What investor wouldn’t want a few hundred dollars cash flow per month while being able to cash out the entirety of their principal investment within six months to a year? That is the promise of the BRRRR Method.
BRRR is a bit of a hybrid between the strategies of buying and hold and fix and flip. You get to take advantage of a rental’s long tail semi-passive revenue stream on the buy and hold side.
The real icing on the cake of a buy-and-hold investment is principal paydown, and after the refinance, there will be a large amount of principal on loan.
You get to enjoy the benefits of creating value through the renovation tax-free by refinancing instead of selling like a typical fix and flip.
Properties that can be purchased and rehabbed for 70% of the total ARV is a good criterion. Another is a property that will require relatively low maintenance once completed.
Because you are refinancing the down payment back out, there is more opportunity to benefit from appreciation and principal paydown.