BRRSSBRR Explained: The new BRRRR

[Zach Matson]

In Boise at least (and most major markets), it's been nearly impossible to find BRRRR deals for years, even before high interest rates.

Enter BRRSSBRR. Not a new strategy, just an investor/developer/builder realizing there is a ton of opportunity in this market and almost any market that 99% of investors aren't even aware of. 

So, what does it stand for? 
Buy, Rehab, Rent, Split, Sell, Build, Rent/Resale, Repeat. 

One of the challenges of lot splits is zoning and the time it takes to accomplish. Enter the BRR method of lot splits. Buy the house that you can split the lot from. You shouldn't be paying any extra for the land. Fix up the house (if needed) and rent it, to ideally at least break even on your mortgage on the house while you're working through the steps of the lot split. 

The value here isn't usually in the house you're acquiring, its the value you're creating from the lot split. 

Once the split is approved, sell the original house. You can recoup a huge chunk of the cash put in, and, if it was a rehab, sometimes even make money on the flip. You now own the land free and clear with the equity of that land created. In Boise, for example, it's at least 6 figures no matter what part of town. Sometimes multiple six figures. Now, there is some cost to splitting it, but almost always the cost is much less than the new lot value. 

You can now either sell the lot for a profit, or, create even more value by building (with the right builder and cost), then using the equity you have created to have a cash-flowing rental, or sell it for profit and do it again. 

This works in any market that you can sell a building lot for over $100k.