It can be hard to get ahead with the money you earn at your day job. Between your mortgage and paying off student loans, money is tight. No one has time or energy for a second job. For the adventurous, real estate investing is a way to grow your net worth while working part-time. It's a win-win, especially when you use the BRRR method of investing in real estate.
What is the BRRR method of buying real estate?
BRRR is an acronym thrown around a lot in real estate investing groups. It stands for Buy, Rehab, Rent, Refinance, which is a method of investing in real estate. Essentially, the goal is to buy a home that needs repairs, get any loan you can on it, fix it up, and rent it out. You then go to a lender and show them a nice home that has a renter living in it and you refinance at a much better rate. When refinancing, you pull your original down payment out so you can use it to buy the next house.
Why does the BRRR method work?
The BRRR method works because you are buying something that is undervalued -- usually because it needs cosmetic repairs -- and adding value to it. Your goal would be to rent it at a fair price and use that rental income to both pay the mortgage, taxes, and insurance as well as create a savings fund for long-term repairs, like a new roof or furnace. The long term plan with any BRRR home in your portfolio is to pay off the mortgage and have a steady stream of income that allows you to quit your full-time job and retire early.
Does the BRRR method work for real estate investors?
Everyone has different goals in real estate investing. Some people want to quickly flip houses for large amounts of cash while others like the idea of owning several rental homes and creating a stream of income. Both options work.
How many mortgages can one person have?
While there is no legal limit to how many mortgages a person can have, most lenders will only allow four. To get around this requirement, many real estate investors choose to form an L.L.C. or an L.L.P. for their investment purchases. This is also a way to protect your personal assets in the event of a lawsuit. Talk to your attorney for clarification.
It is always a good time to invest in real estate and the BRRR method can make the process that much easier for you.Share