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BRRRR is a term you may have seen floating around. And no, it’s not shorthand for the sub-zero temps we Canadianas deal with every year – it’s an acronym that’s all about optimizing a rental property.
In this piece, we’re exploring a few examples of what BRRRR looks like in real life.
Step 1: Buy
The “B” in this acronym stands for “Buy” – the first step of your ownership journey. Our founder, LJ, has personally found most of his deals via MLS: about 75%, if not more.
However, we do complete off-market deals every once in a while, and those can be quite interesting as well. The one thing to keep in mind is to run the numbers properly and not get too wrapped up in the excitement of an off-market opportunity!
If the math checks out and you have all the contingencies accounted for, the deal should work just fine – so don’t focus on anything else but that.
Step 2: Rehab
There are some situations where you can get away with updating just the kitchen, bathroom, or maybe the floors, but LJ personally prefers to strip down the property and restart from scratch.
That means you’ll know exactly what’s in there, and you will avoid having any problems with the property in the future.
Step 3: Rent
Once all of the necessary renos are complete and your property is looking slick, it’s time to find a renter (or renters, depending on the size of the building). This step will require a little research.
To make sure you’re optimizing your prices and charging a fair amount, you should look around the neighbourhood and see what rents are like. When determining a price, you’ll also need to factor in the work you put into the property, as well as any premium materials used.
Step 4: Refinance
Refinancing is the process of renegotiating your mortgage to get more favourable terms from the bank. For this step, make sure to talk to a couple of different banks, because no two institutions offer the exact same deal.
Once you’ve fielded a few offers, choose whichever one has better options for you based on the type of income that you receive, the size of the property, etc.
If this step sounds a little complicated, don’t worry – we’re here to walk you through it, so reach out if you need a hand.
Step 5: Repeat
Once you’re in, you’re in! The more you repeat the BRRRR process, the more you’ll grow and diversify your portfolio, and the more financially free you’ll become.
Want to learn more about starting your real estate investing journey? We know every tip and trick in the book! Reach out and one of our pros will get back to you ASAP.