How Does the BRRRR Method Work?

All we hear these days are crypto, stocks, and other risky investments. However, no matter what arises, investors still agree that real estate is the best investment of our time. When we hear about real estate investments, most of us think about “turnkey” rental properties, but that’s far from the only option.

Well, there’s one method that stands above all else for potential profits, and it’s known as the BRRRR method. So, how does the BRRRR method work and why is it so popular? Let’s talk about that below!

Keep reading to learn what you need to know. 

What Is the BRRRR Method?

Simply put, the BRRRR method is an acronym that stands for: buy, rehab, rent, refinance, repeat.

The plan is to buy a building in need of renovation for a discounted price, renovate it, and rent it out to tenants. From there, a cash-out refinance will provide the money for a down payment on the next property, repeating the cycle. In theory, this is supposed to be the best strategy for building a real estate business from scratch.

Benefits of the BRRRR Method

The reason the BRRRR method is so popular is that, in an ideal scenario, it’s the fastest and most affordable way to grow a real estate portfolio from scratch. All you need is 15% down on a mortgage and enough cash for renovations, which you can get from loans. Therefore, the greatest benefit is how inclusive it is, as nearly anybody can get into the action with this investment strategy!

If you put in the work yourself and choose the right property, then you can save a fortune on repairs and maximize the profitability of your investment.

For such a small amount down, you get nearly total control over your investment, setting your own policies, prices, and everything else!

How Does the BRRRR Method Work?

Real estate is one of the best side hustles or full-time careers you can have, but only if you know what you’re doing.

In practice, using the BRRRR method has to start with a diligent search for both the building and the funding. First, you need to find the right building that’s ideally in need of only minor repairs. This way, you can do a lot of it yourself, save money on renovations, and still get a good deal on the property.

You’ll also want to look for the right location. A booming market and access to public transportation or major highways can really secure your investment and profits in the future. No investment is 100% safe, but with a little groundwork, you can make them as secure as possible!

Also, you’ll need to find a loan that’s ideal for this type of investment. Mortgages are the best for long-term rentals, but only if they have the right refinancing policies. Always look into the terms of your loan before signing and shop around for the best deal!

To judge the potential profits and risks of your investment, you can use a rental property calculator to see how the costs compare to the revenue.

Start Using the BRRRR Method Today

Now that we’ve answered the question “how does the BRRRR method work?”, you can see why it’s such a popular choice for investors of all sizes. The biggest benefit of them all is that you can get started with it right away!

Start investing today, stay up to date with our latest investing news, and feel free to contact us with any questions!

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