Book SummaryBuy, Rehab, Rent, Refinance, Repeat, by David Greene

1-Page Summary1-Page Book Summary of Buy, Rehab, Rent, Refinance, Repeat

From moguls like Donald Trump to HGTV house-flippers, countless people have invested in real estate to build their wealth. Some focus on commercial real estate, others restore and sell run-down residences, and still others buy single- and multifamily homes to rent out to tenants.

In Buy, Rehab, Rent, Refinance, Repeat, David M. Greene focuses on this last category. He explains how the buy, rehab, rent, refinance, repeat (BRRRR) method differs from traditional real estate investing, and he argues that the BRRRR approach is the most efficient way to build wealth and gain financial freedom by developing a large portfolio of investment rental properties.

(Shortform note: Although some experts dispute that BRRRR is the best method for buying investment properties, many agree that rental properties are ideal low-risk investments: You can use other people’s money to buy...

Buy, Rehab, Rent, Refinance, Repeat Summary The BRRRR Method vs. the Traditional Method

The BRRRR model hinges on two elements:

1. Buying a property as far below market value as possible and paying the full price (not just a down payment)
2. Refinancing the property after you’ve renovated and rented it out (Shortform note: The term “refinance” is misleading because you’re not replacing an existing mortgage, since you paid full price for the home’s purchase. However, it likely refers to a cash-out refinance, which allows you to use your equity to borrow cash that you can use for anything—in this case, to “repeat” the process and buy your next investment property.)

Together, these steps represent the biggest difference between BRRRR and the traditional approach to real estate investing: BRRRR investors finance the property at a later stage than traditional investors. This chart illustrates the difference in the sequence of steps for each approach.

Buy, Rehab, Rent, Refinance, Repeat Summary Preliminary Step 1: Begin Recruiting Your Dream Team

When you start investing, Greene says you need to assemble a team of people who you’ll work with on property after property. He calls this your “Core Four”; we’ll call it your Dream Team. Greene explains that the members of your Dream Team are not employees, but rather vendors and collaborators who specialize in working with real estate investors, which requires different knowledge and strategies than primary residence homeowners have.

(Shortform note: Greene offers two main pieces of advice for how to find the members of your Dream Team: First, build a reputation as someone people want to work with—by being fair, reliable, and helpful. Second, get recommendations through your network. But how do you build a network? Attend professional networking events, meetups, industry conferences, and open houses; host investment classes, parties, and charity events; and make an effort to constantly meet new people, both in person and online.)

Your Dream Team has four roles, though Greene advises having two people in each role to provide backup if...

Buy, Rehab, Rent, Refinance, Repeat Summary Preliminary Step 2: Get Pre-Approved for a Loan

Even though you’ll be paying full price for the property, Greene cautions that you must secure a loan pre-approval letter before beginning the BRRRR sequence, since the method hinges on your ability to refinance in Step 4. If you’re denied pre-approval, he suggests working with a business partner who can get pre-approved, or trying another form of real estate investing like house flipping.

(Shortform note: As a caveat, a lender can still deny your mortgage after pre-approval if your credit score, income, or assets drop, if your debt level rises, or if the loan requirements change.)

When you get pre-approved, find out key information that will impact your decisions throughout the rest of the process:

• The amount you're pre-approved to borrow determines how much you can spend on the property purchase and renovation. (Shortform note: The factors impacting the size of your loan include...

Buy, Rehab, Rent, Refinance, Repeat Summary BRRRR Step 1: Buy

When you’re ready to begin the BRRRR process, Greene claims that your success in Step 1 sets the tone for the success of the entire project: You need to buy significantly under market value to be able to recover most or all of your investment during the refinance. The amount of money you can save or make during the other steps is either more limited or is directly impacted by Step 1.

(Shortform note: Some critics of the BRRRR method say that it’s too difficult to find properties priced far enough below market value to make the math work. Others argue that real estate prices this low only exist in certain markets, like the Midwest and Southeast, which would force some investors to buy and manage their properties from out of state. Although Greene advocates for long-distance investing—he even wrote a book about it—other experienced investors discourage it.)

