BRRRR method of step by step
Finding the right BRRRR property isn’t a walk in the park, but with the right knowledge and techniques, you can succeed.
It’s essential to have a good understanding of the local market. You need to know where to look for potential deals and have the financial resources to back it up.
Building relationships with other investors, brokers, and local authorities is also key. It’s like a puzzle: the more pieces you have, the easier it is to put it together.
With focus and determination, you can find the right property and begin your BRRRR journey.
By George Nicola (Expert Stager)
Table of Contents
Are you interested in leveraging the BRRRR strategy to build your real estate portfolio? If so, you’ve come to the right place.
BRRRR stands for ‘Buy, Rehab, Rent, Refinance, and Repeat’ and is a brilliant strategy for investors who want to unlock the equity of a property.
The first thing is that you need to do your research to know your market and identify potential deals.
Don’t just go for the cheapest houses out there, as these might hide secrets that you don’t want to have on your head.
After that analyze a property to determine if it suits the BRRRR strategy.
When you are done with the above two, you have to build relationships with the necessary professionals and evaluate your financing options.
By following these steps, you can utilize the BRRRR strategy effectively.
In this article, we’ll discuss the steps you need to take to find properties for BRRRR.
Nothing in this article is financial or legal advice.
Read also: BRRRR Investing Method (House Hacking!)
Knowing Your Market
Knowing your market is critical for successful real estate investing, but remember to consider the potential of a property beyond its current state; it could be the difference between a good investment and a great one.
Start your search by understanding the immediate market and observe the local trends. Make sure you research and look into the local real estate investors dealings (if you can), what kind of properties they buy, at what price range and in what areas.
Most of the time, BRRRR investors will brag about their dealings on social media or in local business meetings like the morning breakfast meeting (BNI). If you are shy or don’t know how to start a such conversation in case you are on such meeting try the following:
1. Introduce yourself: Start by introducing yourself to the group or the person you want to engage in a conversation with. Mention your name, what you do, and express your interest in real estate investing.
2. Share your experience: Talk about any recent deals you have closed, properties you have bought or sold, or any challenges you have faced in the process. Or just tell them you are a newbie. This will help build credibility and show that you are actively involved in the BRRRR strategy.
3. Ask questions: Show genuine interest in the experiences of others by asking questions about their deals, challenges, and success stories. This will not only help you learn from their experiences but also help build rapport with the group.
4. Offer advice or solutions: If you have any insights or solutions to the challenges faced by others, do not hesitate to share them. This will not only help others but also demonstrate your expertise in the field.
5. Share resources: If you have come across any useful resources, such as books, podcasts, or seminars related to BRRRR investing, share them with the group. This will not only show that you are well-informed but also help others in their journey.
6. Build connections: Make an effort to connect with fellow investors on a personal level. Exchange contact information, and express your interest in staying in touch or potentially collaborating in the future.
7. Be open to feedback: As you share your experiences and insights, be open to receiving feedback from others. This will not only help you improve your strategy but also show that you are humble and willing to learn.
8. Stay active in the community: Regularly attend local business meetings, real estate investor meetups, and other relevant events. This will help you stay updated on the latest trends and developments, as well as build a strong network of fellow investors.
This will not only help you build a strong network of fellow investors but also enhance your knowledge and skills in the field of real estate investing.
Once you know where it is in the local market, you can set your sights on properties that may have the potential for BRRRR.
Analyzing the data can help you find a property that offers the best value and return.
Start by looking at the total cost of the property and then compare that to its estimated value after it’s been renovated.
This will help you determine what kind of potential return you could get from the property. Consider any associated costs, such as taxes and any possible restrictions that could prevent you from making a total return on your investment.
Finding the right property for BRRRR requires you to do your due diligence and understand the market.
Knowing what to look for and analyzing the data can help you find a property with great potential for BRRRR and the best possible return on your investment.
So be sure to research, and you’ll be well on your way to finding a great BRRRR property.
Identifying Potential Deals
You’re looking for great deals to make a BRRRR, so let’s identify some potential ones!
