An Intro to BRRRR Real Estate Investing [Fixer Upper Rentals!]
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An Intro to BRRRR Real Estate Investing [Fixer Upper Rentals!]


You know what I really like about ligers? Picks the best traits of lions and the best traits of tigers and combines them into one beast and you know something else that combines the best of two things into something totally new and totally cool? BRRRR real estate investing. You know it’s the perfect cross between house flipping and rental property investing it takes the benefit of both and make something incredibly powerful that could help you build millions of dollars in net worth plus significant monthly cash flow in shorter time than you ever thought possible. Well my name is Brandon Turner co-host of the BiggerPockets Podcast and author of the Book on Rental Property Investing and today I want to give you a brief overview of how to invest in fixer-upper rental properties using this BRRRR strategy. Hang tight… So BRRRR stands for Buy, Rehab, Rent, Refinance, and Repeat. It’s basically the strategy where you find a nasty property and then you buy using short-term funds, fix it up pretty nice, put a great tenant in there paying top dollar, refinance it to get a nice long-term mortgage, and then repeat the process over and over. Now, if you’re confused don’t be. I’m going to give you a real life scenario right now on a recent BRRRR deal that I did. Now, this is the Cedar House, so i bought it for seventy thousand dollars then I used a private money lender – somebody I met on Bigger Pockets while networking – to fund the deal and to fund most of the rehab. Now including holding costs and other expenses we spent about thirty five thousand dollars fixing up the property and man was it nice. The house rented in no time to a great tenant who paid on time every month and was super easy to work with. Then we went to work refinancing. Now, typically a bank is going to want you to wait at least six months after getting to purchase before they’ll give you the loan and sometimes they want an entire year, just be sure on that when your calculate your numbers when you’re doing a BRRRR analysis. So after the time the house appraised for close to 150,000 and I was able to get a brand new loan to pay off the short-term lender with a long-term mortgage and drop my payment by one hundred dollars a month. Now at the end of the day I kept only a few thousand dollars of my own cash in the deal and going forward with cash flowing every month. Now, besides that story why is BRRRR so cool? Like I said it’s kind of a hybrid between flipping and renting – it takes the benefits of both and reduces the risks of both, so I can build an instant equity in my property which adds to my net worth, but I can wait until the market is where I want it to be at the peak to sell. I can also get monthly cash flow from a great tenant because great houses attract great tenants. Furthermore, my repairs and Cap Ex are reduced because the house is rehabbed already. Plus, as a BRRRR property I can take advantage of long-term capital gains tax which means I pay less taxes than a flipper might. And finally… BRRRR investing allows me to buy real estate without using much of my own money, so I use a private lender to fund the deal and hopefully the repairs and I use a long-term mortgage to pay off that private lender. Now I’ve done numerous BRRRR deals in my life where I didn’t even put a single penny of my own cash into the deal. Finally, BRRRR can be used with single-family houses, small multi-family, large multi-family, and even commercial properties. But, of course, BRRRR investing isn’t without some risks. So what if you can’t get the refinance or what if the appraisal amount doesn’t come in high enough? Typically a bank wants to you know they don’t already finance the whole thing nearly seventy percent or what if you do the numbers wrong? As with any investment there are risks. However, here’s what I love about BRRRR. You can minimize the risks by doing your homework. Now have I spoken to a local bank to make sure I can qualify for a refinance? Have I determined what the after repair value is by looking at recent sales comps other properties that have sold? And have I run the numbers properly to ensure that I’m going to have enough equity to get the loan and that all the numbers are going to work out right. Now in doing your homework you can minimize your chances of something going wrong with the refinance and furthermore I love the fact that if I couldn’t get the refinance I could just sell the house and likely still make a profit and speaking of doing the math be sure to check out the BiggerPockets BRRRR calculator. You can run the numbers on your next BRRRR deal in under five minutes and estimate your cash flow, equity, ROI and much more – plus the downloadable PDF reports are perfect for presenting your deals confidently to private lenders, banks, partners, your spouse and it’s just amazing. So check it out on BiggerPockets.com/analysis if you’ve not yet used them. Now if you want to learn more about the BRRRR strategy I want to invite you to a free online class that I’ll be hosting this week here on BiggerPockets. We’ll be discussing the BRRRR strategy in minute detail to help you prepare to do your next or maybe your first BRRRR investment. Just head to BiggerPockets.com/BRRRRwebinar BRRRR with four r’s. And sign up. So I wish you the best of luck on your future BRRRR deals and as always stick close to BiggerPockets and your journey towards becoming a real estate mogul. The BiggerPockets forums are free to post questions any time and we’re putting out new videos every week on the Bigger Pockets YouTube page so be sure to subscribe to our channel there. Now for BiggerPockets.com my name is Brandon… Signing off.

