BRRRR is an acronym some real estate investors use and it stands for Buy, Rehab, Rent, Refinance, and Repeat (BRRRR). Many investors have made a living using this strategy to accumulate and grow their portfolio. The process is simple in nature but there is a method that must be adhered to.
This post will just discuss the Buy portion of BRRRR.
Buy – When you have a buy and hold strategy for investing in rental properties there isn’t a great feedback mechanism to determine how well you may have done. You will get an appraisal on the property but those are disputed regularly as one party usually disagrees with the value. When you flip a house, you can immediately see what your profit or loss was after the sale. The goal of a BRRRR strategy is to pull all the money you put into a property out when you refinance. The key is to find a deal when you purchase.
Many investors have their specific number or formula they use to analyze their deals. A quick guide is to use a 70-75% guide in your formula. (After Repair Value X 0.7) – Repairs = Maximum Purchase Price.
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