If passive income is something you would like, let’s do real strategy talk with rules for financial success.

What Does BRRRR Mean?

You might have heard the term BRRRR in investing, and if you haven’t, you should. It’s a method that allows investors to build passive income over time by leveraging the real estate market to their advantage. It stands for Buy, Rehab, Rent, Refinance and Repeat and its one of my favorite strategies.

BRRRR step-by-step

So let’s break this down

First, you Buy– the idea is you’re buying a property that’s below market value, either because its distressed or you can add value to it. The key is that you do not invest more than 70% of the properties after repair value to ensure you have enough equity when refinancing or selling.

Next you Rehab– in order to rehab for success you need to budget the construction costs to improve the value of the property, and you need to have the right team to get the project done in time and to budget.

After you rehab, you Rent the Property- rent the property and increase the monthly cash flow with the new updates. Lenders love rental income and that can in fact help qualify you for a higher refinance. And besides, Rental income is great to pay the mortgage.

Speaking of Refinance– It’s time to get more favorable rates and terms and, most importantly, the ability to cash out. Remember your property value has now increased which means your loan to value has decreased. And now you have rental income to help qualify you for a better loan. If you cash out, don’t go shopping, cashing out in this strategy is only for another investment property.

And finally its time for a Repeat! Take what you learned and repeat. Use the profit left over to go get another investment to play with!

If you need a Real Estate agent, I’d be more than willing to help you. If you are looking at the option of buying a home or selling a home in the San Francisco or the Peninsula in the near future please reach out to us.