{"id":115384,"date":"2019-09-06T12:00:08","date_gmt":"2019-09-06T18:00:08","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=115384"},"modified":"2022-08-09T09:32:45","modified_gmt":"2022-08-09T15:32:45","slug":"real-estate-investing-key-components-brrrr-strategy-success","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/real-estate-investing-key-components-brrrr-strategy-success","title":{"rendered":"10 Key Components of BRRRR Strategy Success"},"content":{"rendered":"

Whether you\u2019re a fix and flip investor<\/a>, a buy and holder, or (like me) combine both into what is commonly referred to as the BRRRR method<\/a>\u2014buy, rehab, rent, refinance, and repeat\u2014there are certain considerations that come with every single deal you do.<\/p>\n

Below I detail 10 vital elements of the BRRRR process. Understanding how they relate to your business, as well as to each other, is empowering and will enable you to boost your results to whatever heights you desire.<\/p>\n

Failure to recognize them, on the other hand\u2026 well, you could be setting yourself up for a world of hurt!<\/p>\n

10 Key Things You Need to Know About the BRRRR Process<\/h2>\n

1. Change is inevitable.<\/h3>\n

The Navy SEALs have a great motto: \u201cYou plan your dive, and dive your plan.\u201d Real estate investing is no different\u2014with one caveat.<\/p>\n

Your plans and timeline will change. It seems like this happens with every single deal. No matter how carefully you plan, the unexpected crops up or there are unforeseen delays.<\/p>\n

The key is to understand this and to plan for it! No, I\u2019m not trying to be smart. The point is you should account for changes in your timeline and your plans, so when things crop up, you\u2019re ready to deal with them.<\/p>\n

2. You\u2019ll go over budget.<\/h3>\n

This one goes hand in hand with the first. If your plans and timeline change, then that invariably means your budget will change. Again, plan for this. Expect it to happen.<\/p>\n

The reasons you\u2019ll go over budget are as varied as you can imagine\u2014from increased costs in materials to contractor delays to finding something during a rehab you didn\u2019t expect or simply deciding that you want to do a bit more to improve the property. It might even take a bit longer to find a tenant or to sell.<\/p>\n

Again, account for this by padding your estimates in both time and money by 5 or 10 percent. As you get more experienced, you\u2019ll notice a pattern, and you can adjust this percentage to accommodate your business.<\/p>\n

\"Businessman<\/p>\n

3. There are highs and lows.<\/h3>\n

This is just as true with investing as it is in life. There are always ups and downs. The trick is to work through them. If you feel your project is dragging on longer than you thought and you\u2019re bogged down, the best solution is to lower your head and work through it.<\/p>\n

Persistent and consistent effort always pays off.<\/p>\n

Related:<\/em><\/strong> How to Work with Lenders for the BRRRR Method (+ a Massive Open Secret to BRRRR Success!)<\/a><\/em><\/p>\n

4. Develop and nurture A-team relationships.<\/h3>\n

Relationships move real estate. Relationships help you find deals, fix properties, locate tenants, and sell a house\u2014and everything else in between. So form and never neglect those powerful relationships with (who I like to call) your \u201cA\u201d team.<\/p>\n

These key players include contractors, agents, lenders, title companies, inspectors, and even other investors. Nothing pays bigger dividends than strong relationships.<\/p>\n

5. Recognize good design.<\/h3>\n

Let\u2019s face it, we\u2019re in a competitive market. And we always will be. The reasons for competition may change, yet the idea of staying ahead of the curve never will.<\/p>\n

You want to create a \u201cwow\u201d factor on every level of a fix, rent, and sale. That\u2019s where great design really comes into play. Do more than the basics. Painting, new floors, and shiny appliances are vital, but where can you truly transform a property into something more valuable?<\/p>\n

Turning a three-bed into four dramatically increases value and wows a potential tenant<\/a> or buyer. Taking down walls to open up an older home and create a more spacious and modern look really has a tremendous effect. Finishing basements and adding amenities gives your property that feeling of desirability you want.<\/p>\n

Remember, today\u2019s tenant and today\u2019s buyer are far more discerning than decades ago. Their options are open, so do all you can to provide them with plenty of reasons to choose you.<\/p>\n

Related:<\/em><\/strong> 4 HGTV-Level Upgrades to Make Your Flip Stand Out<\/a><\/em><\/p>\n

6. Know when enough is enough.<\/h3>\n

Great design and wowing improvements can really make a big difference\u2014but you\u2019ve got to be careful you don\u2019t cross the line. It\u2019s important to know when you\u2019ve done enough and more importantly, when not to go further. It\u2019s entirely possible to rehab yourself into the poor house.<\/p>\n

It\u2019s great if you rehab a property to be four beds and three baths with a pool. However, if all the other houses around you are 3\/2 and no pool, then your property suddenly becomes the overpriced big fish in a small pond. And you\u2019ll be in trouble!<\/p>\n

\"\"<\/p>\n

7. Set up weekly contractor meetings.<\/h3>\n

Stay on top of the rehab. Don\u2019t micromanage, but also don\u2019t turn your back and just assume it\u2019s all going perfectly. Meet every week with your contractor to discuss the project’s progress, budget, and timeline.<\/p>\n

8. Mistakes will happen.<\/h3>\n

Sorry to burst your bubble, but this is something you can\u2019t avoid. I\u2019m not saying there will be mistakes on every deal; however, you should expect them to crop up from time to time.<\/p>\n

This goes back to the first point I made: A wise investor will plan for errors. Give yourself enough wiggle room when estimating to account for mistakes without completely blowing your budget out of the water.<\/p>\n

9. Communicate often with your contractor.<\/h3>\n

The last two points tie into this one, too. The best way to avoid or limit mistakes is to communicate with your contractor often. I\u2019m not talking about the weekly meeting; that\u2019s one thing. But talk to them every day or two and just check to make sure everything is going well.<\/p>\n

This also helps limit the possibility that a contractor will do something incorrectly. If you can nip it in the bud before it happens, you\u2019ll save both time and money.<\/p>\n

10. You can do it.<\/h3>\n

Anybody can be a successful BRRRR investor if they simply are willing to do the work. You also have to be brutally honest with yourself in regard to your strengths and weaknesses.<\/p>\n

Acknowledge the areas in which you’re skilled and the areas in which you need expert help. There\u2019s no sense in trying to reinvent the wheel. You can\u2019t be an expert in everything, so fill in the gaps with those who are.<\/p>\n

Grasping these 10 keys will help you unlock the doors to success in real estate!<\/p>\n

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Questions about any of the above? Advice to add?\u00a0<\/em><\/p>\n

Let’s talk in the comment section below.\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Here I detail 10 vital elements of the BRRRR process. Understanding how they relate to your business, as well as to each other, is empowering and will enable you to boost your results to whatever heights you desire. Failure to recognize them, could be setting yourself up for a world of hurt!<\/p>\n","protected":false},"author":12764,"featured_media":115213,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7355],"tags":[],"class_list":["post-115384","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-brrrr-method"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/115384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/12764"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=115384"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/115384\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/115213"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=115384"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=115384"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=115384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}