The BRRRR prepare and prevent: Prepare for your refinance. Prevent a bad investment.
We believe in this quote:
“It is better to prepare and prevent than it is to repair and repent.”
This line applies to all real estate investing, but especially BRRRR.
The BRRRR Buy Box is a framework designed to help you bring a “prepare and prevent” mindset to your rental investments.
Prepare and Prevent with Your BRRRR Buy Box
The BRRRR Buy Box involves keeping the refinance at the forefront of the process. You need these 4 key pieces of information before ever closing on a property:
- Cash flow requirement.
- Money you can put in the property.
- Required loan amount.
- Purchase and rehab budget.
Knowing the BRRRR Numbers
If the maximum loan you want to do is $250,000 and you’re willing to put in $30,000, that makes $280,000 total for everything. This “everything” includes the purchase, both closings (for the initial loan and the refinance), all construction costs, and carry costs.
There are a lot of reasons to prepare for BRRRR. Poor prep results in holding the house longer, missing out on vital rent income, and paying high interest rates on a hard money loan.
Before diving into BRRRR, remember:
- The house can involve major repairs.
- Your lender could delay the appraisal process.
- You need to factor closing and carry costs into your total budget.
Don’t give up on BRRRR
Make sure you’re prepared to win at BRRRR. Know your BRRRR Buy Box, and you’ll be successful.
Nine out of the 10 people we meet who stop doing BRRRR give up because they got to the refinance and it just did not work.
These people didn’t prep their buy box ahead of time. Therefore: They had to bring in too much money. The house did not cash flow. They didn’t qualify for a refinance. The hard money loan sat on the house, eating away at their funds.
In this situation, people usually sell at a loss, then they’re turned off from BRRRR forever.
BRRRR is an excellent process. It’s a smart way to get into rentals, if you prevent and prepare before you start buying.
Download this free BRRRR tool to plug in your numbers and understand your BRRRR Buy Box quickly and easily.
Help to Prepare and Prevent
If you’re left with any questions or have a potential BRRRR deal you want us to look at, we’d be glad to help. We can go through the numbers for you and help you find your BRRRR Buy Box.
Send us an email at Info@TheCashFlowCompany.com.
Read the full article here.
Watch the video here: