BRRRR Method - Does anyone have a visual money flow chart?

Question

Hello,

I'm extremely dumb and am having trouble grasping the concept of the BRRRR strategy. Specifically where the money flows through each step and how it continues flowing after your first property. I don't mean 'cash flow'. I mean where does your initial monies go after making your first purchase and how does it get recycled and paid off.

Is there a flow chart or some sort that I can look at that details this?

Kunle Akangbe · Answer

@Kevin Sha I recommend you read the book BRRRR by David Greene. You buy using borrowed money, rehab the property, rent it out, refinance after 6 months and repeat the process. In a successful BRRRR, your refinance allows you to pull out at least all the money you borrowed so you can pay it back. Sometimes you are able to pull out more than you borrowed which means you’re actually paid for doing the BRRRR.

Note: Delayed financing is also an option

Kunle Akangbe · Answer

@Kevin Sha which property pays the mortgage? The same property you BRRRR’d. Usually your new mortgage after you refinance will be a 15 or 30 year mortgage which would make your monthly payment relatively low. If your property cash flows, you should have enough to pay for that mortgage and other expenses and still make some money.

If you’re referring to the closing cost associated with refinancing - you would probably have to include that in your initial budget.

Kevin Sha · Answer

@Kunle Akangbe

So after the cash out refinance of the first property, which property's rent pays for that refinance loan?