Better than BRRRR: The BRRR Method

[Jon K.]

Bold title I know and I'm sure it's been posted about before but what else do we have to talk about right now? I've done a couple of deals lately using this method which is similar to BRRRR with one important distinction: I'm not remodeling the properties. If you can find a move-in ready property to buy at a good enough discount then you don't have to improve the value to get your money back out. The trick is to purchase (including closing costs) at 80% or less of what it will appraise for, get a loan to cover 100% of purchase and costs (a private lender whose trust you've earned is your go-to here), then do a rate and term refinance shortly after purchase. That's it: I've done it twice in the past two months.

Purchase price of 142k and 150k respectively. They appraised for 205ish and 210ish with $0 of repairs/remodel after owning them for less than a month. 2 free houses cash-flowing from day one (they came with tenants).

What makes it better than BRRRR? It's just easier not to manage a remodel, rate and term refinances tend to have a better rate and you can also do them for up to 80% of the appraised value vs 75% which is typical of a cash out.