Investors have multiple strategies and techniques used to analyze and purchase investment real estate in Detroit. It today’s post, we will provide information about the BRRRR method and how it can help you generate wealth!
There are a lot of rules of thumb, equations, and formulas investors use in real estate. The LTV, cap rate, the 1% rule, the 50% rule, and the 70% rule are all useful equations when buying an investment property. But a great formula for investing (and profiting) is referred to as the BRRRR method. Keep reading to learn more about what it means, how you can benefit, and what our team can do to help you!
What Does It Mean?
The BRRRR method is a popular formula used by Detroit real estate investors who are just starting out. BRRRR stands for buy, rehab, rent, refinance, and repeat. Using this formula, investors are able to begin a cycle of real estate investment, building a well-stocked portfolio that builds wealth for the investor and their family.
Step 1 – Buy
The first step is to find a property you want to buy. Our team can help you find the right property, complete with a full analysis, ensuring you are getting a great deal. That first property purchase can be rough because you aren’t sure exactly what to do, but with a professional buyer on your team, you’ll be able to find discounted Detroit property that will make an excellent addition to your growing portfolio.
Step 2 – Rehab
The rehab of the property can be tricky as well. Do you have construction experience? Do you understand all of the costs that will be associated with the rehab? If not, you’ll want to work with someone who has the proper qualifications. You may think you are able to correctly estimate all costs, but it never hurts to get the opinion of a professional. At We Buy Houses in Detroit, when you purchase a property from us, you will receive an expert analysis of the property that will help you accurately estimate any repair costs you may face. There are things first-time investors will often overlook, but working with We Buy Houses in Detroit will ensure you have all of the facts you need.
You’ll also want to find simple ways to add value to the property that won’t cost you an arm and a leg. You could fix up the countertops, replace old windows, improve the flooring, or swap out the appliances. Even small things such as swapping out hardware, basic landscaping, or a fresh coat of paint can add real appeal to your property when it’s time to rent it out.
Step 3 – Rent
Finding the right tenants may feel like a challenge, but if your properly screen and stick to your standards, you’ll have your place rented in no time. Take a look at what comparable properties are renting for and either price your slightly lower or add a feature that the other properties lack. You could include internet, basic furnishings, patio furniture, or a wine fridge depending on your target demographic. Get creative with it so you can attract great, long-term renters for your Detroit investment property. As a landlord, your goal is to find someone who will want to stay in the house for a long time and who will also be respectful of your property, treating it as if it were their own. With the right additions and upgrades, you will be able to rent out your house right away!
Step 4 – Refinance
The next step in the process is to refinance the property. This can cost you a little money, but the rewards are definitely worth it. The goal is to take all of the money you pull from the house after you refinance it, and put it toward your next Detroit real estate investment. This is how the cycle really begins and how you can rapidly turn one investment into a portfolio of excellent properties.
Step 5 – Repeat
Now, you do it all over again. This is how investors all over the country have begun their investment journies. After this first one, things begin to make more sense. You will get into a rhythm and will have a better understanding of which properties are the right ones for your investment needs. Once you have done a few, you’ll realize how simple it can be to invest in Detroit real estate and you’ll wish you would have started sooner.
Are you ready to invest in Detroit? Find out how our team can help you find Detroit investment real estate with high ROI. We help novice investors, as well as seasoned professionals, find the perfect properties to add to their portfolios. We are happy to answer any questions you have about investing in Detroit real estate.