Joe Homs, a broker and investor with 40+ years of experience, breaks down the BRRRR method: buy a property, rehab it, rent it out, refinance to pull out cash, then repeat. The strategy can accelerate portfolio growth and boost returns, but refinances typically only cover about 70% of the property's after-repair value, and rehab delays can squeeze your cash flow.
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Today we're going to break down the BRRRR strategy, what it is, the pros and cons. Let's do it. The BRRRR method has proven to be a great way to build cash flow for investors, but this is not for everyone. Learn how to invest with the BRRRR method and the pros and cons, and I will show you how much you can make. Welcome back to the channel and make sure you subscribe So you get my over 40 years as a broker, investor, and mentor. I have a new video every Tuesday and Thursday for those new investors and experienced investors. Those of you who want to build the life you've always wanted through real estate. The BRRRR method stands for buy, rehab, rent, refinance, and repeat. This investment strategy is for investors who want to grow a large rental portfolio quickly. All right, let's break it down. Buy— purchase a property that's undervalued with hard money. Rehab— make improvements to the property to get it rent-ready. Rent— rent the property out to market standards. Refinance— use a cash-out refinance To repay your original loan. Repeat, use the profit from a cash-out refi to go and find another property. Okay, we're going to break down some of the pros right now. Growing a large rental portfolio with less money invested. So you're putting money into a property, refinancing it afterwards, taking that money out, and again repeating the process, buying something else. And you continue to repeat that process so that your rental portfolio increases. Potentially higher returns because less money is invested in each deal. Tax advantages of owning rental real estate. Okay, let's go over some of the cons now. The risk of being unable to refinance at the desired amount, and that happens when you've possibly put too much money into the rehab So that you're unable to get all that money back out. So you have to be careful with your numbers and your rehab. Typically, you get about 70% of the after-repair value when you do a refinance, but you also have to be careful that the appraisal comes in at the value that you want. The risk of a longer than expected timeline to renovate. Losing some cash flow by refinancing with a larger loan. There are a lot of moving parts to this investment strategy and a lot of areas that things can go wrong. Doing your due diligence is very important, especially with the BRRRR strategy. You have to make sure that you run all your numbers correctly because you're really looking at the end result. So make sure that all those numbers that you're calculating are correct before you pull the trigger. If you want to know more about analyzing properties, click on this video right here. I break down how to analyze a property so that you make the most on your next purchase. And feel free to reach out to me at any time. I'm here to help.
