Looking to invest in real estate? the best way to do so is by buying long-term rental properties.
When you buy and hold properties over the long term, you earn money in multiple ways. For one, you have the rent coming in each month, which should provide you with some cash flow. But you are also having your mortgage paid down each month, growing your equity.
On top of that, your home will appreciate in value, earning you even more. This is why you want as many properties as you can get. And the BRRRR method is the best real estate strategy to use if you want to multiply the number of properties you own.
So what is the BRRRR strategy, and how can you begin implementing it today? Keep reading to find out now.
The Old Way of Obtaining Properties
Most DIY investors have followed the same path to growing their rental portfolios. They save up 20% for a down payment, which often takes a year or longer, and then get an investment mortgage in order to obtain a new property.
This allows them to build their portfolio one house at a time, over the course of decades. It’s slow and ultimately ineffective, especially for those looking to retire early.
BRRRR Strategy Real Estate
The BRRRR strategy, on the other hand, rapidly increases the speed at which you can obtain properties. It does this by allowing you to recycle your capital, rather than save it up and spend it once, never to see it again.
BRRRR stands for buy, rehab, rent, refinance, and repeat. Here’s what the process looks like.
Buy
Just like any investment strategy, your first step is to buy a single-family home. Ideally, you find one that needs a fair amount of work. Your goal is to rehab the property and increase the value of the home.
Because it’s hard to get a mortgage on worn-out, outdated properties, it’s best if you can save up and purchase with cash. This always allows you to find the best deals.
Rehab
Once you own the property, you’ll make the necessary improvements to remodel the home and increase the value. You can do this on your own or by hiring a contractor.
Rent
Once the property is remodeled, you can rent out the property to a long-term tenant. Now you start earning money as rent checks begin coming your way.
Refinance
Because the property is worth much more than you bought it for, you can refinance the property, pulling out all or most of the capital you’ve invested. This allows you to reuse your money on the next property, rather than saving up a new down payment.
Repeat
Once you’ve pulled out your capital, you can reinvest your money into the next property. And then the next. And now you can start acquiring multiple properties a year, building a rental portfolio fast.
There’s a lot more to this strategy, as many books have now been written about the process. One thing you’ll need to do is build a team of people able to help you with every step of the process.
That means contractors for the rehab process and lenders for the buy and refinance processes. Learn more about the BRRRR strategy here and how you can get started today.
Winning With the BRRRR Strategy
The BRRRR strategy has the potential to make you a full-time living through real estate investment in a matter of a few years, rather than a few decades. If you want to build your wealth while you are still young enough to enjoy it, this is the best strategy to use.
Looking for more tips like this? Be sure to visit our blog today to keep reading.
