BRRRR Strategy Question

[Wayne Mack]

Hi everyone!

I have a question regarding the BRRRR strategy, it has really caught my attention and I believe this is the entry strategy I will employ! The phrase actually made me laugh a few times last night during the webinar @Brandon Turner hosted

Now, when funding the BRRRR strategy, can you fund it the same way you would fun a flip? For instance could I get a HML for this type of strategy because I have the intent to cash out refinance within 6-12 months and repay the lender? As you would do a flip when you repay your lender?

Anyone who has done this type of deal or is knowledgable within this strategy I would love your advice 

Thanks in advance! 

[Brian Larson]

@Jerod Smith Hopefully I answered your holding period question above. You should be holding for about a year.

As for not finding a BRRR deal, take a look at your cost of money. That is what will kill you in that first year. Brandon says to just make a little bit of money in year one so you can refi and make solid cash flow in years 2 and on. I personally have a minimum amount of $50/door for year 1. The reason I can go so low on CF/door is because I can minimize vacancy in 1 year due to a 1 year lease thus my expenses drop a bit in that year and it gives me a little air cover.

As for figuring out a solid BRRR, you have to buy well under market value and create a ton of value with a rehab. As an example, I bought a place for $32k, rehab for $24k and the ARV is $80k. Without cost of money, rent, etc the numbers there work because $56k is right at the 70% of ARV I need to get all of my money back on refi (less closing costs).

Cheap plug, but I made a specific BRRR Calculator and uploaded it. I use this all the time as it helps me quickly input a few numbers and see if the deal works.

You can grab it here

I have a newer version but have not scrubbed it and put it up. If you want to see a version of a real property let me know and I would be more than happy to share. Just DM me and I can send it to you so you can see a real world scenario from Kansas City or Indianapolis.