75 Comments

  • Peter

    Can you refinance a property that's under LLC? If no, can you remove the property from LLC, refinance and put in back without any tax consequence?

  • Gordon Cuffe

    All conventional lenders want you to wait one year before they will give you the new appraised value. It is very tough to find a portfolio lender that will use the new appraised value after only 6 months.

  • neocush1

    Brandon. BRRRR sounds great. But. Wouldn't the private $$ loan increase your debt to income ratio?? So when you're trying to qualify for an equity loan at the bank, the bank will still count the private loan against u and if you're close to your debt to income limit u may not get the loan.

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  • KETAYA VEGA

    Maybe I am misunderstanding.  How is it beneficial for an investor to wait up to a year for you to refi and pay him back?

  • William Echevarria

    What he doesn't tell you is you can't keep doing this as fast as you'd like because it takes 6 months to a year to refinance so it would take you around 10 years to get 10 properties smh.

  • elias palacios

    With the payment of the rent I pay the investor? I have 19 Years I did not understand that part, excellent videos

  • Nathan Cunningham

    Sounds easy until you run into the old debt to income ratio problem and the banks aren’t prepared too cover your loan. Do you have any solutions to this Brandon? Cheers!

  • Brian Smith

    In stead of using a private lender I use a home equity line of credit. Then there is no waiting period for refinancing after the rehab.

  • Benjamin Poole

    Normally I speed videos up 1.5x or 2x because presenters speak so slowly wasting my time! I had to slow you back down to 1.25x, so good on ya for talking at a decent pace.

  • the shadow

    what if your in the UK??? (any tips?)
    I'm only 15 but am planning on being a full-time property investor, I just need this crucial question to be answered.
    thanks to anyone that answers.

  • william731

    I am using some of my homes equity to buy the blank property next to me, I would like to put 3 newer (2005- 2010) trailers on it and rent it out. Rent here for a nice trailer is about $850. A month. I would like to get a short term loan of about $60,000 – $75,000 to do this and then rent and refi after a year. My question is will this work with trailers the same as it would a house? Technically it’s the land that I’m improving not the trailers so will it still work with the refi?

  • Moguls in the Making

    Thanks so much for the info on the Brrrr strategy, we are doing this up in Canada with lots of success. Thank you for the great video

  • Joel Gierbolini

    Great episode, question. When you refinance to take the equity out. If the house is worth 200K(market value) and you bought it for 180K does the bank gives you 20K in this particular situation?

  • ronald williams

    I don’t get why people do this with 5 houses u end up with roughly 100k debt on 5 houses and a few k a month why is this good

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  • Just Justin

    Is a tenant paying rent necessary for this to work? Can I buy a home in cash, rehab it, live in it then refi for cash to buy the next property? Is it likely for the bank to process the refi with an owner residing in the property instead of tenant paying rent? Any input or resources related this are much appreciated.

  • Michael Lords

    Okay so let me get this straight. The house was $70k and the rehab another $35k, all financed by a private lender?

    The house gets appraised for $150k and now you have money to pay off the private lender, how??

  • Matt Kimes

    All sorts of funny money going on here, or mommy and daddy's money. Doing it the right way, not holding a loan, that takes sweat and more than 5 years. Pay cash for three houses a year for your first two years, and that separates the men from the boys.

  • ROSS MORFORD

    What is going to hurt me is the 20% down over and over until each property hits a year old to refi, not to mention the rehab costs. Unless my primary income goes up every year, I won't be able to "stack" as rapidly as suggested..

