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Interest rates are rising. Sellers are still asking for high prices. Bidding wars are still happening. And Investors are still working hard to save for 25% down each and every time they want to buy a better property.
But there has to be a better way!
Not to sound like an infomercial, but it is true! It is during difficult times that in order to succeed, we have to be able to pivot and get creative. Although we can have our niche and our primary strategy for investing, it is important to educate ourselves on the other options available to us.
So here is THE that hack Successful Real Estate Investors are using!
The BRRRR Method is a way to purchase a property at a low cost because it needs renovations. Then, you generate monthly cash flow from renting it while pulling out your original investment so you don't have to save for another down payment! It is a rinse and repeat process that can put more money in your pocket in multiple ways! (And who doesn't want that?)
Join our FREE Hard Money Lending Webinar tomorrow here to learn more about how The BRRRR Method works!
Here's what BRRRR stands for:
B: Buy
Clearly we need to start here. With the BRRRR method, the idea is to find a house that needs improvements. This is a great opportunity to hone your skills for finding off market properties. (Learn how to do that here.) By buying the ugliest house in a nice neighborhood, you have the chance at getting a property at a better price and having less competition than turnkey properties!
R: Rehab
Next, we need to make those improvements. Using a Hard Money Lender for the funding will give you the rehab money you need to complete the project. Learn more about Hard Money Lending here. You will need to have a good contractor on your side and if you are handy, doing some of the work yourself can be a huge asset. Make sure to account to carrying costs during the renovations!
R: Rent
Now that the renovations are complete, let's get that baby on the rented. Screen well to get tenants in place and start collecting your monthly cash flow!
R: Refinance
Since you bought at a low price and then made nice upgrades during the rehab, your property should now be worth more money than what you paid for it! You can now refinance out of your Hard Money Loan into a traditional loan. When you do this, you can pull out a certain amount of the equity you just gained. The goal is to be able to pull out at least the down payment you used and, hopefully, a little extra profit as well!
R: Repeat
If you do this right and can at least get your down payment back, you can now buy another property without having to save up! You can repeat this strategy over and over again, picking up properties, collecting that monthly cash flow, and using the same down payment money! Neat, right?