By now you should have researched the major listing portals in your country like Zillow (US), Redfin (US) or even facebook market. The same applies for other countries like the UK – Rightmove, Zoopla, Onthemarket and others.
- It’s important to remember that you’re looking for properties with a good amount of equity, so you’re looking for properties you can purchase at a discounted price. Foreclosed properties are a good place to start with.
Doing your due diligence when researching the market is vital, as it will help you identify potential deals. Make sure you know the average price of similar properties in the area, and use this to your advantage when looking for deals.
- When you’re looking for potential deals, make sure you look for properties with motivated sellers.
- This could be people looking to move quickly or who have recently inherited a property but need more time or resources to maintain it.You can also find properties that have been on the market for a while, as these could be good potential deals as well.
- Make sure you look for properties that require some repairs or updating.
Properties requiring cosmetic updates, such as new paint, flooring, or landscaping, can often be purchased at a discounted price and provide great potential for a BRRRR.
Remember that these properties can take a bit more work but can be well worth the effort.
Read also: Is Buying A Foreclosed Property A Good Idea
Analyzing a Property for BRRRR Suitability
Once you’ve identified the potential deals, it’s time to analyze them to see if they’re suitable for a BRRRR; as the saying goes, ‘measure twice, cut once’ to ensure you make the right decision.
To do this, you’ll want to consider various factors, such as the location, the property’s condition, and the potential rental income it can generate.
The location of the property is a crucial factor to consider. Ideally, you’ll want to find a property located in an area that’s in high demand, has good access to public transportation, and has the potential for appreciation.
Determine what repairs and renovations need to be done to make it a desirable rental property. It’s essential to understand the end costs associated with the repairs and renovations and the potential return on your investment.
Consider the potential rental income that the property can generate. This includes researching current market rents for similar units in the area and the potential for future rent increases.
It’s also important to consider expenses such as taxes, insurance, and maintenance costs, as these could all impact your overall return on investment. By analyzing these factors, you can make the best decision for your BRRRR investment.
Networking and Building Relationships
Networking and building relationships are essential for real estate investing success, so don’t shy away from getting out there and connecting with people in the industry! Identifying the right people to communicate with is vital to finding properties for BRRRR.
Start by researching and networking with the following groups:
- Real estate agents: Real estate agents have access to a wide variety of properties and may be able to point you in the direction of “off-market” deals.
- Private lenders: Private lenders provide alternative financing options to help you finance your deals. They’re typically willing to lend at higher loan-to-value ratios than traditional lenders.
- Real estate investors: Experienced investors can provide valuable advice and insight on the market. They can also help you find potential deals and give you feedback on your investment strategies.
- Real estate attorneys: Property attorneys provide legal advice to help you navigate the inner workings of the purchase process. They can also help you review and negotiate contracts.
- Property appraisers: Property appraisers can help you determine a property’s actual value and ensure you’re not overpaying for a property.
With networking and building relationships, you will gain access to valuable resources and insights that can help you find the best properties for BRRRR.
So take the time to build relationships with people in the industry, and it’ll pay off in the long run.
Evaluating Financing Options
Evaluating financing options can be complex, but understanding the different financing types is critical to success in real estate investing. Over 80% of real estate investors rely on some form of financing.
Knowing what type of financing is available and which most fits your needs and goals will help you make informed decisions when investing in real estate.
- The most common type of financing used in real estate investing is a mortgage loan.
- Mortgage loans are typically secured with the property itself, meaning the lender has a lien on the property if the borrower defaults.
This type of financing is generally used for purchasing properties and is usually the most affordable way to finance a real estate investment.
Other financing options include:
- private lenders
- hard money loans
typically with short-term, higher-interest loans, but without the need to wait for long approvals.
Generally, private lenders, companies, or individuals, such as friends and family, can provide funds for a real estate investment.
In addition, specialized lenders willing to lend on properties that may not qualify for traditional financing usually offer hard money loans.
Try to grasp these options and understand their associated risks and benefits is essential for finding the right financing solution for your real estate investing needs.
If you don’t calculate your risks well, you might find yourself in a situation that is not looking financially well for you.
We can help you design your property for rent. Free estimate >