Step-by-Step Guide to BRRRs Buy, Rehab, Rent, Refinance, Repeat

The BRRRR method is a popular real estate investment strategy that involves buying, renovating, renting, refinancing, and repeating the process to build a substantial real estate portfolio. My team and I have helped a significant number of clients BRRR and flip and houses. It’s a terrific strategy due to its scalability and flexibility.

Here’s a quick breakdown of the basic process:

1. Buy:

  • Identify a distressed property: Look for properties that are undervalued, such as fixer-uppers, foreclosures, or properties in need of minor repairs.
    We have specific deals we recommend for this as well as specific streams of foreclosure and investment properties.
  • Analyze the property: Calculate the potential after-repair value (ARV) to determine the potential profit. Memphis is an older city can be hyper localized, you need to make sure the data you’re seeing is hyper nuanced and accurate at the boots on the ground level.
  • Secure financing: Cash is king. If you have it, it facilitates a smoother transaction and typically a stronger position. However you can definitely employ the BRRR method via financing. We have a number of different lenders we can connect you with to help you obtain the best loan to purchase the property.

2. Rehab:

  • You’re going to need to work with a good contractor and your Realtor to make a solid plan. You’ll need to take stock of what repairs the home needs and what opportunities exist to not only restore the property’s value but grow it as well. We can direct you towards ample resources for renovation and repair be it via local property management company or private contractor.

3. Rent:

  • Find reliable tenants: Screen tenants carefully to minimize potential problems.
  • Set a competitive rental rate: Research local rental rates to determine the optimal rent price.
  • Manage the property: Handle tenant issues, maintenance requests, and property inspections.
  • We’re happy to connect you with reputable local property managers.

4. Refinance:

  • Appraise the property: Obtain a professional appraisal to determine the property’s current market value.
  • Secure a cash-out refinance: Refinance the property to obtain a loan that exceeds the remaining mortgage balance.
  • Use the cash-out proceeds: Use the funds to pay off debts, invest in other properties, or cover additional renovation costs.

5. Repeat:

  • Identify a new property: Use the funds from the refinance to purchase another property.
  • Repeat the BRRRR process: Continue the cycle of buying, renovating, renting, refinancing and growing your wealth.

Key Considerations:

  • Market Knowledge: Stay informed about local real estate trends, rental markets, and property values.
  • Financial Planning: Have a solid financial plan, including a budget for each step of the process.
  • Risk Management: Understand the risks associated with real estate investing and implement strategies to mitigate them.
  • Legal and Tax Implications: Consult with legal and tax professionals to ensure compliance with regulations.
  • Team Building: Build a strong team of professionals, including real estate agents, contractors, property managers, and financial advisors.