The BRRRR method of real estate investing has made many new millionaires across the US over the last few years. While the method is not fully “new,” the BRRRR label has made this process of generating income through real estate investing simpler and more accessible than ever before. Understanding the method, as well as the pros and cons associated with it, will ensure you can reach your money-making goals in 2023.
Defining the BRRRR Method
If you want to make tons of money in today’s real estate landscape, you cannot afford to ignore the many amazing benefits that the BRRRR method provides. For those not already in the know, however, trying to wrap your mind around such an oddly named model for making money can feel overwhelming. Thankfully, the BRRRR method is much simpler than you might expect it to be at first.
To simplify the method, think of it according to the letters in the method, and what they stand for. Buy, Repair, Rent, Refinance, and Repeat. Each of these steps ensures that the BRRRR method is one of the best ways to make consistent, and substantial ROI on all of your real estate investments in 2023 (and for many more years to come).
To delve into the method in more detail, however, it can be useful to comprehend what “buy, repair, rent, refinance, and repeat” actually means when the method is put into practice IRL. First, you find a property that, while filled with potential, needs clear repairs and maintenance to be a true winner. Not only does this allow you to buy below market value, but it helps you enter into the next step of the BRRRR method (repair). During the “repair” stage, you’ll put as much effort as possible into making any major repairs upfront. Doing so will allow you to move onto the “rent” stage, where you can begin renting out the property and generating a positive cash flow as you perform additional repairs. Once you’ve successfully renovated the property, you can seek a refinance offer that will allow you to make tons of money off of the property (in addition to the positive cash flow you’ve already created pre-refinance). Lastly, you simply need to “repeat” the process as much as humanly possible, so you can have a series of successful and ROI-packed real estate investments under your belt.
3 Pros of the BRRRR Method
1. It’s Affordable to Get Into
Because you’ll be buying properties below the market value (due to the needed repairs and maintenance), investors who have limited income to invest in real estate will be thrilled by the prospect of using the BRRRR method. As long as you’re willing to put in the work, you’re nearly guaranteed to generate a profit using the BRRRR method over a long period.
2. Positive Cash Flow Potential
If done right, the BRRRR process allows you to unlock a positive cash flow around your rental property (even as you’re renting it out and repairing it simultaneously). If you can secure a reliable tenant to rent out your BRRRR property, you’ll have an even better setup to take advantage of in 2023.
3. Put Your Investments on Autopilot
Because the BRRRR method is so straightforward, it’s perfect for those who do not have the time to constantly obsess over their methods. Once you’ve successfully used the BRRRR method for a few properties, the process will become so simplified that you can basically put your efforts on autopilot for the foreseeable future.
3 Cons of the BRRRR Method
1. It Can Be Tricky at First
While the BRRRR method is fantastic for first-time investors due to its accessible price points, it can still be tricky (even for experienced investors) to master. For those with a great work ethic, however, this should not become a major obstacle. Believing in yourself during this process is key, after all.
2. You Must Understand Refinancing
Getting a solid understanding of how refinancing works is the biggest hurdle for newcomers to overcome when getting into the BRRRR method. Refinancing is affected by tons of ever-changing financial and economic factors, so staying on top of the waves in the real estate sphere is key. If you can master the art of refinancing, you’ll have the full power of the BRRRR method under your belt.
3. It Can Take a While to Get Started
Even if you do every aspect of the BRRRR method perfectly, you’ll still need to prepare yourself for the gradual ramp-up of getting the method started. Once the method is going in full force, however, you’ll be making more money in the real estate game than you’ve ever thought possible.