The Best Way To Grow A Real Estate Portfolio Quickly

What is the best way for you to get started building a portfolio of properties in the next 5 to 10 years if you don't have a ton of money to start your real estate investing today?

The ‘BRRRR’ Strategy’ (Buy, Rehab, Rent out, Refinance, Repeat).

As one of my all time favourite real estate investment strategies, 'BRRRR' is a perfect choice for those ready to get started building their portfolios with minimal investment to begin with.

It is a mixture of two of the most common and popular real estate investing strategies: the ‘buy-and-hold’ strategy and the ‘fix-and-flip’ strategy.

I personally love ‘buy-and-hold’ because it's about the endgame. It's about building wealth and getting a certain amount of properties that one can eventually retire from down the line.

Combining the ‘fix-and-flip’ and ‘buy-and-hold’ strategies into the ‘BRRRR’ Strategy is a great way to force appreciation, which increases your equity in the properties. Once that grows, you can take the money out, and do it again in different properties.

The ‘BRRRR’ Strategy

Step 1: Buy

You buy a property that needs quite a bit of work, and then you go and renovate the property. It’s becoming more difficult to finance a property that needs a lot of work. Knowing this, people will usually either buy the house outright in cash or choose to use a private lender, a hard money lender, or use a home equity line of credit on their primary residence.

There are many different ways to secure the short term financing for the property based on what is best for you at the time. Once the funding is secured, you get in there and do the renovations.

Step 2: Rehab

When you're renovating the property, make sure that you are renovating the property with the lens of a landlord and as an investor. Unlike if you were renovating your own property, you're not going to choose the high-end finishes or the high-end appliances for this one.

You’re want to focus on repairing and renovating the property so that it is livable and appealing for the tenants that are going to be moving in. You also want it to be visually appealing for any appraiser that's going to come to the property towards the end of the strategy.

Step 3: Rent Out

Once you have bought the property and renovated it, the next step is to rent out the property.
The first step is to start advertising for the property. If possible, you can even add a basement apartment or a second unit to the property because that will increase its value as well and increase the cash flow.

Step 4: Refinance

Once the property is rented out, you need to find a lender at a bank that is going to lend you at the appraised value of the property.

They will probably send in their own appraiser, or you could send in an appraiser, when the renovations are finished and the renters are living in the property.They will appraise the property and provide you with the official appraised value.The whole goal is to have increased the property value by about 20-25%.

If this is the case, you can then get a traditional mortgage for 75-80% of the value of the property and then you'll be able to take out that 20-25% in equity.

Essentially, you're taking out all the money that you have invested in the property, so you can pay off your lenders that you secured for the initial short-term lending.

Step 5: Repeat

By taking your money out of the property, and then doing the same thing again, that's the last R, repeat.

The 'BRRRR' Strategy really allows you to get into a property, force appreciation to the renovation, and then remove your equity right away and continue to do it again and again.

This allows you to have little to no money down in your property, which is very close to getting something called 'Infinite Returns'. Essentially this means that the less money that you have in a property, the higher your returns are going to be.

If you essentially have a property that's cash flowing in a good neighbourhood, and you've done the 'BRRRR' Strategy on it, you basically have little to no money into this property. This means that your returns are going to be a lot higher. And it's going to allow you do the same strategy over and over again.

So if you're looking to invest in real estate and build up a portfolio of properties that you can then retire from, quit your job, or have more time or money freedom, 'BRRRR' is a great strategy to look at.

With 'BRRRR', you're doing the same process over and over again. You're always taking equity out and putting it into other property which will hopefully allow you to build up a big enough portfolio to achieve your financial freedom goals.