Updated about 6 years ago on . Most recent reply
USING THE BRRRR STRATEGY
Hello! So I have some questions, I'm trying to figure out the BRRRR Strategy. How do you come up with the equity/cash out at the end of the last step? Is there an equation to solve it, to find the answer? There is a house that cost $70k repairs will cost $30k, and according to the realtor I will make $30500 equity at the end. How did he come with that number?
The ARV is $140k
My understanding is that you can do a 75-80% cash our refi of the value after 6 months seasoning.
But I thought the lender can only give you 75-80% of the value of the house which means I will only get $105,000, not the $140k so at the end I will have $5k equity, not $30,500.
I’m very confused with this. Can someone help me clear things up? It will be very much appreciated.
Most Popular Reply
@Christian Haley I'm in the same boat as you, just getting started. I've read BRRRR twice now. What has helped me the most is just finding a house on Zillow and then running the numbers by hand. Basically the 4 square method but I don't actually make the square. After doing this a few times the numbers clicked and I understood the metrics. After doing it quite a few times I started seeing deals on Zillow and would instantly have a feeling for if it was a good deal or not just based on price, sqft, DOM, condition and location, ect. If something caught my eye I would pencil the numbers.
Another good book I recommend is "Never Split the Difference" by Chris Voss. Amazing insight on negotiating for what you want. I listened to that on audio book 3 times. It's only 8 hours so goes fast.
Good luck on your journey.