out when you refinance? : realestateinvesting

Insert what ever numbers you feel like

You buy a home for $100,000; You put down $20,000, meaning you mortgage $80,000.

You do repairs at a cost of $20,000; Home is now worth $160,000

You have put $40,000 into the property, worth $160,000; You rent it out, once it has income, you can refinance the property at somewhere near 80% loan to value, which 80% of $160,000 is $128,000

You owe $80,000 on a home worth $160,000, so you have equity of $80,000. Pull out the difference between $80,000 and $128,000 (80% of home value), or $48,000.

Congrats, you now have your $40,000 back, $8,000 profit, and a property that’s paying you.