THE ISAACS TEAM
BRRRR
The Isaacs Team | Compass
Find an undervalued property in Washington DC and put it to work building your investment portfolio.
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What is ‘BRRRR’?
What does the term mean?
‘BRRR’ is an acronym for Buy Rehab Rent Refinance Repeat, a long-established real estate investment strategy. It was branded with the acronym by Brandon Turner of BiggerPockets.
The strategy involves purchasing a property in need of rehab at under-market value, renovating, renting it and effecting a cash-out refinance in order to purchase another property, and repeating the process.
Why BRRRR?
The BRRRR is a form of ‘Buy & Hold that allows investors to quickly scale up their real estate investment portfolios using equity as a funding source.
Caveats to this strategy include:
- The investor must purchase homes at below-market value
- The investor must understand renovation costs and the process, and have the respources to employ it efficiently
- The property must increase sufficiently in value to warrant a cash-out refinance
- The property must be rented at a rate that effets positive cash flow
This strategy works well for investors familiar with home renovation andd its costs. In addition to the purchase price, down payment, loan amount, and closing costs for the initial property, the following expenses will need to be factored in:
- Carrying Costs
- Rehab Costs
This will allow you to calculate your potential After Repair Value (ARV).
The investor then must determine rental value once the property is rehabbed, and factor rental costs into the overall equation.
Financing Advantages
Standard financing options apply to BRRRR property purchases. Once the investor is able to show increased appraisal value for the property and verified rental income, the property can be refinanced up to 75% of its appraised value, in most cases. Factor in:
- Down Payment
- Refinancing Costs
- Interest Rate and loan terms
Will the rent paid by tenants cover overhead?
What type of properties can I BRRRR in DC?
CONDOS | CO-OPS
Condos and cooperatives are poor candidates for BRRRR due to rental restruction rules, association dues, and their lower appreciation rate compared to other property types.
You’ll need a BBL license and certificate of occupancy. Read the rules here.
SINGLE FAMILY
Single family homes are great candidates for ‘BRRRR.’ Investors may encounter competition from house flippers. Carefully evaluate the home’s structural integrity.
You’ll need a BBL license and certificate of occupancy. Read the rules here.
MULTIFAMILY
Multifamily dwellings can be excellent ‘BRRRR’ assets.
From 2 unit single family, duplex, triplex and fourplex to apartment buildings, look for multifamily properties in desirable locations, in good structural condition. Carefully calculate renovation costs for the overall property and individual units.
You’ll need a BBL license and certificate of occupancy for each unit. Read the rules here.
DC REAL ESTATE INVESTMENT
Start With The Basics
Whether you’re investing in DC real estatae as a side hustle or full-time business, understanding the local real estate market and fundamentals is key.
How We Help
- Guidance and education
- Off-market opportunities
- Skill, expertise and experience
Assembling A Team
Having a team of professionals in place will ease acquisition and managment of your investment portfolio.
Your Realtor, lenders, property manager, contractors and vendors functioning as a team can identify opportunities, speed transitions, address issues, and increase profitability.