Have you ever considered purchasing an investment property? Maybe you’re concerned that your money could be better invested somewhere else. Today I want to go over everything you need to know about investment properties, including how you can still have money for other investments.
The method I want to break down for you today is called the BRRRR strategy. BRRRR stands for buy, renovate, rent, refinance, and repeat. Books have been written about it, and podcasts have spoken at length about it, but hopefully, I can explain things for you in a way that makes sense.
Let’s start with buying. When we buy a property, we want to look for two major things. The first is equity, and the second is cash flow. We need equity because when it comes time to refinance, we need to be able to take money out. The cash flow is so that the property makes sense as a long-term investment.
The next step is to renovate. The property behind me in the video was in extreme disrepair, so we improved its value by updating it. With other properties, it might make sense to add extra rooms or make other structural changes.
After you improve your property’s value, it’s time to refinance. With the property behind me, I purchased it for $300,000 and made updates for $65,000. Now, this home would appraise for around $450,000. Since we have so much equity, banks will be willing to do a cash-out refinance.
If you follow these steps, you now have a property you own and are renting out, but you also have the cash from it to repeat the process. Repeating is important because your cash flow will scale with each new property.
Hopefully, you now understand the opportunity in investment properties. If you have any questions about investment properties or the BRRRR strategy, please call or email me. I am always willing to help.