fbpx

BRRR method: source of opportunities in real estate market

The BRRR method has nothing to do with someone angry with you. In fact, this technique puts a lot of money in the pocket of investors in the real estate market who use it wisely.

Thus, the BRRR method is an acronym that means buy, rehab, rent, refinance, then repeat.

Although this strategy is used successfully by many investors, you need to have information about what it consists of in order to find out if your profile fits within this area of the real estate market.

If you are the kind of person interested in building passive income in a scalable way to enjoy the good times of life, this article is for you.

After all, between us, who in good conscience doesn’t want to have a passive monthly income to live with more tranquility?

So come with me and I will show you how!

The BRRR method step by step

BRRR method

In fact, before applying the BRRR method it is necessary to know how it works in theory.

First of all, it must be said that the purchase part is crucial for the success of the method.

After all, in case you get in a trap with the purchase of a property that has little practical value, the whole method goes down the drain.

If you are fully confident that you have found a jackpot you can make a loan with a hard money lender or a private lender to make a cash offer.

But, anyway, it is worth paying attention to the 3 main points before buying the business.

So, let’s see them in detail:

B – Buy

The first one is to find a property with a price below the market.

Often these properties are distressed ones and the owner of the property wants to sell it to pay off at least part of his debt.

The second point is: how much money will be invested to give new airs to the property?

There are some houses that are in such deplorable situations that it doesn’t matter the price you pay for them, because the cost of the renovation is so high that it makes the purchase impossible.

Finally, it is necessary to verify the value of the rent in the region of the property. The secret of passive income is to get more for less.

Thus, the higher the price of rent in the neighborhood of the property to sell, the more advantageous this business shows.

R – Rehab

Well, now that you have bought the property the time has come to make it as attractive as possible for the tenants.

In the article about the flippers I gave an idea of the biggest investments that must be made to leave a functional property.

Although the flipping process aims at selling the property, basically the renovation follows similar patterns, as in both cases it is intended to make the property welcoming.

Because of this, in order to reform in the most profitable way possible, it is necessary to analyze well and calculate each investment in order to reach an ideal balance between spending and return.

R – Rent

The time has come to put the property on the market so that it receives its first tenants.

However, you need to take certain precautions first.

Define well the tenant profile you want and the amount you want to buy from the rent.

In this sense, it is necessary to be very conscious, because if you put the rent price on the heights, you will drive away those interested by increasing the vacancy of the property.

On the other hand, if the price is too low, it will be more difficult to receive a sufficient return for the business to be advantageous.

Hence, it is vital that you study well before applying the BRRR method, especially if you are going to take out loans to achieve it.

Therefore, it is at the moment of renting that you will realize if you have made a good or bad deal.

R – Refinance

 Before coming to this step, it is recommended that you have rented the property for a few months.

I say this because most lenders demand this prerequisite for refinancing.

In addition, it is important to say that the financing is based on ARV – after the after-repair value.

So, make sure you follow all the rules and you are ready for the next step.

R – Repeat

Repetition is the key to any business in life.

 In this bias, it is no different with the generation of wealth within the real estate market.

So, the BRRR method is proven to be effective, provided it is done in the right way and with all the necessary consistency.

In short, when you get your refinancing, you’ll have more money to buy another opportunity and restart this virtuous cycle.

The pros and cons of the BRRR method

Having seen the method step by step, let’s now think about the pros and cons of the process.

First of all, it is a business that in fact generates many opportunities for profit and for generating excellent passive income provided by quality tenants.

But while the returns are high, the risk is also high.

For, in fact, leveraging finances has its price. Loans are sometimes quite expensive and their margin of error becomes very limited.

In addition, one must consider the fact that reforms are often time-consuming, stressful and more costly than anticipated.

So take some time to reflect on whether this method is for your profile.

If you are a risk-averse investor who doesn’t like to do business in a leveraged way, maybe BRRR is not the ideal method for you.

Conclusion about BRRR method

The BRRR method can even be a bit complicated the first time you perform it.

But I am sure that each time you conclude this strategy, you will be more and more prepared for the following.

Thus, the potential return is fantastic, since after a certain time of applying the method, you can have a series of properties generating rent at the same time.

That is why we at BR Capital USA want to help you with this method.

After all, it is part of our purpose to help generate opportunities for all stakeholders within the real estate market.

Therefore, we believe that the BRRR method is an excellent way to generate financial gains in a practical, honest and socially responsible way.

Learn more about us by clicking here!

 

Deixe um comentário

O seu endereço de e-mail não será publicado.

Sign up to learn about the benefits we offer to our customers.
Hello, BR Capital USA Customer
Sign up to learn about the benefits we offer to our customers.
Hello, BR Capital USA Customer
Sign up to see the benefits we offer to our partners.
Hello, BR Capital USA Partner.
Sign up to see the benefits we offer to our partners.
Hello, BR Capital USA Partner.
Sign up to learn about the benefits we offer to our investors.
Hello, BR Capital USA Investor.
Sign up to learn about the benefits we offer to our investors.
Hello, BR Capital USA Investor.