The BRRRR method

[Chris Mullinax]

I'd like to know your opinion on this: Is the BRRRR method the best option for real estate investment?

[Sam Smith]

Hi Christin,

I think Joe is right on a lot of those points, but there is a situation in which BRRRR is an exception strategy: if you start out by buying a house without a mortgage.

If you buy a house outright (all cash), fix it up, rent it out, and then refinance so that it still cash-flows and you get your initial investment back, then BRRRR is an exceptional strategy.

For example, spend $90,000 to buy a house, and put $10,000 into it. Then, go to the bank and put a mortgage on it with a valuation of $125,000. You’ll end up with a cash-flowing investment property and $100,000 in cash so that you can start again with a new house.

This is better because you don’t pay the bank twice for the loan and you won’t have to wait the six month “seasoning time” between buying and refinancing.

Of course, it all comes down to your goals. what’s a “good deal” for one person isn’t necessarily a “good deal” in another person’s eyes since their goals might be different.

Good luck with it!