as I am analyzing houses to buy in cash, fix up and then rent out to use the brrrr method I get the first part of the numbers ran to find the roi is about 10%. But when I go further to find out how much I'm making after i take my cash back I'd only be making about 2k a year. I understand that essentially the house would be free and I am still making money after all expenses are paid but is that worth it? Just curious to see what other people are typically seeing number wise or if there is a general rule of thumb to how much is worthwhile after cash out refi. Thanks in advance.
I'll take an infinite return on my money all day every day.
Don't forget about gaining equity through appreciation and principle pay down.
And keep in mind that's after the equity you already forced through rehab.
Also don't forget about the tax benefits of rentals.
Plenty of reasons to LOVE the BRRRR strategy if you can find deals where they work!
I agree with Brian, if you want to be a good landlord and not just a slumlord ask yourself what is the number that gets yourself off the couch to get the property repaired and to keep it up nice so you get good renters and lower vacancy. For me that number is about $200/month/door in cashflow, but for some people that number may only be $100... or less. If that 2k per year is going to get you excited, then that is great and go build some sweat equity and get the snowball started!
Howdy @Matt L.
Here's the deal. Ideally the main goal of using the BRRRR strategy is to be able to use the same bucket of money over and over again to acquire endless number of properties. As @Brian Garrett said "INFINITE " ROI !!!!!!!!!
Yes, we also want Cash Flowing properties. One of the side effects of this strategy can be lower cash flow. You have to decide what is and is not acceptable for both. They are not all Home runs (100% cash back and $200/m per unit cf). You may need to take some singles and doubles along the way.
With this strategy we are trying to grow our portfolio at a quicker rate than the standard Buy and Hold method.
Join the Largest Real Estate Investing Community
Basic membership is free, forever.