BRRRR Method explanation?

[Clara Brashear]

Can someone explain the BRRRR method to me?

[Rigoberto Medina]

@Clara Brashear, there is a wonderful book on this topic in the BP store that goes into great detail but a short synopsis as follows: 1st and foremost it is a long term investment strategy, you are marrying the high points of buy and hold as well as flipping and what I mean by this is explained by the steps of the BRRR.

Step 1: Buy, you will be buying a home that needs rehab. Why are you doing this? because you can get them at lower than retail value, you can then add value to the home by way of the rehab (in this sense, it is very similar to the flipping strategy)

Step 2: You execute the rehab. This step is similar to the rehab step in the flipping model but there are some definite differences. For example, since you are planning on renting this out, the degree of rehab will likely be a little different. Material choices may be a little different, etc. What I mean by this is that you will have a property that you will keep for a long period of time, you will want to choose materials that will be as tenant proof as possible. 

Step 3: You refinance the property. This is where the strategy diverges from the flip model. You will want to refinance the property, this is because you usually aquire the property, to begin with using hard money or private lenders, which will normally have a much higher interest rate than traditional lenders. Additionally, when you refinance, you have a chance of getting most of the money you initially invested or all of it back. This last facet is what is so great because it allows you to scale this strategy. That finally leads you to the final step

Step 4: You repeat. After you get your initial investment back or at least a good portion of it, you find another property and do it all over again.

Disclaimer: there is soooo much more to it than what I listed above, that is only a very high-level overview. You will need to become familiar with finding the deals, financing the deals, rehabbing (this is huge, this can turn a good deal into a money pit if you dont know how to do it right), property management, and on and on and on. The forums are a great place to learn this, the search function that @Jim Goebel mentioned is a great place to start. Read, read, and read some more. There are so many great books out there that can educate you on what you will need to know. This business is a people business, develop relationships with people that are doing what you want to do and doing it successfully (I can't stress that last point enough. There are people that are "investors" but never have had a single property and will tell you all the reasons why it won't work......while never having really done it themselves.) Don't just limit yourself to investors, develop relationships with bankers, hard money lenders, contractors, etc. I have learned so much just from speaking with a couple of bankers that I took out for dinner. Go to local REI meetings but most of all, TAKE ACTION. It can seem like a lot but no matter your journey, its one step at a time. Best of luck to you.