Updated about 7 years ago on . Most recent reply
Understanding BRRRR Strategy
Hi BP family,
My name is Alex and I'm very interested in the BRRRR strategy. From listening to a bunch of podcasts, some routine advice seems to be, "choose your niche, become laser focused on how to become great at it, then move on to something else...". Well I want to do that with BRRRR and am just wondering..where do I start? Like the very first step. With the exception of learning how it works because I'm pretty knowledgeable on how the strategy works. What are the first steps to be taken?
Most Popular Reply
@Alejandro Hayden you need to be very sure of 4 things.... rehab costs, rent, ARV, and an exit strategy. If you're off base on any of these things it could cost you a lot of money. The rent and ARV portion is usually what trips people up. It's not like flipping where because the margins are thinner.
For example, you have a property that your flipping. You paid $100k, needs $50k in rehab, ARV is $200k. You have a $50k buffer before you lose money.
Because the Refi is based off of 75% of the ARV, you have no buffer there. Your max refi is $150k so if you're over rehab or off on your ARV, its money out of your pocket.