How exponentially can you expand using BRRRR?
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[{"id": "fspgju9", "text": "If you are using the answer to determine if you would get into the business, that is fine. If you are using the answer to this question to figure out how to do your first few deals, forget about it. \n\nThe reason I say this is that you need to be focused on performing and executing well and the gains will come. Typically if you get a few under your belt, you have a story that you can use to raise other peoples money. That would certainly increase the rate of expansion.\n\nFigure realistically, you would need 14 months from purchase to cash out refi. I could be totally off but that is the quickest I have done on multifamily properties. So technically you got double every 14 months but that is a very unlikely outcome.  You will never find the exact size deals so that you can maximize how much you can put in. There are also countless other factors that make the process not play out in even 14 month increments.\n\nI know people who have started small and made 9 figures over a couple of decades of just brrr.\n\nHope this helps.", "replies": [], "depth": 1}, {"id": "fspguj4", "text": "You can easily make millions or go bankrupt in probably a couple years. It\u2019s a super dangerous strategy predicated on buying places around 30% less than ARV  minutes repair costs.", "replies": [], "depth": 1}, {"id": "fsqhmpm", "text": "BRRRR is an amazing way to make money because it means you got a killer under market deal or great opportunity otherwise.  So long as your DSC is there post refi there\u2019s no added danger.  Risk and leverage are all about ratios.  The BRRRR strategy does not mean you will be over leveraged in any way.  That question is deal and numbers specific.", "replies": [{"id": "fsr7orr", "text": "I\u2019m not sure if this is a difference of opinion or you\u2019re just wrong but what you\u2019re saying is at a minimum debated.", "replies": [{"id": "fsrwa3j", "text": "I could be missing something in which case maybe I'm in trouble.  But I'm not getting how there's any more risk in scenario 1 than 2:\n\n1. Property is worth 1m post-reno and stabilized renting for 8k/month.  I buy it  for 500 put in 250k then put 750k debt on it. \n2. Someone buys a similar property for 1m already fixed up and rented for 8k/month and puts 750k debt on it.", "replies": [{"id": "fsrzi4n", "text": "There isn\u2019t much but 75% LTV is undeniably a risky position. Also in scenario 1 \u201cshit happens\u201d along the path of putting 250k into it and refinancing.", "replies": [{"id": "fss4qr5", "text": "Right, assuming person in option 1 put down 25% on the 500k they could stick at 375k debt and be at 37.5% LTV on the 1m valuation.  I think the thing people miss is BRRRR is only an option if you got a great deal to begin with, which is the real game.  Asking whether you should BRRRR or not is like asking if you should try and pick-up the cute girl or the ugly girl.  You can't cash-out refi if the thing is only worth what you paid.  The question of how much debt you can handle is a personal matter about you and your cash reserves in conjunction with your properties' DSC.  But there's a huge difference between option and 1 and 2 in that option 1 ads 250k to your NW, but again that's b/c it was a great deal to begin with regardless of whether or not you choose to refi.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fsqkgyx", "text": "Take your time. I believe there is a 6 month waiting period after you rent before you can refinance any ways", "replies": [], "depth": 1}, {"id": "fsqoce5", "text": "Using the BRRRR (Buy, Remodel, Rent, Refinance, Repeat) model I went from 50K of cash in 2017 to 1 Million of Equity in 2020 with a stable net profit of $13,000/mo after mortgages in rental income with 30 units. I\u2019m planning on doing a massive umbrella loan on all of my properties and refinancing the entire portfolio, to purchase another 45 unit portfolio and double my size (when banks reopen).\n\nSo yes, the BRRRR method can have very exponential growth.", "replies": [{"id": "fsrvd6q", "text": "Wow. Guessing this is in a fly over state?", "replies": [{"id": "fssbhdb", "text": "It\u2019s in Connecticut. There\u2019s a lot of value add possibility in New England where the median property age skews towards early 1900\u2019s. Deferred maintenance and new construction drives values down of existing homes, but paint and cosmetic fixes can still attract high paying tenants, resulting in a high DSCR and good market valuation post rehab.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]