What is the Buy, Repair, Rent, Refinance Strategy?
Updated: Feb 13, 2022
What is the best strategy for investing in real estate? What would you do to grow your wealth?
Have you heard about the BRRR strategy? It is a surprisingly simple method in how to effectively build equity through real estate. Here are the steps:
Buy: Find a property that you think is undervalued and purchase it if you think it has the potential for an upgrade. Even if the property is not in the best condition, if it has potential, it has value. Seek out hard money lenders (ex: Kings of Capital) for adequate financing if necessary.
Repair: Fix up the place to code and match (or slightly exceed) your competitors in providing it with proper value. With proper financing, hire contractors to get the job done, and plan out a budget and timeline to get it done efficiently. Don’t over-exhaust your repairs as it eats away at your profits. Just make it look nice for the new homeowners.
Rent: Rent out the newly refurbished property to tenants to bring up its value in the marketplace and make some profits. Make sure your tenants are trustworthy and reliable.
Refinance: Pay off the debts owed with the money made through tenants. As yours and the property’s equity grows, go to a bank or lender to refinance the property for a higher value than when you started.
A bonus step for the dedicated: Repeat. BRRR is a sound strategy if done properly and can be repeated with a series of properties to no end. Be wary of legal fees, interest rates, and fluctuating markets though as they can severely impede the process. As sound of a strategy BRRR is, be wary of the volatility that can emerge in the real estate market.
Lastly, the most important advice when utilizing the BRRR strategy is to be patient. Be wary of volatility that may emerge and be wary of the time and effort it takes to see your projects through to the end. Just know that having faith and confidence in yourself goes a long way.
Do you have what it takes to build your wealth through the BRRR strategy?
Contact Kings of Capital today, just click here to contact us.