All Forum Posts by: Luke Miller

Quote from @Stephen Keighery:

BRRRR is awesome. I have done around 25 of them. The key is buying them at a heavy discount so you can add value and pull all your capital out. It is more challenging to cash flow with interest rates and insurance right now so you need even deeper discounts when buying.

I agree with what Stephen stated but believe he under emphasized the challenge.  I can find good flip properties.  Properties that used to be good brrrr properties.  However, today when I refinance at high LTV to extract my value add, I am in a large negative cash flow position.  

This is why my last brrrr purchase was in Dec 2021 and because it is unlikely that my next purchase will be a brrrr even though I have made a lot of money from BRRRRs.  Sometimes you have to pivot.  It is my belief that the rate increases have pretty much curtailed successful BRRRRs.

good luck

When it comes to financing, especially for hard money and permanent financing, it's crucial to understand the terms and costs involved. Hard money loans are great for the initial purchase and rehab phase because they offer quick access to capital, but they come with higher interest rates and fees. For permanent financing, you'll want to refinance into a more stable, long-term loan once the property is renovated and rented. Look into lenders that specialize in rental property loans, and consider working with a mortgage broker who can help you navigate the process.

### Deal Evaluation

To find the right deal, focus on properties that are undervalued relative to their potential. Use the 1% rule as a guideline: the monthly rent should be at least 1% of the home’s value or purchase price. Also, ensure the property needs renovations but isn't a total teardown. You want to strike a balance where you can add significant value through rehab without breaking the bank.

### Construction Process

Managing the construction process can be challenging, but having a clear plan and budget is key. Create a realistic timeline and budget for renovations, and factor in unexpected expenses. It's also important to work with reliable contractors and have a system for tracking progress and costs. Consider renovating units in phases to keep some units rented and generating income while you work on others.

### Connecting with Experienced Investors

Connecting with other investors who have successfully executed the BRRRR strategy can be incredibly valuable. Joining real estate investment groups, attending local real estate meetups, or participating in online forums like BiggerPockets can help you network with experienced investors. Don't hesitate to reach out to people directly, as many are willing to share their experiences and offer advice.

If you have any more specific questions or need further guidance, feel free to reach out. Good luck with your next deal, and I'm sure you'll find plenty of helpful insights from the community here. Happy investing

BRRRR is awesome. I have done around 25 of them. The key is buying them at a heavy discount so you can add value and pull all your capital out. It is more challenging to cash flow with interest rates and insurance right now so you need even deeper discounts when buying.