How to Find the Best Brrrr Property Deals for Your Real Estate Investment Strategy

Introduction

Are you looking to dive into the world of real estate investing but unsure where to start? The BRRRR method may just be your answer. This sustainable investment strategy has been transforming ordinary people into successful property investors with a proven five-step approach: Buy, Rehab, Rent, Refinance, and Repeat.

In this blog post, we'll explore various techniques to find and secure off-market BRRRR properties at discounted prices that will kickstart your journey towards financial freedom.

Key Takeaways

• The BRRRR Method involves five steps: Buy, Rehab, Rent, Refinance, and Repeat.
• To find BRRRR Properties, network with other real estate investors, look up foreclosures and bank-owned properties online, visit neighborhoods and drive around to spot distressed properties, join online real estate groups and forums to connect with wholesalers or motivated sellers and partner with real estate wholesalers who can help you find off-market deals.
• When evaluating potential BRRRR properties consider the location and neighborhood, property type financing options available as well as its potential for adding value through renovations or cosmetic updates.
• Different types of properties come with their own unique sets of challenges and opportunities.

Understanding The BRRRR Method

The BRRRR Method is a real estate investment strategy that involves five steps: Buy, Rehab, Rent, Refinance, and Repeat.

The Five Steps: Buy, Rehab, Rent, Refinance, Repeat

The BRRRR method is based on a five-step process that helps real estate investors build wealth and generate consistent cash flow from their properties. These steps include:

1. Buy: Acquire off-market or underpriced properties, often in need of some repair or renovation.
2. Rehab: Renovate the property to increase its value, focusing on improvements that will attract tenants and allow for higher rent prices.
3. Rent: Find reliable tenants for the newly renovated property, ensuring a steady stream of rental income.
4. Refinance: Secure a new mortgage on the property based on its higher appraised value after renovations, allowing you to pay off any initial loans and access additional funds.
5. Repeat: Use the funds generated from refinancing to purchase more properties and implement the BRRRR strategy again, steadily growing your real estate portfolio over time.

How To Find BRRRR Properties

To find BRRRR Properties, network with other real estate investors, look up foreclosures and bank-owned properties online, visit neighborhoods and drive around to spot distressed properties, join online real estate groups and forums to connect with wholesalers or motivated sellers, and partner with real estate wholesalers who can help you find off-market deals.

Network With Other Real Estate Investors

One of the most effective strategies for finding lucrative BRRRR properties is networking with other real estate investors. By connecting with like-minded individuals, you can gain access to valuable insights and information about potential deals that may not be available on public listings.

For example, an investor in your network could tip you off about a motivated seller who needs to sell their property quickly due to financial distress or personal reasons.

In addition to attending events, consider joining online forums and social media groups focused on real estate investing. These platforms provide a wealth of knowledge from experienced professionals who share tips, advice, and firsthand experiences related to BRRRR strategy.

Moreover, engaging in conversations within these groups allows you to build relationships with investors in different markets and potentially uncover off-market deals that suit your investment goals.

Look Up Foreclosures & Bank-Owned Properties

One of the most effective ways to find BRRRR properties is by targeting foreclosures and bank-owned properties. These types of listings usually arise when a homeowner defaults on their mortgage payment, allowing investors to potentially acquire these homes at below-market prices.

In addition to foreclosure databases, popular real estate websites like Zillow, Marketplace, or Craigslist frequently post preforeclosures, notice of defaults, trustee sales, and motivated seller listings that can prove valuable in your search for BRRR investment opportunities.

By regularly monitoring these sources and acting promptly when suitable deals emerge, you stand a better chance of securing prime investment property that fits well within the BRRRR strategy.

Visit Neighborhoods & Drive for Dollars

One effective way to find BRRRR properties is by visiting neighborhoods and driving for dollars. This strategy allows you to spot potential deals that may not yet be on the market.

Look for signs of distress, such as boarded-up homes or overgrown lawns. Pay attention to the condition of the surrounding properties because this can give you an idea of the overall quality of the neighborhood.

You may also come across "for sale by owner" (FSBO) signs posted in yards, which can lead to off-market deals.

Finding off-market real estate is crucial in discovering BRRRR properties, and driving around neighborhoods is one way to uncover these hidden gems.

Visiting different areas gives you a better understanding of what kind of property would work best for your investment strategy based on its location and condition.

Join Online Real Estate Groups & Forums

Joining online real estate groups and forums can be an effective way to find potential BRRRR properties. Real estate groups on social media platforms like Facebook, LinkedIn, and Meetup.com are excellent places to build relationships with other investors, share resources, and stay up-to-date with the latest trends in the industry.

In addition to being a great source of information and networking opportunities, these groups often feature members who post deals that they have come across but may not be able to pursue themselves.

Partner With Real Estate Wholesalers

Partnering with real estate wholesalers can be a valuable avenue for finding BRRRR properties. These professionals specialize in sourcing off-market deals, which can provide a competitive edge in acquiring promising investment properties that are not listed on the market.

Real estate wholesalers often have established networks of property owners and motivated sellers who are looking to sell their properties quickly without going through the traditional listing process.

