CAN'T SEEM TO FIND THIS ANSWER ABOUT BRRRR RENTING! PLEASE help!

5 Replies

I really appreciate you taking a minute to read this and if you can help that would be amazing ! Like I said I'm new to investing in real estate within the last couple years and I just ran across this BRRRR idea and I think I'm in love.

I'm halfway through the book  which I very much find valuable  and I definitely understand  99% of it, or so I think I do at least , but the rent part is leaving me a bit confused.

It's possible that I have missed this explanation or potentially didn't make it to this part yet but how much do I rent the said house for? Is there a certain percentage that I need to shoot for in order for it to be a successful BRRRR?

I've heard Brandon and David talk about 12% Roi when renting but does that same number need to be achieved when brrrring?  Obviously it would be wonderful if I could get 12% after financing the property and getting my money back but I'm just looking for some info here.

I have a couple houses I just picked up cash for what I would consider a price that would make for a successful flip, No Doubt, but when I run the numbers with renting there's not a whole lot of money to be cash flowed each month after pulling out even 75% of the value. 

@Nathan Fausnaugh When you use the BRRRR strategy successfully, you should be able to take out most of the money that you have into the property, thus your ROI can be in the 100's or 1000's or infinite. The key is to find a property well under market value there you can fix it up and still remain at about 70% of the ARV. Then when you go to refinance, you can get most or all of your money out of the deal and you can go do it again.

Shiloh lundahl, thank you so much for taking the time to respond! You have a cool name by the way.

  If I'm able to pull out most or all of my money and have someone renting the property for an amount that will take care of all my monthly expenditures with that property than I'm good? Or is there a guideline / Target for how much Cashflow I should get?  I understand that everyone might have a different opinion on this but I'm just looking for some type of rule of thumb potentially?

there is no rule of thumb and BRRRR generally if you pull out all your cash your cash flow will be minimal.

the theory is you can build up a portfolio and you suppose to have some built in equity.

but the deals are not what they were 5 to 10 years ago.. so while in theory for sure this works and its not a new concept we did these loans routinely prior to the GFC  its just been coined on this site .. I did a few thousand of them for my clients. 

end of the day though its a max leverage minimal return game.. which if your up for that that's fine.. just make sure you have adequate reserves..

@Nathan Fausnaugh - how much do you rent the house for is dictated by the local rental market and condition of the property. You can estimate that through various tools and websites (agents and brokers, Zillow for rent, HotPads, rentometer.com, RentRange.com, MLS lease CMAs, etc.).

Is better to stay in the middle or lower side of the rent range you determine with the means mentioned above, in order to get the house rented fast and keep it rented (vacancy is a cash flow killer).

How that factors in with the rest of the BRRRR strategies and how to do the calculations is a much larger discussion and the resulted outputs are dependent on the quality of the inputs you make. You have tools here on BP for this, or if you want a more detailed tool, PM me.