What if you could discover a way to buy more and more real estate without ever running out of money? That’s exactly what smart investors are doing when they employ the BRRRR strategy.
BRRRR (pronounced “bur”) stands for Buy, Rehab, Rent, Refinance and Repeat. BRRRR is a real estate investment strategy that involves buying undervalued properties, renovating them, leasing them out to reliable tenants, refinancing them to get your money back out, and then repeating the process all over again. In other words, this strategy allows investors to invest over and over again without ever running out of money.
So what’s the catch?
If you’re a careful reader, you will have caught the word “undervalued.” In other words, you need to find a seller who’s willing to sell you something for less that it could be valued at.
But why would anyone sell you something for less than it’s worth?
The truth is, there are lots of reasons. But one of the most common reasons is the property needs “work”--upgrades--and the seller would rather sell their property at a discount and let the buyer do the work and capture the upside.
Let’s say you find a property that could sell for around $100,000 after fixing it up.
Let’s say you estimate that the repairs will cost about $25,000.
And let’s say that you have an older landlord who’s looking to retire to Florida and no longer wants to deal with renting out his property.
So you’re able to strike a deal with the owner. You’ll pay him $50,000 for the property. He agrees.
Once you take possession, you do the $25,000 in upgrades. You’ve now invested $75,000 in the property (for the sake of simplicity, we’ll ignore acquisition costs, etc.)
After you’ve rehabbed the place, you rent it out for $1,000 a month. In 6 months you approach a lender and show them you’re new, fully upgraded property that has a paying tenant in it.
The bank agrees that the property is now worth $110,000 and because you have good credit, the lender is willing to allow you to refinance the property for 75% of its current value.
You do some quick math - that means the lender will cut you a check for $82,500 (75% of $110,000).
You pay yourself back the $75,000 you initially invested and you have $7,500 leftover to invest in your next property!
Of course, you now have a mortgage and have to repay the bank (about $650 / month, depending on the interest rate), but you’re not actually paying off the loan - your tenant is from the rent they pay!
And you’re now free to repeat the strategy again for your next property.
There you have it--the basics of the BRRRR real estate investment strategy: Buy, Rehab, Rent, Refinance, and Repeat.
There are more nuances such as limit on the number of loans you can get, how to value a home, how to estimate repairs, etc.
But luckily, we have an expert in the BRRRR strategy for our next meetup!
On Wednesday, August 2, the Seoul Real Estate Investing Meetup invites Beau Gumbert to talk about his unique BRRRR and wholesaling real estate investment strategies.
Find out how Beau, along with the help of his technically-savvy business partner:
- Identifies properties going for 50% to 70% of their ARV using a special algorithm and big data;
- Has the best real estate agents in town scrambling to work with him;
- Accurately assesses ARV;
- Identifies distressed properties not listed on the MLS using cutting-edge tools and custom-made software;
- Markets to distressed property owners and gets significantly higher-than-average response rates for a fraction of the cost and time of traditional direct mailing approaches;
- Wholesales some of the properties for a quick profit and flips others himself as part of his wealth-creation strategy;
- Has been able to refinance over 25 properties.
Also, find out what brought Beau to South Korea. (Hint: It’s related to real estate and cryptocurrencies.)
More about Beau Gumbert
Beau Gumbert is from Fort Worth, Texas and is a marketing major from the University of Arkansas. Although Beau is just 25 years of age, his entrepreneurial spirit was clear to see from much earlier on in his life. In high school, for instance, he would buy abandoned storage containers at auction and flip them. In college, he went on to launch a number of successful businesses including Northwest Arkansas Christmas Lights--a Christmas light installation business--and Superhero Window Washing LLC, a name that evolved from the popular superhero costumes that its team members would don when on the job. Their motto: “Fighting Grime one pane at a time.” After successfully selling this business, he paid off all his student debt, bought a house for himself to live in, and invested in a turnkey rental property. He then launched two successful real estate businesses: Lucky Duck Real Estate, Inc. and North Texas Acquisitions Group (NTAG).
Language: This event will be conducted in English.
Date/time: Wednesday, August 2 from 7 PM to 9 PM
- 19:00-19:30 Registration, networking
- 19:30-20:30 Presentation, question-and-answer session
- 20:30-21:00 Networking
Venue: Sparkplus 스파크플러스
Directions: Go out of Yeoksam Station exit 8. Sparkplus will be on your left, on the second floor of Aju Building.
Participation fee: 10,000 KRW (payable in cash and on the door); Includes unlimited free beer and coffee