Build Refinance Rent Repeat strategy

[Varun Chawla]

Hey BP community,

I am considering investing in a real estate developer using the Build, Refinance, Rent & Repeat (BRRR 2.0) strategy. Instead of buying existing properties and rehabbing them, the idea is to partner with a builder who constructs new rental properties, then refinance and rent them out.

Has anyone here invested in a builder/developer under this model? If so:

1. What should I look for when evaluating the builder/developer?

2. What are the key risks or potential pitfalls in this strategy?

3. Any specific contract clauses or safeguards I should include?

4. How do these deals typically perform in terms of cash flow and equity growth?

I would love to hear from anyone with experience in this space whether you've done it yourself or know someone who has. Thanks in advance for your insights!

[Ty Coutts]

Hi Varun,

When evaluating a builder/developer, focus on their experience, track record, financial stability, and references. Ensure they've successfully completed similar projects on time and within budget. Key risks in the BRRR 2.0 strategy include construction delays, cost overruns, market fluctuations, and difficulty refinancing if the property doesn't appraise as expected. In your contract, include clear timelines, quality guarantees, and protections for unforeseen costs or issues. Also, have contingencies for shifting market conditions or construction delays. These deals can be profitable in growing markets with strong cash flow and equity growth, but success depends on the builder's execution, local market conditions, and your ability to refinance effectively. If you have any more questions or think you'll need help securing funding for any future projects, feel free to DM me.