BRRRR VS Rental buy and hold

[Jeremy Corporan]

Hello everyone,

I'm super excited and can't wait to get started with my first investment property. I'm focused on multi family units, 2 units more specifically to start off. My question is how do you determine if a property is a BRRRR vs a buy and hold rental when using the BP calculator? Does the after repair value play a big part in that if your doing some fix and rehab work? Thanks in advance!

[Michael Ealy]

Originally posted by @JD Martin:

BRRRR *is* buy and hold. There'd be no need for the "refinance" part of the equation if you were just going to sell the property. That's not saying no one ever sells a property they refinanced, only that the idea of BRRRR is usually somewhat short-term horizons, meaning as soon as the property is done and seasoned and assuming the market is strong and interest rates are low, most people cash out at that point.

To add to what JD said, BRRR is a sub-set of buy-and-hold.

Buy-Rent-Renovate-Refinance is to buy the property and then keep it as a long term rental and, if you bought it right, you pull all (or most) of your capital out so that you can do another deal.

You can do a straight put down 20% and forget it about (traditional buy-and-hold) if you want to do investing the "slower" way and you build a rental portfolio as you save up the money. So, this traditional buy-and-hold is really for those high income earners who can afford the 20%-25% downpayment on properties that don't need a renovation...and wants to build a portfolio more passively. BRRR requires you have rehab experience (or some know-how and know a good GC), it requires that you are able to manage the renovation process in addition to leasing and property management.