Andrew Holmes 2-5-7 BRRRR Strategy

[William S.]

I recently heard a podcast going over the 2-5-7 strategy.

2 years

5 homes (B/B+ neighborhoods using the brrrr strategy)

7 years to payoff all 5 homes

I personally like this strategy, but the brrrr (refinance part is tricky for me). In order to get 100% of your cash back (or close to it) you have to refinance at a fairly high amount. This will leave you with little to no cash flow as long as the mortgage is on the property.

I suppose to get around this you would set aside $10k per home for example for any major repairs within the 7 year mark, rather than setting aside a $/month amount for CapEx ($180-$200/m for 30-year hold). After the 7 year mark, go back a re-evaluate your CapEx budget?

Anyone using this strategy?

[Andrew B.]

If the property doesn't cash flow after a refinance then it isn't a good deal. if you have to pay off your mortgage to make cash flow, you are losing a large amount in wasted equity. No sense in doing either, and you should keep looking for a better deal.