Moreover, partnering with real estate wholesalers also offers benefits beyond deal sourcing. Many wholesalers have extensive knowledge of local markets and emerging trends, which they can share with potential partners to help them make informed decisions about location, property type, and suitable investing strategies.

Additionally, wholesalers may offer various financing options tailored to specific needs or situations that conventional lenders cannot accommodate.

TIRED LANDLORDS

This method gets a lot of attention for wholesalers and flippers but it also works great for Brrrr.  Use your favorite list software or website and narrow your filters down to the areas you picked out.  Now, look for absentee owners that have owned their properties for several years.

Filter out the LLC's and you have a great list of owners to contact.   These are owners that are already renting the home out.  This gives you some confidence that the house will work for Brrrr, since it's already a rental. It also works well because these sellers often can have more than one property and if you catch them at the right time they could be in a phase in their life where they are simplifying things and getting rid of their properties.

EVICTION LISTS

Another way to find properties for Brrrr investing is to get a copy of the eviction list from your county.  This is done differently in each jurisdiction but once you get the list you will know which properties to put the most effort into getting ahold of the owner.

Just like before these are landlords (see a pattern) and houses that were rented before.  They are more likely to be in the price range you want and if the current renters are getting evicted the owner of the house might be more open to selling.

Evaluating Potential BRRRR Properties

When evaluating potential BRRRR properties, consider the location and neighborhood, property type, financing options, and potential for adding value through renovations or cosmetic updates.

Location And Neighborhood

One crucial factor to consider when evaluating a property for the BRRRR strategy is its location and neighborhood. Areas with strong rental demand and potential for future growth in property values are ideal for BRRRR properties.

For example, neighborhoods near universities or colleges tend to have high rental demand due to students looking for nearby housing options. Good access to public transportation is also essential when evaluating a property for the BRRRR strategy as it makes commuting easier and more convenient for potential renters.

Property Type

The type of property you are looking to invest in is an important consideration when using the BRRRR method. Generally, properties that make good candidates for this strategy are those that need some work and can be purchased below market value.

It's worth noting that different types of properties come with their own unique sets of challenges and opportunities. For example, while apartment buildings may offer greater cash flow potential than single-family homes due to multiple rental units, they also require more maintenance and management.

Ultimately, it comes down to evaluating which property type offers the best balance between upfront cost and potential return on investment.

Financing Options

When it comes to financing your BRRRR investment, there are several options available. Private lenders and hard money loans offer alternative financing solutions with higher loan-to-value ratios than traditional banks.

However, they come with higher interest rates and fees.

Additionally, real estate crowdfunding platforms like RealtyMogul or Fundrise offer another unique way to finance rental property purchases by pooling funds from multiple investors online.

Evaluating financing options and understanding their associated risks and benefits is essential for all real estate investing needs.

Potential For Adding Value

Part of the BRRRR method includes evaluating the potential for adding value to a property. This means looking at ways to increase its worth through renovations or updates that will appeal to renters and raise rental income.

Evaluating the potential for adding value involves analyzing the total cost of repairs and renovations against the estimated post-renovation value of the property. With this information in hand, investors can determine if it's worth pursuing as part of their BRRRR strategy.

Tips For Succeeding With BRRRR Method

To succeed with the BRRRR method, it's important to know your market, build relationships with professionals, analyze properties for BRRRR suitability, and explore various financing options; keep reading to learn more!

Know Your Market

One of the key factors in succeeding with the BRRRR method is knowing your market. This means carefully researching and analyzing local real estate trends, including supply and demand levels, fluctuations in property values, and anticipated growth patterns.

For example, if you are looking to invest in rental properties in Texas using the BRRRR Method (as recommended by our [IMPORTANT FACTS]), you might begin by researching different regions within the state to determine which ones offer affordable housing options with strong projected returns.

You could also look at crime rates and school ratings to identify areas that are desirable for renters.

Build Relationships With Professionals

Building relationships with real estate professionals like agents, lenders, investors, attorneys, and appraisers is crucial for finding success with the BRRRR method. These individuals have valuable insights into local markets and can offer advice on everything from financing options to property management strategies.

For example, attending Real Estate Investment Association (REIA) meetings or joining Meetup.com groups dedicated to real estate investing can be an excellent way to connect with fellow investors and industry experts.

Additionally, working closely with a trusted lender or hard money source can help you secure financing quickly for promising properties. Furthermore, establishing relationships with contractors who specialize in rehabbing properties will ensure that any work done on your investment projects is of high quality at a reasonable cost.

Analyze Properties For BRRRR Suitability

To find properties suitable for the BRRRR Method, it's essential to evaluate various factors such as location, property type, potential for adding value, and financing options.

For example, a property located in a high-demand rental area with good schools and low crime rates is more likely to be profitable than one situated in an undesirable neighborhood.

Additionally, evaluating financing options carefully can help investors choose the right solution that aligns with their financial goals. Private lenders or hard money loans offer alternative ways of funding real estate investments while minimizing risks associated with traditional mortgages.

