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BRRRR Method
Posted on 1/17/24 at 4:38 pm
Posted on 1/17/24 at 4:38 pm
Give me your pros and cons. Seems like an interesting concept.
Posted on 1/17/24 at 5:22 pm to Jerrysworld
Pros:
You can use debt to leverage your dollars and buy more income-generating property than more “traditional” ways of investing in assets. Theoretically that leverage will make you a real estate mini-tycoon.
Cons:
That same leverage can put you out of business if you have some severe financial problems along the way. The most obvious one to me is the severe optimism people usually have about what it will take to renovate a home. My anecdotal experience has been that people with little to no experience woefully underestimate the capital and/or time it will take to complete the remodel and end up with a much higher breakeven than they initially thought. Typically if an easy flip pops up, the seasoned real estate investors buy it. If you’re able to buy it, you might want to ask serious questions about why the pros let it go to you.
The other potential problems are the idiosyncratic risks that a single property presents. Ex - Replacing an A/C when you have 10 rentals is a lot easier than when you have 1, all else being equal. Vacancy and tenant problems will also exist. You can also run into issues with the overall cost of capital in high interest rate environments. Insurance costs can be a problem as well.
You really need your cash flow in a good spot to truly mitigate those risks.
Real estate investing is a tried and true way to create significant wealth, but a lot of people get tired of the headache and can’t wait to get rid of their rental(s) too.
Good luck.
Posted on 1/17/24 at 5:54 pm to Jerrysworld
quote:
BRRRR Method
quote:I turned my central heat on the past two mornings...
Give me your pros and cons.
Posted on 1/17/24 at 6:27 pm to Jerrysworld
quote:
BRRRR Method
Got its arse blasted with high rates, especially if new to the game.
Real estate takes a sizeable amount of money to really get it rolling.
How much liquid do you have right now?
This post was edited on 1/17/24 at 6:30 pm
Posted on 1/18/24 at 6:07 am to Jerrysworld
It seems like a full time job.
Posted on 1/18/24 at 7:26 am to Jerrysworld
It seems like right now buying to flip or rent just doesn’t make sense unless you can pay cash or find a unique situation. The cost of construction, cost of homes and cost to carry debt makes the margins razor thin unless you can ford to buy it outright. Depending on appreciation alone is great as long as your total cost to carry doesn’t create a cash drain. Also, home appreciation is a paper gain and useless until you sell the property or borrow against it.
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