If you want to build a massive rental portfolio fast to get a lot of passive income, use a tried and true method called BRRRR. You Buy, Rehab, Rent, Refinance and Repeat.
It allows you to get all of your money out of the property and, in the end, use it to invest in another project.
The BRRRR Method: Buy
When you make your buy, you have to be very smart on your numbers. You have to use it so the numbers allow you to refinance and get all of your money out of it.
The purchase is the most important part of the transaction. You always make your money in real estate on the buy. That’s where the money is made because when you get a good purchase you’re going to be able to sell it and do well in the end.
The BRRRR Method: Rehab
When you rehab a property in the BRRRR method, you’re typically rehabbing it to make it a rental. So as you’re making it a rental, you’re hardening up the property. You’re able to go top to bottom through the property and clean it up. The goal is to make it maintenance free for the next 10 to 15 years. That effort is going to give you amazing tenants that will pay a higher price in monthly rent.
The BRRRR Method: Rent
if you’re looking for passive income, and you’re building a massive rental portfolio, you’re looking to rent. One of the main things to look for is being able to get a ratio of 1.25 minimum out of the property. So every dollar you have into the property you have in a mortgage payment, you get 1.25 back. That’s the magic ratio there.
The BRRRR Method: Refinancing
You’ve just done massive work at the property, cleaned it all up, and it’s looking great. The appraisal comes in, say at 250,000. Now you have appraised value of the property that you got a really great purchase on and cleaned it all up. You can then refinance up to 75% of that 250. That’s where you wanna be with the BRRRR method. Because, again, the bank is only going to loan you up to 75% of the appraised value of the property.
Then use the money to reinvest and grow your portfolio.
The BRRRR Method: Repeat
Then use the money to reinvest and grow your portfolio. Repeat the process all over again.