Greene strongly recommends...

Buy, Rehab, Rent, Refinance, Repeat Summary BRRRR Step 2: Rehab

Once you’ve found and bought a great deal, Greene says that executing a cost-effective, value-raising renovation is the second most important aspect of making a profit in the BRRRR method. This involves working with the right contractor and making smart upgrades to the property.

(Shortform note: Many real estate investors consider this to be the riskiest step in BRRRR, especially for rookie investors, since unexpected issues with the property, poor project management, and bad renovation decisions can add tens of thousands of dollars to the budget. As an alternative, buying properties that are already renovated and rented out allows wary investors to bypass two of BRRRR’s biggest potential hazards.)

Finding the Right Contractor

As we mentioned, each member of your Dream Team should have experience working with investors. Greene describes an investor-friendly contractor as one who knows how to find cost-effective solutions to problems (like repairing instead of replacing worn flooring). (Shortform note: [When vetting...

Buy, Rehab, Rent, Refinance, Repeat Summary BRRRR Step 3: Rent

As soon as your property is rehabbed, Greene writes that it’s time to start renting it and creating cash flow. (Shortform note: Finding tenants quickly is also critical because many lenders require you to have renters before refinancing. Delaying this step not only postpones your cash flow but also your ability to recoup your investment.)

Since you don’t have much wiggle room in your rent prices at this stage—they’re largely determined by the property you bought and the success of your rehab—your priorities in this stage are to minimize vacancy and manage your property effectively.

Minimizing Vacancy

Greene states that you can minimize vacancy by strategically setting your rent prices and lease periods and by keeping tenants happy.

As we discussed in Step 1, you should have consulted local investors, PMs, and rent calculators on websites like Rentometer.com and Biggerpockets.com to estimate your rent prices before buying your property. Greene recommends you set rent prices at the lower end of your estimate initially to attract tenants and fill vacancies quickly. Then raise rents to the higher end of that range during lease renewals—at that point, most...

Buy, Rehab, Rent, Refinance, Repeat Summary BRRRR Step 4: Refinance

As discussed in Preliminary Step 2, Greene emphasizes that you should have a loan pre-approval letter before beginning the BRRRR process. That pre-approval gives you a baseline for your refinance, but certain conditions like the loan’s interest rate may change. (Shortform note: Another major risk is the real estate market crashing between budgeting your project—based on your pre-approval and estimate of the property’s after-repair value—and getting it appraised for your refinance. If home values tank, you lose a large chunk of your investment. Although crashes can be unpredictable, monitor market trends and try to anticipate dips.)

Your lender should work with you to determine which type of loan product is best for your project. As a primer, Greene describes several types of loans.

Conventional loan: Many lenders offer conventional loans because they’re partially insured by the government, making this a common option for new investors. For investment properties, this loan typically requires a 20-25% minimum down payment.

(Shortform note: As previously mentioned, if your down payment is less than 20%, you’ll typically have to pay private mortgage insurance (PMI) until you...

Buy, Rehab, Rent, Refinance, Repeat Summary Step 5: Repeat

Because you recover your investment during the refinance stage, BRRRR is uniquely designed to make it easier to repeat the process than other investment methods. Greene writes that repetition brings two primary benefits.

First, repetition builds the volume of your portfolio of rental properties, which increases your cash flow. As we mentioned earlier, you can also reduce your proportionate costs by negotiating discounts from members of your Dream Team in exchange for the volume of business you bring them.

(Shortform note: As with other forms of investment, experts recommend diversifying your real estate portfolio. You can do this by buying properties in different areas, buying different types of properties (such as single- and multifamily homes), and branching out into real estate investment trusts and real estate mutual funds.)

The second benefit is that **repetition allows you to learn from mistakes and develop systems that make your business more effective and efficient....

Shortform Exercise: How Would You BRRRR?

Consider how you would use the BRRRR process.

If you were looking to buy an investment property right now, would you rather buy a single-family home or a multifamily property? Why?