PUTTING ALL YOUR TRUST IN TENANTS FOR THE BRRRR METHOD

[Asa Ifill]

Hello BP Team!

I'm a newly REI looking for all the criticism I can get! Please help me change my mind about this.

I have been reading/watching a lot of content on the BRRRR method. I've recently bought the BRRRR book by David and can't seem to put it down!

I've really been considering getting my feet wet using the BRRRR method because it seems like you're getting the best outcome with your investment. (EX: Gaining equity through the deal, cash flow when renting, and also a cash out refinance up to 75-80% to use that money on another investment, if you did the BRRRR method correctly.)

I couldn't seem to find a flaw in the BRRRR method until I reached out to a friend who has been in real estate investing for quite some time.

He has lead me astray from the BRRRR method by saying "tenants trash the place". He then explained that tenants beat the place up before they leave so you'll always have to pay money into the rental property which eventually takes away from your cash flow...

He explained to me that buying a property for less than market value and rehabbing it then selling it would be better than having a tenant live in the property... Then I asked, WHERE’S THE PASSIVE INCOME!?

Can anyone who has completed a successful BRRRR property put me back in the right mindset and tell me how/why to continue with the BRRRR process if I'm putting this amount of trust in my tenants.

[Brent Paul]

It sounds like your friend doesn't do a good job at screening his tenants.  The excuse because your tenants will trash the place is not a good reason.  I have heard that same comment from friends who are too afraid to have rental properties.  You can't let 1 bad experience turn it into sour grapes.

The main thing is to run those numbers and do some due diligence to see if it makes sense.  I had several homes I thought were great deals until I ran the numbers and saw there was barely any cash flow on it.  You also are going to want to know your market.  Get some comps of houses nearby to see if it really does make sense.  Worse case scenario If the value goes down 20k is it still worth it?