I just finished my first BRRRR investment using a hard money loan! Now this isn't my first house or even my 2nd, 3rd or 4th. I just was never fully confident in the idea of using hard money before. After I finished the process however, I think I'll keep this will be my go to system moving forward...Maybe. It was alot easier than I expected.
If your new to BRRRR investing heres the breakdown:
I’m going to explain to you the BRRRR Strategy of real estate investing step by step. It’s the fastest way to build wealth investing in real estate and it’s the best of both worlds between rentals and flipping houses. If you don’t know BRRRR stands for Buy, renovate, rent, refinance and it’s actually really simple.
Buy:
To buy a property fast you need two things: A wholesaler, or another way to buy properties below market value to create a nice spread between your purchase price of the property and the final value of the property, and second you need to be able to act fast.
Now, the fast money usually comes in the way of a hard money lender or some other easy money/ liquid cash method that lets you make “all cash offers”. Another way to do it is to buy properties with the equity in your home via a HLOC (home equity line of credit) or if you have the time to spare, a traditional mortgage. (let me know if anyone wants to hear a longer list of ways to buy a house without using your savings.
Renovate:
Depending on the property, you may have to do renovations as simple as a cosmetic refreshing with things like paint and new appliances but more than likely you’ll be replacing flooring, upgrading electrical or moving plumbing. The combination of remodeling projects is infinite, but I’ll make it simple. Usually the nicer the property, the nicer the tenant and obviously the higher the appraisal value at the end of the project.
Rent:
Your tenants are easy find. Your good tenants, well they can be a bit more of a challenge if your new to the land lording world.
-Someday Im going to write a book about all the interesting people I have met throughout the years. –
Anyhow, hire a good property manager unless you dream of fixing lightbulbs at 3am. The best way to find a good property manager? Ask your local real estate investors who they use! You have to be social at this point. If people start bragging about their manager, that’s the one, if they try to change the subject, let them.
If you insist on renting your own properties, do your self at least one favor. Find a good property management software that will screen your tenants for you. And despite how down on their luck the person tells you they are, don’t rent to them unless the software gives you a green light. If you do, you’ll quickly go from the happy one time saint, to the “slumloard” when they don’t pay rent. If you want to be charitable, give your money to a homeless shelter or church. This is another lesson I have had to learn the hard way and its cost me a lot. And what’s funny is I had heard this advice before.
Refinance
You have a tenant! Congratulations! Now how long does your back want to you wait before you can refinance? Some have a 6 or 12 month waiting period. So know this before you start the process. If you can’t find a bank locally that’s willing to refinance your awesome investment, you can cheat and just use Park Place finance. Do me a favor and say I sent you. I don’t get anything yet, except a good feeling for passing on this information, but maybe they’ll eventually send me a gift basket.
Repeat
Sounds easy right? Well….alot of people find out through their first experience that this easy money, isn’t as easy as they thought. And unfortunately, they give up before they get the hang of things. Don’t let your first property be your last. It gets better and I already know you’ve made a very stupid mistake…and you haven’t even bought the property yet….
Anyhow leave a like for good luck! And subscribe!
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