Playbook #086: Residential Real Estate BRRRR
🖼️ The Big Picture
BRRRR (Buy, Rehab, Rent, Refinance, Repeat) is a single-family value-add strategy that smart investors have used for decades. It's recently received more attention as some online “gurus” and influencers have taken to the term. It’s an excellent way to get your first rental property, and this market cycle is arguably an ideal time to get started.
It’s dead-simple, but incredibly powerful. BRRRR stands for:
- Buy a property (at the right price in a market you understand)
- Rehab the property
- Rent it out
- Refinance (to pull out cash tax-free)
- Repeat the process
You can buy with traditional financing, private lenders, or creative structures like seller financing. To be successful with this strategy, you’ll need to be able to accomplish a few critical things, including:
- Buying for the right price
- Having a team you trust do the renovations
- Doing market research to understand what price you need to buy at and how much rental income you can earn
- Having financing (or the skills to negotiation creative terms) to buy quickly when you find a deal
- Property management skills (or a team) to handle your tenants
If you don’t, you could wind up in trouble, losing money and suffering from some serious headaches after doing a lot of hard work.
Real estate is a fantastic way to build cash flow and generational wealth — but only if your Investor DNA aligns with it. As of the time of writing (January 2023), we’re now entering a “buying cycle” with lower prices and more availability of contractors for renovations, so if it does match your Investor DNA, this is a strategy to pay attention to.
If this does not match your Investor DNA, don’t get caught in the “millionaires buy real estate so I should too” mentality. There’s no right investment for everyone… only the right investment for YOU.