3 Real-World Examples of Successful Brrrr Strategies

In this blog post, we'll explore three real-world examples of successful Brrrr strategies. By examining these case studies, you'll be able to see exactly how the Brrrr method works, the benefits it offers, and the challenges you might face along the way. Whether you're just starting out in real estate investing or looking for ways to grow your portfolio, these examples will provide valuable insights and inspiration.

Follow along as I go over a few real-life scenarios that show the BRRRR method in action.

Johns BRRR Story

John was always interested in real estate investing, but he didn't have a lot of capital to work with. He had heard about the Brrrr method and decided to give it a try.

John found a distressed property in a desirable neighborhood and was able to negotiate a purchase price of $100,000. He knew the property needed some work, so he budgeted an additional $30,000 for renovations.

John hired a contractor and spent the next few months rehabilitating the property. He installed new floors, painted the walls, and made a few other cosmetic improvements.

Once the renovations were complete, John listed the property for rent and was able to secure a tenant at a monthly rate of $1,300.

With the property generating passive income, John was able to refinance the property and obtain a loan for $130,000 (the original purchase price plus the cost of renovations). He used the extra cash freed up from the refinance to repeat the process and continue building his real estate portfolio.

Thanks to the Brrrr method, John was able to turn a single investment into a stream of passive income and start building wealth through real estate.

Johns BRRRR Numbers Broken Down

Step 1: Purchase a distressed property for $100,000.

Step 2: Rehabilitate the property, spending an additional $30,000 on renovations.

Step 3: Rent out the property for $1,300 per month.

Step 4: Refinance the property and obtain a loan for $130,000 (the original purchase price plus the cost of renovations).

Step 5: Repeat the process with the cash freed up from the refinance.

In this example, john is getting $1300 in rent and has a rental with quite a bit of equity some of it (30k) he was able to pull back out. The investor can then use the $30,000 freed up from the refinance to repeat the process and continue building their real estate portfolio.

Samanthas BRRRR Example

Samantha spent a lot of time researching neighborhoods and looking for distressed properties that seemed like good candidates for the Brrrr method. She also did a lot of research to get a sense of what to look for in a property and to make sure she was making a sound investment.

She looked at a ton of properties before finding one that seemed like a good fit. The neighborhood she chose was great strong, it was close to amenities and had a strong rental market. She also liked the fact that the property needed a lot of work, as this meant she could add value through renovations and increase the property's value.

After negotiating with the homeowner directly, Samantha could purchase the property for $200,000. She knew this was a good deal, as the property had the potential to generate a significant amount of passive income once it was renovated and rented out.

Samantha knew the property needed a lot of work, so she budgeted an additional $50,000 for renovations. She hired a reputable contractor and spent the next few months rehabilitating the property. She installed new windows, replaced the roof, and made a few other major improvements.

Once the renovations were complete, Samantha listed the property for rent and secured a tenant at a monthly rate of $2,500.

After 6 months Samanth refinanced the property with a local bank and was able to pull out most of her money.  It appraised for 325,000 and she was able to secure her cash-out refinance for 250k getting most of her money back out.  There were some monthly costs and other small bills that she paid out of pocket.

Samanthas Numbers Broke Down

Step 1: Purchase a distressed property for $200,000.

Step 2: Rehabilitate the property, spending an additional $50,000 on renovations.

Step 3: Rent out the property for $2,500 per month.

Step 4: Refinance the property and obtain a loan for $250,000 (the original purchase price plus the cost of renovations).

Step 5: Repeat the process with the cash freed up from the refinance.

Samantha turned a $200,000 investment into a $325,000 asset. She then put 250k of debt on it so she could pull out the 50k.  It now generates $2,500 per month in rent which is more than her mortgage payment. She can then use the $50,000 freed up from the refinance to repeat the process and continue building their real estate portfolio.

David buys a BRRR from a Wholesaler

One day, while browsing online, David came across a distressed property that was being sold by a wholesaler. The property was located in a desirable neighborhood and needed some work, but the price was significantly lower than other properties in the area.

David knew this was an excellent opportunity, so he contacted the wholesaler and negotiated a purchase price of $150,000. He was confident that he could add value to the property through renovations, so he budgeted an additional $30,000 for the project.

David hired a contractor and spent the next few months rehabilitating the property. He installed new floors, painted the walls, and made a few other cosmetic improvements himself.

Once the renovations were complete, David listed the property for rent and was able to secure a tenant at a monthly rate of $1,900.

David was able to refinance the property and obtain a loan for $200,000 (the original purchase price plus more than the cost of renovations). He was able to pull out $50,000 on the refinance, which was more than the $30,000 he had put into the property in renovations.

Davids BRRR Example Breakdown

Step 1: Purchase a distressed property for $150,000.

Step 2: Rehabilitate the property, spending an additional $30,000 on renovations.

Step 3: Rent out the property for $1,900 per month.

Step 4: Refinance the property and obtain a loan for $200,000 (the original purchase price plus the cost of renovations and a little extra).

Step 5: Repeat the process with the cash freed up from the refinance.

He used a hard money lender for the purchase and private money for the down payment. His own money was used for the rehab. After the rehab, the same hard money lender used a cash-out refinance to get David all his money back plus some. This is rare but possible if you look hard enough to get a good deal.

Some key takeaways from these examples of successful Brrrr strategies

1. The importance of purchasing a distressed property at a discounted price: By buying a property at a discounted price, investors can add value through renovations and increase the property's value, which can lead to greater profits when the property is sold or refinanced.
2. The importance of choosing a desirable location: Properties located in desirable neighborhoods with strong rental markets are more likely to generate high rents and be in demand from tenants.
3. The importance of budgeting for renovations: Rehabilitating a property can add value and increase its profitability, but it's important to carefully budget for renovations to ensure that the project is financially viable.
4. The importance of understanding the loan process: Refinancing a property to free up cash for the next investment is an important part of the Brrrr process, and it's important to understand the loan process and negotiate the best terms possible.
5. The importance of patience and persistence: Building a real estate portfolio through the Brrrr method can take time, and it may involve overcoming challenges and setbacks along the way. However, with patience and persistence, investors can achieve long-term success with this method.

In Conclusion

Real-world examples of successful Brrrr strategies can be a valuable resource for investors looking to understand how this method works and see it in action. By examining case studies and learning from the experiences of others, investors can gain insights and inspiration as they embark on their own real estate investing journey.