How To Take Advantage Of The BRRRR Method | FortuneBuilders

Abstract

Once a sizable amount of equity in the property is built up, the investor can then purchase a second property by refinancing the first, and so on. Matt Woodley from Mover Focus states that "The BRRRR Method is a real estate investing strategy that helps investors identify, research, and purchase properties at a discount. The BRRRR method involves three steps: brainstorming, researching, and reselling. By brainstorming ideas for potential properties to invest in, investors can gain an understanding of the market and find undervalued properties. Once researched, investors can determine whether or not the property is worth purchasing and make the necessary repairs or upgrades. Finally, once purchased and renovated, the property can be resold at a profit". There is a complicated intersection between making sure a property represents a sound investment deal and promising to perform well as a rental property. Tenants who are willing to pay top-dollar for their rental property in exchange for certain features and amenities are more likely to take better care of the property and reduce their expenses. Economies of scale: Once you hit your BRRRR stride, you can achieve something called economies of scale, where owning and operating multiple rental properties at once can help you lower your costs overall by lowering your average cost per property and spreading out your risk. Appraisal Risk: Investors typically refinance a property based on the appraisal of the property, rather than how much money they have paid into it. How To Finance BRRRR Properties One of the most difficult obstacles for starting investors is figuring out how to finance BRRRR properties.