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BlogArrowReal Estate Investing BasicsArrowThe BRRRR Origin Story: How I Discovered This Amazing—No Money—Real Estate Strategy
Real Estate Investing Basics Jul 11, 2020

The BRRRR Origin Story: How I Discovered This Amazing—No Money—Real Estate Strategy

Brandon Turner
Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP, Real Estate Investing Basics
593 Articles Written
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Two lessons from that first deal that I just did over and over and over, both those things, over the next decade.

Partnerships

Number one, I added a partner to the deal. Now, that partner was my father. He didn’t have a lot of money, but he had a job. He was a meat cutter at a grocery store. He had a job. So I said, “well, can I just add you to the title?”

And we refinance it. I talk to a local bank and they’re like, “Yeah, that’s fine, as long as he’s on the loan, we don’t care that you don’t have a job as long he has a job.”

Great. He didn’t have to put any money in, he just had his name on the loan.

So what I discovered that day was two things. Number one, the power of partnerships, because at the end of the day, you don’t have everything you need to put together a real estate deal, chances are. But somebody does.

handshake-partners

The Deal Delta

Today I teach about the deal delta. There’s three things every deal needs, right?

Number one, you have to have knowledge of what you’re doing. Somebody has to know what they’re doing in the deal to be able to put everything together. The knowledge of how to acquire deals, how to analyze it, knowledge of how loans work, whatever.

You have to have the hustle. So somebody has to do all that work, fill out the paperwork, show up, manage the contractors, manage whatever the process is, everything, just the hustle involved.

And then third, you have to have the money. Somebody has to have the money.

Related: BRRRR Investing: The Ultimate Guide to the Buy-Rehab-Rent-Refinance-Repeat Strategy, Made Simple!

So it’s like a triangle. And you have to have all three sides in order to put together any real estate deal. I thought I had to have all three in the beginning, but then I realized I don’t.

I know this is part of your story as well, right? Like, if I had the knowledge and the hustle, I could figure out somebody else with the money.

Now, some people are really good at the money. They can raise money really well, but maybe they don’t have the knowledge or the hustle or the ability, maybe they don’t have something else. So the key was my dad had the “money.”

And, you know, the bank had the money. But my dad had the ability to get it. So I added him on. And so I realized that you can do deals with partners and amazing things happen.

win-win-partnership

Creating the Process

The second thing I learned was that I bought that property. I then rehabbed that property. Now it was a really nice property, it hardly needed any repairs at all. I think I fixed it four times over the next decade.

I bought it, I rehabbed it, I rented it out. I then went to a local bank and I refinanced it, so I got all the hard money back that I’d used to buy and rehab the property.

Now it’s pretty rare to get a hard money lender to fund the rehab and the purchase price, all of it. But I got it. I paid the hard money lender back. And now the hard money lender’s money was freed up and now he trusted me, he’s like, “wow, Brandon did this.”

So I borrowed more money from him again, I repeated the process.

Related: The Pros & Cons of the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) Strategy

And so looking back on that, a few years later, I was like, “I buy, rehab, rented, refinanced, repeat.”

I was writing a blog post for BiggerPockets now like seven years ago and was like, “How can we make that whole process—which was really cool, and a lot of people do it—how do we put a name to it?”

I was like, “let’s call it BRRRR investing.” And when I told that story, I said I basically did a BRRRR. And that’s where the term BRRRR came from. And I discovered the power of the BRRRR strategy.

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How did you get into the BRRRR strategy?

Share your experiences in the comments.

By Brandon Turner
Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has taught millions of people how to find, finance, and manage real estate investments. Brandon began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, Brandon is the managing member at Open Door Capital. With nearly 300 units across four states under his belt, he continues to invest in real estate while also showing others the power and impact of financial freedom.
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10 Replies
    Derrick Washington
    Replied 6 months ago
    Was the loan or refinance put in your fathers name or it stayed in yours
    Danny Tao Real Estate Agent from San Jose, CA
    Replied 6 months ago
    That's a good questions Derrick. I would like to find that out also.

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    Frankie Lesowske Rental Property Investor
    Replied 6 months ago
    So awesome, thank you Brandon! I read this at the perfect time. Once I'm out of the Army, I will have to refi or get a HELOC on my first property to get the downpayment to House Hack my next property in AZ. If I don't have steady income to qualify I know people who do, but that possibility didn't cross my mind. It's an amazing thing to read the advice from mentors that have already been through the struggle I'm about to encompass.

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    Mark Mcdonnell Rental Property Investor from Irvine, California
    Replied 6 months ago
    So I have thought long and hard about the BRRRR method but as of yet haven’t put it into action and I’ll tell you why. Think I know my market pretty well and have a great agent so pretty confident on the BUY. Have done a few rehabs and also have a great property manager so not worried about the REHAB and RENT aspects either. I have also read countless article’s and David Greene’s book “BRRRR” ( which is great by the way), so pretty confident with the all cash offer and elements of the deal. What keeps me up at night is the REFI step in the process. I have talked to multiple loan brokers (even those that specialize more in portfolio lending) and reps from larger banks and I’m perplexed. None seem willing to refinance a deal even after being paid For and rehabbed. What am I missing?
    Steven Silman Rental Property Investor from Vancouver, BC
    Replied 6 months ago
    Mark Mcdonnell lots of lenders require "seasoning" before being willing to refinance (typically 6 months to a year). When getting turned down, be sure to ask why - with that knowledge you can tailor your strategy to meet the lender's needs and keep the surprises to a minimum.

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    Steven Silman Rental Property Investor from Vancouver, BC
    Replied 6 months ago
    Mark Mcdonnell lots of lenders require "seasoning" before being willing to refinance (typically 6 months to a year). When getting turned down, be sure to ask why - with that knowledge you can tailor your strategy to meet the lender's needs and keep the surprises to a minimum.
    George Lui Investor from Palo Alto, CA
    Replied 6 months ago
    Steven, can you expand on what you mean by "seasoning" in this context? I'm in the same boat as Mark.

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    Roseann Dunteman
    Replied 6 months ago
    Great advice. One BIG caveat is to be very sure of your numbers and abilities in every regard. If the deal goes south, the person with the job will be on the hook, would have liability and their credit score could be damaged.

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    Pranav G. Investor from Blackwood, NJ
    Replied 6 months ago
    We have purchased almost 30 plus single family homes with none of our own money , not only that we got cash out of those, so basically negative $ investment. They are cash flowing as per expectation and it feels good when you have no money involved still getting paid every months.

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    Alex Giassa Real Estate Agent
    Replied 6 months ago
    Great lesson to share! As the saying goes, "Alone we can do so little; together we can do so much." ~ Helen Keller

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