Updated 8 months ago on . Most recent reply
BRRRR Doesn't Always Require Rehab
The first "R" in BRRRR is for "Rehab." It's a handy acronym, but don't let it structure your thinking. You want value-add property you can Buy, Add Value, Rent, Refinance and Repeat. When you think Value Add instead of Rehab, you allow yourself to think more creatively.
It is not always distressed properties that create opportunities, although that's a great strategy all by itself. Think also about:
Distressed Revenues. Properties rented significantly below market because the owners are afraid to raise rents or emotionally attached to their tenants and reluctant to raise rents or maybe just ill-informed. Getting rents up to market adds significant value.
Distressed Owners. Foreclosures, tax sales, heir property, divorce, out-of-state owners with bad local management, many more.
Distressed Market Intelligence. I live in Tuscaloosa Alabama, home of the University of Alabama with 40,000+ students and still growing. Some parts of town that used to be predominantly low income are changing to student housing. Student housing brings higher rents and parent guarantees, making it more valuable. Despite that, many owners are still selling on low income tenant assumptions to evaluate a (low) asking price. Some apartment communities are D- properties in B+ or better locations. Finding the opportunity and partnering with an equity partner who can pay for the rehab allows both of you to share in refinance money but without any rehab expense by you.
Get out of the "rehab" straight jacket and find many more opportunities!
- Denise Evans
- 205-310-3799
Most Popular Reply
Totally agree with this approach.; thinking beyond rehab opens up way more deal flow. One angle I've been seeing lately is renting to traveling nurses or other mid-term tenants. In some markets, you don't need to add a full ADU or go through zoning headaches — just having a private entrance or a bedroom with its own bath can be enough to get solid monthly income. Especially useful in areas near hospitals or universities where there's a steady flow of professionals looking for short-term stays. It's a great way to add value without swinging a hammer.