Can someone help me understand the major differences beween the two strategies? Do most people perform upgrades on buy and holds? Is the brrrr strategy about forcing apreciation so that you can refinance and cash out the initial down payment to use for additional properties? What am I missing?
Yes you are correct. It is buying properties at a discount because they need rehab work done and after the rehab is complete you have forced appreciation. Two important concepts. Be an expert at your market so you what the ARV will be when you are done. Know what the market rents are. You need the ability to refinance or have a partner who has good credit for the program to work. Unfortunately it requires institutional financing or at least that is the concept. I have been using the BRRRR strategy for a number of years, its a great strategy.
BRRRR is a just a particular type of buy and hold strategy, BRRRR is an attempt to be able to refinance all of your money out so you have nothing in the property you acquired. It's sort of approaches buy and hold from a flippers mindset but instead of flipping the property and making a profit from your equity, you're flipping the debt and using the equity to be able to acquire a property with nothing down. Whereas buy and hold can be anything that involves buying a property and holding it.
In other words, all BRRRR is buy and hold but not all buy and hold is BRRRR.