The BRRRR Real Estate Investment Method
The BRRR Method is an acronym first coined by an investor named Brandon Turner. Simply put, it is a real estate investment strategy designed to generate passive income and grow purchasing power and investment capital through revolving rental property flipping practices. The acronym stands for the following 5 steps:
- Repair (Rehab or Renovate)
Not only does Realty Exchange believe this is a good strategy, but it is used by many of our agents for their own personal investment properties as well. While no one can guarantee a positive investment, they all agree this is a good place to start.
How does this work?
Buy: An investor purchases a property requiring renovations at less than market value. This typically requires a little property that needs a little TLC. Our Realty Exchange agents are trained to help customers find the perfect property to fit their needs. The agent will be able to provide property comps and rental comps in order to ensure the best decisions are made. Let’s not forget about their negotiation skills! Sara Blandino is currently our highest agent with a 99% closing rate for buyers and sellers with more than 10 years of experience.
Repair: The investor rehabilitates the property, completing any necessary repairs in order to bring it up to code. Aesthetic repairs should also be made in order to attract tenants who will be willing to pay the highest monthly rent possible to live in the property.
Rent: The property should be rented out to a GOOD tenant. It is important to do your research on tenants before you decide who lives in your property. Its wise to get letters of recommendation, proof of employment, and request a credit check, so you have a good idea if they will be able to make the monthly rent payment. As soon as the property starts generating income, it immediately increases the home’s value.
Refinance: Once you can show a lender that you are making money from this property and that you have equity in it, you should be able to procure a cash-out refinance; converting the equity in the home into useable cash. This cash can then be used to pay off the original home loan if you so wish.
Repeat: Now your Realty Exchange agent will help you find a new investment property to start the process all over again!
Stay tuned next month for more additional tips regarding the BRRRR Method.