BRRR STRATEGY NEED HELP!

[Latasha Shipman]

Greetinfs!

I am slightly confused on how the BRRR strategy can help out in my investing needs.

I recently purchased an investment property for $23,000 in cash. It was appraised for $42,000. I have been hearing non stop about a particular investing strategy called BRRR!

Based on the information given, could someone elaborate on my next steps as it pertains to using the BRRR strategy? Also, if possible give pros and cons.

[Len Roche]

Hi Latasha,

BRRRR stands for

Buy and undervalued property using financing, I.e not your own money. Bonus points if you finance the costs of rehab.

Rehab and repair the property to force appreciate it to the market price.

Rent the property to start earning an income.

Refinance the current loan to the reflect the new appraised value of the property. A HELOC will work as well. If you got a hard money loan, than refinancing to a conventional loan will save you on interest and avoid any ballon terms. If all the steps were done correctly then the increase in property value and refinancing to second loan will allow you to pull a good chunk or all of your money out of your first loan to pay for rehab costs and to buy another property that is also undervalued.

Repeat steps again with new property.

This aggressive strategy allows you to quickly recoup your initial investment (down payments and rehab costs) so you can quickly buy other properties and grow your portfolio much faster. You should check out the BP calculator to run calculations on whether BRRRR can work for you in one form or another since you already paid cash for your property. A HELOC could work to pull cash out some cash out of your higher appraised property to be used for another property.