Don't Fall For This Trap As A BRRRR Investor

[Stuart Udis]

I am hoping this post will help those interested in the BRRRR investment strategy avoid this common trap. From what I consistently observe, the ability to complete the BRRRR investment strategy and recapitalize oneself is a key metric used in how many underwrite acquisitions. For illustration purposes, the majority of investors who post on BP will move the property that pencils as a true BRRRR to the front of the line over the better situated asset with better fundamentals merely because they receive 100% of their invested capital back as opposed to 90% (again numbers are merely to illustrate a point). I will be the first to share I understand the value in being able to recycle capital through refinances to grow a portfolio but this should not be done at the expense of other fundamentals that are more telling of the properties current and future economic performance. Unfortunately many investors become laser focused on the 100% recapitalization of their transactions and end up working harder than those who don't place all of their emphasis on the 100% capitalization and have real estate portfolios that perform better because they made investment decisions better aligned with the underlying real estate's fundamentals.