What is BRRRRRR?????

[Darren Demus]

What is BRRRRRRRRRRR

[Canesha Edwards]

@Darren Demus

BRRR stands for: Buy, Rehab, Rent, Refinance, Repeat.

Example: You purchase a duplex for $90k all in ( purchase and rehab)

You then rent both sides of the duplex and the property cash flows each month.

Now that the property is stabilized, you can go to a bank and get a loan on the property from a traditional lender,typically 75-85% of the ARV ( after repair value).

Since the property now has an ARV of $150k, you can refinance your current loan and pull money out.

Original Loan + Rehab= $90k

ARV=$150k

Refinance Amount ( 75% of ARV)= $112.5k

$112.5-$90k= $22.5k

So, with this example, we would receive $22.5k in cash when refinancing. Which we would use as a down payment for the next property.

Couple of things to remember about this strategy:

1. It is important to have accurate ARV estimates. The ARV is going to determine your refinance amount and how much cash you're able to pull out the property.

2. Check with lenders before hand to make sure you will be able to refinance the property. Different lenders have different DSCR ( debt service coverage ratio) requirements, so make sure to ask each lender what are their requirements.

Hope this helps.

Canesha