The BRRR Strategy (Buy, Renovate, Rent, Refinance)

What is “BRRR” and why is it “supercharged”? Because as an investor, you’re combining the house flipping strategy and the buy & hold strategy for maximum benefit.

BRRR stands for buy, renovate, rent and refinance. Another way you could look at it is, you’re flipping a house to yourself and holding it long term.

The truth of the matter is that I figured out early on that refinancing rental properties in Canada was the quickest and most practical way to grow a real estate portfolio.

In fact, I gave a talk about it at the Toronto Real Estate Wealth Forum and got an overwhelming response.

It’s 1 part fix & flip…

Here are the pros and cons of fixing and flipping an investment property

Pros

Cons

  • Get all your capital and profit back!
  • Potential for big profit!
  • Risk is high. Playing with market.
  • Short term gain – no cash flow.
  • Wait for property to sell, realtor fees to give up!
  • Have to keep repeating the process!

 

 

A 2nd part buy & hold…

Here are the pros and cons of buying and holding an investment property

Pros

Cons

  • Less hassles – usually not much renovations
  • Only initial down payment required.
  • Get cash flow right away!
  • Usually buy at market value.
  • More competition for turnkey properties.
  • Have to wait it out to get any equity!

Using the BRRR Strategy in Canada

You buy a property that is under market, not moving, no one wants to buy perhaps.  You see the potential.  This is the BUY phase.

Once you acquire the property, you put in the renovation dollars and make it look fantastic.

Now this is the the exact same as when you flip – because you are turning a not so great product into a fantastic product.

This could be simple fixes like painting and replacing old carpets – or it could be something more complicated like creating a legal duplex!

Now that the property is renovated and looks great, we are going to attract a good quality tenant and RENT for top dollar!

So now when this is all done we have:

  • A premium property
  • A premium tenant

So what are the benefits of BRRR?

The strategy can be applied to any property type and it raises the value of your property very quickly. Not only that but it will reduce your longer term maintenance and repair bills. Last but not least, it lowers your down payment after refinance.

Best of all… the BRRR strategy allows you to GROW at a much faster rate while still maintaining a smooth running portfolio.

Here’s proof with my own investment property

Now, if you were thinking, “all my MONEY is tied into the property, especially the money used for renovations” –wait– there is an upside.

We have increased the value of this property through renovating it, and created some great instant equity.

In fact, this property is now worth more than simply the purchase price + the renovation cost!

Let me break it down for you with a real life example:

I purchased a single family home in Hamilton a few years ago.

Purchase price $320,000
Cost of renovations $45,000
Re-appraised price (6 months later) $425,000

And that’s the beauty about refinancing rental properties in Canada.

I was able to pull out $60,000 plus the $45,000 cost of my renovation from this property in less than 6 months!

And, best of all, I am still getting cashflow of $600/month because I still own the property.

Oh and wait – it is still appreciating.  This property is worth well over $550,000 today!

So as I mentioned, refinancing rental properties in Canada has been the key to my success and growth.

If you’d like to learn more about this strategy; more than I can share in a single post, then check out my free email course below.

[mailmunch-form id=”351725″]

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.