Real Estate is a highly lucrative venture, and to be successful, you need to be strategic. One of the best strategies in Real Estate is called “The BRRRR Strategy for Real Estates Investment”.
Wondering what BRRRR means? Buy, Renovate, Rent, Refinance. Repeat.
The idea is to repeat this process several times over a 5 to 10 year period and eventually you will have acquired several properties that pay you enough monthly income to quit your job and pursue real estate investing full time if you wish.
Let’s dive deeper into the BRRRR method and look at some examples with math.
The BRRRR Strategy for Real Estates Investment
1 – Buy Real Estate
You are going to need enough cash on hand to purchase the property plus fund the renovations. Start saving as much as you can from each paycheck at your job if you don’t have enough in your bank account.
Depending on which real estate market you live in, foreclosure properties and distressed properties can sell for might need extra cash for renovation.
Once you’ve purchased the property, move on to step two of the BRRRR Method.
2 – Renovate the Property
Inspect the property thoroughly so you can know from A-Z what needs to be repaired.
Call up different contractors (roofer, plumber, electrician, painters, etc.) to walk through the property with you and quote you for different repairs.
Make sure to get multiple quotes for each service so you can make the best use of your money and not overpay.
Or if you don’t want a hands on approach, consider hiring a general contractor to walk through the property with you and let him manage the renovations with their crew of contractors they use.
3 – Rent out the Property
Once you’ve neared completion of all renovations, begin advertising the property for rent.
- Post ads on Jiji and other online platforms
- Use a real estate agent like Rogba Properties
- Place a For Rent sign in the neighbourhood
Having a website is super important if you want to have automated systems in place that save you time and make investing in real estate more passive.
You can also hire a property manager to manage renting out your properties, but this isn’t recommended until you’ve grown and have acquired several units.
4 – Refinance
Now you may be thinking, “why don’t I sell the property as a flip and cash out for my profits?”
This investing strategy is focused on building “passive income” or “job replacement income”, hence, the idea is to acquire as many rental units as possible. Consequently, you will have a diversified monthly income that can allow you to quit your job and live full time off your rental properties.
If you flip each property, you have to keep finding more deals and it’s no different than having a job. Your income isn’t consistent. When you stop flipping, the income stops as well.
In addition, you can refinance to pull out your profits, and then use them to go acquire the next rental property without giving up the current property.
This allows you to earn rental income that pays off that mortgage you take out, and eventually you’ll own the property 100% again.
5 – Repeat
You can then proceed to Step 1 to repeat the whole process.