If you’re at all familiar with BiggerPockets.com, then you’re familiar with the BRRRR method of building real estate wealth.
For those of you who simply think I’m referring to buying properties in cold climates, I’ll explain.
BRRRR is an acronym for Buy, Renovate, Rent, Refinance, Repeat. The idea is to buy a property you can add value to either by renovating it or increasing rent. Because the duplex either needs a lot of work or is in dire need of updating and/or repairs, is lower than it would be if it was in great shape with market-rate rents.
Doing those improvements makes the property worth more than you paid for it. Ideally, the property will appraise for at least 20-25 percent more than the total of what you paid for it, holding costs, and costs or repairs.
This value over and above costs allows for the property to be refinanced with all of the original capital invested taken back out and the equity created by its increase in value to serve as the down payment.
Once the original capital has been refinanced out, the investor may take the funds and go repeat the process on another property.
This practice is wonderful when it works. To ensure it does, however, it’s important to:
I love the BRRR strategy. It’s a great way to build wealth. Just make sure you take the warm weather gear of research and knowledge before you