Explore Various Financing Options

There are various financing options available for those looking to invest in BRRRR properties. Private lenders and hard money loans can provide alternative funding with higher loan-to-value ratios, making them attractive options for investors who may not qualify for traditional bank loans.

Real estate crowdfunding platforms such as RealtyMogul and Fundrise also offer investment opportunities that allow individuals to contribute small amounts of capital towards larger-scale real estate projects.

CONTACTING THE OWNERS

Some of the methods are pretty easy to get your offer in. Real estate agents will likely be involved in foreclosures or the auction company will give direction on what to do.  But in the other examples like driving for dollars or your eviction lists, you will need to contact the owners directly.  

There are tons of ways to do this but basically, your list provider or software will give you the owner's name and address.  Once you have that you have several options.

1. Contact the listing agent: If the property is listed for sale with a real estate agent, you can contact the agent to express your interest and request more information about the property.
2. Door Knocking:  If you are really motivated to buy a house try knocking on the door.  Make sure you are at the owner's house, not their rental or you won't be talking to the right person.
3. Send a direct mail campaign: If you are unable to locate the owner or the property is not listed for sale, you can try sending a direct mail campaign to the property. This involves sending a letter or postcard to the property offering to purchase it. While this approach may not be successful in all cases, it can be an effective way to reach out to owners of off-market properties.
4. Cold Calling:  Have the owner's name and address then there is a good chance you can skip trace them for their phone number.   Now you can call them directly.

BRRRR Method Vs. Flipping

Comparing the benefits and challenges of the BRRRR Method to flipping, investors who use the former can achieve long-term financial gains through a steady stream of rental income, while flippers need to sell quickly for profit.

Comparing The Benefits And Challenges

The following table compares the benefits and challenges of the BRRRR Method and flipping in real estate investment, helping investors analyze the right approach for their specific needs.

Overcoming Difficulties In BRRRR Deals

Identifying potential problems early on by conducting thorough property evaluations can help investors avoid difficulties in BRRRR deals, such as unexpected repair costs or issues with tenants.

Common Challenges And Solutions

Real estate investing using the BRRRR Method can come with its fair share of challenges. Here are some common issues and solutions to help overcome them:

1. Financing: One of the biggest challenges investors face is securing financing for their rehab projects or rental property purchases. Hard money lenders and private lending sources can offer short-term loans, while real estate crowdfunding and partnerships can provide additional funding.
2. Finding suitable properties: Off-market properties may be harder to find than listings on popular websites like Zillow or Realtor.com. To overcome this challenge, investors should network with other professionals, explore new neighborhoods, and partner with real estate wholesalers.
3. Rehab project management: Estimating rehab costs and managing contractors can be challenging for those without experience in construction or renovation work. By partnering with a contractor and using software, such as Landlord Studio's rehab estimator, investors can better manage their rehab projects.
4. Tenant screening: Managing tenants comes with its own set of challenges, including finding reliable tenants who will pay rent on time and take care of their unit. By using tenant screening services or partnering with a property management company, investors can ease the burden of finding quality tenants.
5. Unexpected expenses: Even after evaluating potential rental properties carefully for profitability, unexpected expenses may arise from repairs or maintenance costs. It's important for investors to have a contingency fund in place to prepare for these situations.

By being aware of these common challenges and having solutions in place ahead of time, real estate investors can better navigate the BRRRR Method and achieve financial success in their investment endeavors as they build their real estate portfolio over time.

Conclusion

In conclusion, finding BRRRR properties may seem like a daunting task at first, but with the right tools and strategies, it can be done successfully. By networking with other real estate investors, looking up foreclosures and bank-owned properties, visiting neighborhoods and driving around, joining online real estate groups and forums or partnering with real estate wholesalers - you'll have plenty of options to choose from.

It's important to evaluate each potential property based on location and neighborhood, property type, financing options available as well as its potential for adding value.

FAQs:

1. What is a Brrrr property and why should I invest in one?

A Brrrr (Buy, Rehab, Rent, Refinance, Repeat) property is an investment strategy where you buy underperforming or distressed properties, renovate them to increase their value and attract tenants, rent them out for cash flow, refinance to pull out equity and then repeat the process with another property. This strategy can be lucrative for investors looking for long-term passive income streams.

2. How do I find Brrrr properties in my area?

There are several ways to find potential Brrr properties in your local area including working with a real estate agent who specializes in investment properties, searching online real estate marketplaces such as Zillow or Realtor.com or attending local real estate auctions.

3. What should I look for when evaluating potential Brrr properties?

When evaluating potential BRRR investments it's important to consider factors such as the location of the property (including nearby amenities and transportation), size of the building/lot size , condition of the property (needing minor repairs vs needing significant renovations), rental prices in the area versus mortgage payments/taxes/utilities/maintenance costs after renovation/refinancing.

4. How much money should I expect to spend on rehabbing a BRRR property?

The amount spent on rehabbing a BRRR property will depend on factors such as its current condition and scope of work required but typically investors can plan on spending anywhere from 10-20% of the purchase price on rehabilitating each individual unit within multifamily buildings while single tenant homes may require up to 30-40% depending upon complexity & level upgrade/details desired by owner at time project launch .