Updated over 5 years ago on . Most recent reply
$50k to invest in BRRRR
Greetings. I have $50k to invest and I'm interested in BRRRR. I've been doing my research on it but I don't fully understand the concept....do I put down 25%, and follow the BRRRR protocol? Help me understand.
Most Popular Reply
Hi, I'm about to get started with BRRRR myself, but can help you understand the concept (just giving an example):
You buy a property for 50K (you can use your own money or borrow). Invest 25K in rehabbing it. Then, you rent it out, and then reach out to a lender to refi. The lender will lend you money based on an appraisal, so let's assume the appraised value is 100K. If you are interested in a 75% LTV loan (meaning - 25% down), the bank will lend you 75K, which covers your purchase and rehab costs, so eventually you are left with a property which you purchased for free (and it cashflows).
the example above is a very basic and simple one, there are many details which you need to take into account, but from a highlevel this is how it works. You can many posts and videos here in BP which provide more details.
To your 50K - as mentioned above - you can use it to buy in cash (or fund the rehab) or you can find HM or PM to help you with funding the first steps until you refi.
Hope it helped... GOOD LUCK!