  • Alex Soriano

    Must be nice to not put a single penny…. I yet have to find the person to handout money to me. Ive spoke to hard lenders and it just not that easy. how about that 10% at auction or 20 in down payment? Hard lenders want to see 30% of the loan in your bank. Maybe these are things you should tell people.

  • Sharmella Krishnasamy

    Refinancing will increase the monthly installment of the property. With the extra cash, we need pay the morgage of the refinanced property, buy a new property and renovate, pay the morgage of the new property. I don't understand how it can be profitable.

  • Hog Farmer

    I've bought many properties by getting the seller to finance 20% by doing a 15 yr note with a 5 year balloon and I offer them normally 8% interest to motivate them. Find landlords that are at retirement age , they are most likely to sell their properties in this manner.

  • hulkhoganwwf

    This is how i BRRRR. Tell me what i can improve on.

    – dropbox link to all my financials. all categorized
    – 80/20 loan to value. 20% downpayment, 80% financing. same ratio when refinancing
    – no tenant seasoning, refi immediately with lease in hand
    – showings to potential tenants during renovations, so once finished tenant moves in.
    – no minimum limit to financing. The lender i have will finance a 80k home. Average home here is 320k

    anything i can improve on?

  • Jesse Paxton

    Okay so i know you rehab BEFORE you rent it out to your tenants in order to increase rent value… but won't tenants destroy a lot of the cosmetics of the home and you're goning to have to fix that all up before you sell/rerent? And you'd have to do this before every new tenant?

  • Philip Lapinski

    Help!!!! Have seen Brandon use calculator before in different videos. When the property is being rehabbed he included rental income in the calculators? How does that work? Sorry if it’s a dumb question but if I am putting 35k into a property how do I do that with tenants living there???

  • Dude Real Estate

    We've used this method on 3 single family homes. POWERFUL! Added total equity of over $60k across all 3 properties and able to get most of our capital back after the refinance.

  • ablanchi

    So are you refinancing to the 150k appraised or the 100k invested? Also how much does the private lender get, and how is that negotiated?

  • Marty Summers

    What term are you getting on the mortgage? If it's under an LLC. I was told to unclaim the deed back to my name before getting a mortgage. Then put it back to LLC…..

  • ETHAN NEWTON

    Was the 70k paid for the house your own cash. you had 70k on you to buy it, or was that 70k from other people as well?
    and was the 70k a down pay? or full price. cause i dont know that i would find a place anywhere that would sell for 70k. Then again you are probably in a better area.

  • kross keyy

    Dude what is that video of the 4 wealth pillars on real estate ?? I cant find it anywhere ? 1: cashflow
    Capitol apreciation tax benefits and equity ??

  • Jeffy Tood

    I don't understand how going deep in debt to buy houses will make you rich leverage everything to the max all your money goes back to the bank to pay principal and interest taxes insurance maintenance

  • Damnit Bobby

    I'd flip the house + tenant and walk away with the $40,000 cash difference from the loan. The fact is, MOST renters will trash the house and you WILL end up rehabbing the house each time you get a new renter. No thanks. Take the cash and run.

  • Jeff Wible

    Finding a private investor seems to be the impossible part for some. I personally don't know anyone that would be willing to put up a lot of cash up front. So, with that in mind, what is another way to get started?

  • Marcel Rodriguez

    Ok but how much interest did you pay that person for that 70k? Aint nobody gonna lend money just like that without benefit…

  • theodore roberts

    I like what you're saying. I like that it here now, but this was done two years ago. Does it take Google two years to approve?

  • Americ Empire

    Hi, this is an excellent video. But my question, how many times can I do this? Because it seems that after do this 2 or 3 times in a year, the bank going to stop give you money until next yeat

  • RAM Real Estate Investing

    Thanks Beardy Brandon! I've been flipping locally in California, but after learning this strategy I have now purchased 4 out-of-state properties in the past 4 months and I am feeling the BRRRR!!!!

  • Brian Murphy

    it is strange to think that "this way you didn't use any of your own money". If it doesn't work out, you owe all that money plus interest. It is always 'your own money'.

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