All Forum Posts by: Ancil Castillo

@Ancil Castillo, join Atlanta Real Estate Investing Meetup on Facebook. They meet once a month.

@Ancil Castillo

Welcome to BP!

There are numerous factors to consider before tackling the BRRRR strategy ranging from your schedule to financing, tax incentives to holding periods. Read through the following pros and cons to learn more about what you're diving into.

BRRRR Strategy Pros

Any investing strategy will promise certain advantages while bearing some level of risk, and the BRRRR method is no exception. Before executing any strategy, make sure to review the pros and determine for yourself whether or not BRRRR is appealing for you:

• Potential for returns: One of the main benefits is the possibility of a high return on investment. When done right, investors can purchase a distressed property for a relatively low cash investment, fix it up, and rent it out for strong cash flow.
• Building equity: One should also account for the amount of equity that is built up during the rehabilitation phase. When pursuing a passive income strategy, many investors are merely creating cash flow off a property worth the price it was bought for.
• Top-grade tenants: If a property has been properly rehabbed to meet consumer standards in a specific market, it will most likely attract great tenants. Tenants who are willing to pay top-dollar for their rental property in exchange for certain features and amenities are more likely to take better care of the property and reduce their expenses. Better tenants often translate directly into improved cash flow.
• Economies of scale: Once you hit your BRRRR stride, you can achieve something called economies of scale, where owning and operating multiple rental properties at once can help you lower your costs overall by lowering your average cost per property and spreading out your risk.

BRRRR Strategy Cons

The following list helps to shed some light on potential risks associated with the BRRRR strategy. However, it should be noted that these points are not necessarily cons or disadvantages. Rather, they warn investors of what can happen if they are not careful and have not minded their due diligence:

• Expensive loans: When opting to use a short-term or hard money loan to finance the purchase of a property, investors can find themselves over-leveraged, especially during the rehabilitation phase. According to Brian, a real estate investor and founder at SparkRental.com, “Far too many new investors underestimate expenses such as repairs, maintenance, vacancy rate, and other irregular but inevitable expenses that don’t hit you every single month.” Investors should make sure they know how they will make mortgage payments during the time that the property is not producing any income.
• Rehabilitation: Taking on a large rehabilitation project can prove to be expensive, with many headaches along the way. Rehabbing means dealing with project timelines, managing contractors and sub-contractors, and dealing with unexpected issues. Make sure that you have the right resources and contingency plans in place before tackling a project.
• Waiting period: BRRRR is a strategy associated with a longer time horizon, which includes at least two waiting periods. The first is during the rehab phase, where the investor must improve a property before they can place tenants and start earning income. The second waiting period is seasoning, a term that describes the period an investor must wait before a lender allows a cash-out refinance.
• Appraisal Risk: Investors typically refinance a property based on the appraisal of the property, rather than how much money they have paid into it. There is always a risk that the property will not be appraised for as much as expected. This should serve as a warning that running the numbers correctly in advance is crucial.

All the best!

@Ancil Castillo, completing a successful BRRRR in the ATL market this past year has been very difficult/competitive amongst investors. With limited inventory to work with and high demand, sourcing suitable deals have been the biggest challenge for most newer investors. I don't want to steer you in the wrong direction, however, have you thought about your first purchase being a buy-and-hold with little cosmetic work needed? What many investors fail to mention is the fact that most BRRRR deals are sourced off-market. This means, you either need to network like crazy to source your own off-market deals or have a reliable team working for you, be it wholesalers, agents, etc. Either option will consume your time, energy, and money so be prepared. With all that being said, the market is starting to shift so potential MLS opportunities could become more abundant in Q1 or Q2 of next. I wouldn't count on that alone though. If have any real estate-related or ATL market-specific questions, feel free to reach out via cell, text, email, etc. (contact info listed in my bio). Hope this helps!

Welcome! I would just read David Greene's book ofcourse, listen to their podcasts - they talk about it all the time, and reach out to other members/agents that focus on the BRRR strategy

Hey Ancil, first of all welcome to the BiggerPockets community. It's only intimidating at first but once you start doing it, you'll eventually be more confident. You could learn about the BRRRR method here: https://www.biggerpockets.com/...

You should also try to attend your local REI networking groups and meetups. Connect with as many real estate mentors as you can. It's best to learn from the people who have already become successful in doing what you want to do. Try to think of different ways you can add value to that person. What are your strengths? For example are you experienced in social media marketing? Could you offer a mentor some tips? This way its not just a one way street.