Why we completely renovate every house we buy
When we buy a house, we replace everything from the mechanicals in the basement, to the roof and almost all of what's in between. It's part of our model of renovating and investing. We subscribe to the BRRRR method, which was coined by Brandon Turner.
BRRRR stands for: buy, renovate, rent, refinance and repeat.
We typically buy houses for roughly 50% of their after repair value. For example, we expect the property we're currently renovating to appraise at $430,000. We bought it for $225,000. By fixing everything from the basement floor to adding beautiful finishes, like these cabinets, we are forcing the value higher. A two-family for sale across the street from our duplex is listed right now at $450,000.
The reason we do all of this work is because we can refinance at the end of a project and pull all of our money out: our initial down payment, our renovation costs and holding costs. At the end, we own a like new property and we spent $0 to get it. Our renters cover our monthly costs going forward: mortgage, taxes and insurance. Plus, we take home $1000 on top of that in monthly profit, on average.
We are now free to recycle the same money into the next project, and so on.
The second reason we like to fully renovate every property is because anything you neglect WILL come up in a home inspection when you sell or via a tenant phone call. If you give your renters a like-new home to live in, your rate of complaints for repairs or maintenance goes way down. And frankly, you can just sit back and enjoy that $1000 of monthly cash flow, rather than spending it on roof repairs or replacing old appliances.
If you have any questions about how we use BRRRR; what rooms or items we give priority to when renovating; or anything else; please leave a comment for me below! Or you can also reach out on Instagram.