How to Quickly Build a Large Real Estate Portfolio Using Buy Rehab Rent Refinance and Repeat
How to Quickly Build a Large Real Estate Portfolio Using Buy, Rehab, Rent, Refinance, and Repeat Strategies
In this article, you will gain a complete understanding of how you can quickly build a large real estate portfolio using the buy, rehab, rent, refinance, and repeat method. This strategy was started by Danill Kleyman of True Vision Analytics, who is one of the best, if not the best, real estate experts of all time that I have come across. I attended one of their online trainings and the above strategy just blew me away. .
Today, I am happy to share my own opinion and I also hope that you can put this method into practice as soon as possible.
If you are in the following market category and have had problems:
- Property owner,
- Buying and selling,
- Buying and selling commercial properties
- Commercial building for refinancing or sale purposes
- Change of house for profit
- Landlord or owner
- New construction
- And residential and commercial developments
Then this article will definitely benefit you more and you can come back and thank me later.
From what I noticed, the strategy works with the owners, that is, if you own the property. Then sell and buy more. Buying and selling commercial properties will also benefit if your overall goal is to grow your portfolio. The same goes for homeowners and homeowners who want to grow their real estate portfolio.
One great thing about this strategy is that it works in a flat market and it also works in a volatile market. The juice behind this is that you just use one fund and then recycle that fund over and over and over again until you hit the expected or projected portfolio limit or your goal. Now let’s see what the strategy really is and how to use it.
What is the buy, rehab, rent, refinance and repeat strategy?
The strategy according to Daniil is called BRRRR which means:
- Buy of property that is the initial stage of every property owner of future real estate investors.
- Rehabilitation means rehabilitating the property to sell or rent it for profit.
- Rent. which means renting for capital investment benefits.
- Refinance. Which means recycling the financing used in the initial purchases to buy another property as a result of good returns.
- To repeat. This simply means repeating the process.
Benefits of the BRRRR strategy
- First, they are the most powerful money building strategies you will ever find in the real estate investment and construction industry.
- The strategy leverages the concept of “speed of money” to help you roll over the same deal for cash after deal.
- It allows you to quickly build your portfolio using private money or a limited amount of cash.
- It works in a market that is not appreciating
- The strategy allows you to build a portfolio with little or no money on your own, but with at least a 20% equity position against debt that will protect you in a bear market.
How does the BRRRR strategy work?
The first and most important rule here is to make sure you don’t get stuck on the first offer before moving on to the next one. Yes! I was confused myself at first when he explained to me in detail, my jaws dropped, figuratively.
Because these offers, when done correctly, require intensive use of math, and according to Daniil, the best way to keep your numbers from getting bogged down is to make sure they work before you buy the next offer.
In order not to waste time, let me explain how this strategy works.
Step 1: buy a property
This is the first and most important step of the strategy. This shows that you are ready to build your portfolio and that you are committed to making it work.
You can use several sources to obtain financing and this includes:
- Your own cash if you have savings
- Private lender. Just make sure they refinance your rehab as well.
- Bank loan if you know how to prepare a convincing presentation.
- A line of credit from family members, friends, partners, private lenders, or even seller financing.
- To learn more about how to find private money and how to structure private deals that will make lenders ask you to invest with you, watch this video.
Step 2: rehabilitation
Once you’ve secured financing and purchased your first home, you will need to rehab it. Always keep in mind to keep the property in line with the market, as you will rent it out and don’t overdo it.
Aim to create greater property appreciation through larger rehab. To achieve this, you must do this:
- When you do your reassessment, be sure to tell the bank that you have just completed major renovations and improvements to the property.
- Improvements such as replaced broken furnace, electrical, HVAC, plumbing, etc. should be mentioned. These will help to quickly increase the appreciation of the property.
Make sure you do all your rehab work now so you don’t have any maintenance calls for the next 5 years.
Step 3: Rent the property
This step requires you to begin showing the property to prospective tenants before the renovation and upgrade is complete. You will proceed to step four faster if you already have a lease and a tenant to move in as soon as the renovation is complete.
Step 4: refinancing the property
This is a very important step to build your portfolio much faster. As long as the lease is in effect and the rehab is complete, head over to your local community bank to discuss refinancing. This is because local community banks are often required by regulation to make loans to local businesses. And they will lend to you based on the percentage of the property’s new market value, not based on its cost.
Step 5: repeat
In this final step, you are going to repeat the entire process with the net result from step 4. This means that you have paid off your short-term financing and now have a cash flow asset that generates money every month with no cash tied up on your own. . With positive cash flow and 20% equity on paper, your balance sheet is seen and you can take it to your local bank again for another loan.
These five steps; buy, rehabilitate, rent, refinance and repeat are the steps that make up the BRRRR strategy that you can apply today to change. Here’s how you can quickly build a great real estate portfolio. Again, according to Daniil, there are a couple of crucial points to keep in mind to maximize this strategy.
- You can find these types of offers in almost any market.
- Investment Vs appraisal is what matters most.
- This strategy can work on a 50k, 100k, or even 500k deal.
- Make sure to use short-term financing and a reliable refinance.
- You can also use private lenders to refinance, but make sure they have a steady flow of money or a steady job that provides income.
- Always make sure you can get a refinance before you buy the offer. To avoid getting stuck.
- Avoid buying in an area where you will have a hard time renting it out. Without a lease, you won’t be able to get refinancing from your local bank.
- The trade-off to keep in mind is avoiding overspending on renovations. As this could slow down the “speed of money”.
- Always read the fine print on the loan, get a lawyer review it just to make sure there is no sudden foreclosure clause buried inside.
- Know your numbers before you even enter a deal.
Here’s how to quickly build a great real estate portfolio using buy, rehab, rent, refinance, and repeat strategy. The most important point again is to know your numbers before entering any deal. And your ability to obtain short-term financing and take-out financing. What is obtaining financing on the net profit of your first deal. You can use the free Rehab Valuator software to calculate and master your numbers in just a few minutes. Leave your comment or any questions below and I’ll get back to you right away.