The future of real estate investing is uncertain as we close out 2022 and welcome the New Year with 2023. Wall Street saw its worst year since 2008, and some experts believe that the housing market will slide even further. However, it’s not all doom and gloom for real estate investors. In fact, now may be the best time to invest in real estate.
One popular method of real estate investing is the BRRRR method (pronounced “burr”). This real estate investing method requires investors to search for distressed properties that show potential after major renovations. Instead of flipping the property after renovation, BRRRR investors rent the property to long-term tenants and profit off the rental income.
Is the BRRRR method right for you? Continue reading to find out more information about the BRRRR method and whether or not you should consider this tried and true investing strategy this year.
What is the BRRRR method?
The BRRRR method is a real estate investing strategy that has become more popular in recent years. This investing method is similar to flipping houses since real estate investors look for “fixer-uppers” that they can renovate and improve to make the properties liveable and attractive to new tenants. However, the BRRRR method is a long-term investing strategy since investors don’t intend to sell the property for a short-term profit.
BRRRR stands for:
- Buy. The first step in the BRRRR method is to buy a distressed property with the potential for value-added upgrades. This is the most crucial part of the BRRRR method since not every property is right for a BRRRR investment.
- Rehab. The next step in the BRRRR process is to rehab the distressed property. Beginners should exercise extreme caution during this step since overspending is common when it comes to renovations. Beginners should work with other investors with experience renovating distressed properties to ensure they make the necessary upgrades without overspending.
- Rent. Once the property is rehabbed and turned into a livable home, it’s time to find tenants to rent the property. Some local real estate agents can help you find high-quality tenants to rent your property after it’s rehabbed.
- Refinance. After making the necessary upgrades and finding tenants to rent your home, the next step in the BRRRR method is to refinance the property. Most BRRRR investors do a cash-out refinance, which allows them to take out money they can use for their next BRRRR investment.
- Repeat. After you close on your cash-out refinance, the only thing you need to do is repeat the process and add more investments to your portfolio. The BRRRR method is highly scalable, and you’ll find that living off the rental income from your BRRRR investments is a real possibility.
Final thoughts
Investing in real estate in 2023 may sound like a risky proposition. However, real estate investing remains one of the best ways to hedge against inflation and build generational wealth for you and your family. The BRRRR method is an alternative real estate investing strategy similar to flipping but focuses on long-term rentals instead of flipping homes for a quick profit.
Are you looking to buy or sell your home in the Massapequa area? The Kim Holland Homes Team is the #1 real estate team in Nassau Suffolk and Queens. Call Kim at 516-236-6303 to get the process started today.
