BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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Updated over 2 years ago, 04/26/2022
Using BRRRR method for beginners
I have a few questions about this strategy. For a beginner with zero experience with BRRRR method, is it best to steer clear of this investing strategy if the investor has zero out of pocket money to come up? This means no out of pocket money to pay down just to get hard money, no 401k, and no friends and family to turn to. There is also the rehab step to BRRRR method. Let's say the investor knows nothing about rehabbing a home or what all needs to be rehabbed to make the house look move-in ready condition. Who is going to pay the contractor if the new investor is not physically fixing up the house themselves? I have never tried this BRRRR method for myself.
You need money if you are going to buy, rehab, rent, refinance, repeat.
If you have no money right now I recommend looking for ways to increase your income, decrease your expenses, and save.
Research wholesaling as an option to build up some capital. Not easy work but it'll allow you to make money on deals without having to put up any of your own capital.
If that is the case, where do other investors get the idea this can be done with no money? The minute I heard hard money mentioned as an option I thought that would require money out of pocket, which I do not have that kind of cash just lying around.
@Antonio Bodley there are so many ways to respond to this post...
Forget the BRRRR method for now. You need to understand the basics of real estate investing. I'd suggest reading: "The Ultimate Beginner's Guide to Real Estate Investing" from BiggerPockets.
Real estate costs $$$. Doesn't need to be your money, but it needs to come from somewhere. Look into various ways to fund deals (e.g. your own money, traditional financing, hard money, private money, partnering, seller financing, etc.).
Network with investors or agents in your area and learn from them.
@Antonio Bodley The BRRRR method can offer you the ability to 'have no money in the deal' but you definitely need money to do it. If you are just starting out I'd make sure you have a healthy reserve fund in case renovations go long, it appraises low, or you can't find renters. If you don't have the money set aside in those scenarios you would end up losing the house. BRRRR is definitely possible but you need to have a solid financial foundation backing you up.
Quote from @Conner Olsen:
@Antonio Bodley The BRRRR method can offer you the ability to 'have no money in the deal' but you definitely need money to do it. If you are just starting out I'd make sure you have a healthy reserve fund in case renovations go long, it appraises low, or you can't find renters. If you don't have the money set aside in those scenarios you would end up losing the house. BRRRR is definitely possible but you need to have a solid financial foundation backing you up.
Quote from @Jon Kelly:
@Antonio Bodley there are so many ways to respond to this post...
Forget the BRRRR method for now. You need to understand the basics of real estate investing. I'd suggest reading: "The Ultimate Beginner's Guide to Real Estate Investing" from BiggerPockets.
Real estate costs $$$. Doesn't need to be your money, but it needs to come from somewhere. Look into various ways to fund deals (e.g. your own money, traditional financing, hard money, private money, partnering, seller financing, etc.).
Network with investors or agents in your area and learn from them.
@Antonio Bodley the BRRRR method isn't a secret. People have been buying properties, fixing them up and renting for hundreds of years. Your agent will know what you're talking about.
Just have a normal conversation. Try to learn from the agent(s)
Quote from @Antonio Bodley:
Quote from @Jon Kelly:
@Antonio Bodley there are so many ways to respond to this post...
Forget the BRRRR method for now. You need to understand the basics of real estate investing. I'd suggest reading: "The Ultimate Beginner's Guide to Real Estate Investing" from BiggerPockets.
Real estate costs $$$. Doesn't need to be your money, but it needs to come from somewhere. Look into various ways to fund deals (e.g. your own money, traditional financing, hard money, private money, partnering, seller financing, etc.).
Network with investors or agents in your area and learn from them.
It is not as important for your agent to know the BRRR method as your making it. the BRRR method isnt magic. Its buying a fixer upper and renovating it. It is more important for you to understand your financing and refinancing and rehab cost.
Just discuss with your agent what your trying to do and the type of property you are looking for. you dont have to get caught up the word " BRRRR" .
Quote from @Conner Olsen:
@Antonio Bodley The BRRRR method can offer you the ability to 'have no money in the deal' but you definitely need money to do it. If you are just starting out I'd make sure you have a healthy reserve fund in case renovations go long, it appraises low, or you can't find renters. If you don't have the money set aside in those scenarios you would end up losing the house. BRRRR is definitely possible but you need to have a solid financial foundation backing you up.
I'm glad to see people exercising caution and reserves/ backup plans. WAAAAY too many people out there suggesting stretching yourself to the limit on your first deal to get started with no experience, no idea how to rehab, and no idea how to invest. As other have suggested, these ideas are not rocket science, but the doing of them takes work, practice, etc. One of my favorite things about BP is at the end of every podcast they used to (maybe still do I can't remember) "What separates those that make it from those that come and go?" I have worked with dozens of "investors" over the years. Some have experience in construction trades, others have none, some have experience investing, some have none. But the single biggest thing that I've seen that leads to failure is the inability to learn. I've had brand new investors with no experience in flipping come to me telling me how to do everything, they don't know what kind of upgrades, they don't know the market dynamics, and they have purchased 5 houses all at once. And, commonly, they have no idea what the ARV is, they just do whatever they want to the house, then try to sell it and make money. The worst example of this was a guy bought a house in a 55+ neighborhood and was fixing it up like he saw on HGTV, super modern finishes, all carpet in every room (older folks don't like carpet) and finally I asked him why he would do all this for a 55+ home and he didn't even know it was 55+! He lost a lot of money and had to liquidate all the houses eventually. I lost track of him after house #2 but I believe he lost close to $100k.
/rant over but please do some research, join someone successful and do work for them for free. Education is never free. You either need to pay for it or work for it, and my advice is to go for it but get some hands on experience first, or your agent might be able to give you enough info as well.
@Jon Kelly I so agree with your recommendations. Nice to meet another local investor in the area.