Whenever I am doing research on real estate investing, one common strategy I see referred to is the BRRRR method. You may be asking what is the BRRRR method and why should I care?? 

The BRRRR method is like the ULTIMATE recycling program for real estate investors. You buy a property that needs some love, give it a makeover, rent it out to a deserving tenant, refinance it to get your money back, and then start the process all over again with a new property. It's a sustainable way to build your real estate investment portfolio while also making your city a better place, one property at a time. 

Let's break it down, step by step:

Step 1 - BUY: you buy a property that needs work. The property usually needs some cosmetic updates. Definitely more than a coat of paint. Your objective is to raise the value of the property. You want to have that cash available to do the necessary upgrades or leverage an existing property to pull that equity out. The most common way to access your equity in Canada is using a home equity line of credit (HELOC). I will get into more about HELOC's in another blog post.  

Step 2-  REHAB:  Completing the renovation itself. Make sure you don't get in over your head/you are using a contractor for the updates. This part needs to go well! You need to account for costs like mortgage, taxes etc. while the renovations are happening. Every month you are renovating is money you can't recoup since you are on the hook for mortgage and other costs during this process. You also want to be prepared with extra funds just in case there is something you weren't anticipating. 

Step 3 - RENT: Advertise your place and screen for good tenants. Right now there are definitely limited vacancies, so you have the opportunity to pick who you want to rent to. I can’t stress it enough - screen, screen, screen! 

Step 4 - REFINANCE: After you have renovated and secured a tenant. You can start thinking about refinancing options. Each lender is different, so it’s important your realtor and mortgage broker know your investment goals. For example, some banks do not allow you to refinance within your first year of purchase.  Once you get approved for refinance, you are ready to move onto the last step. 

Step 5 - REPEAT! The money you have secured from refinancing is for your next BRRRR investment. You continue to repeat this process to build your portfolio, build equity in your investments, and grow your overall wealth. 

With the BRRRR method, you can create a portfolio of high-performing real estate investments. 

What are your investing goals for 2023? Are you feeling a little B-R-R-R-R this winter? Perhaps we need to chat!