Real estate is the ONLY vehicle where you can take ALL of your original investment capital OUT, and STILL OWN the asset, the cash flow, and the tax benefits.
This is called achieving an INFINITE return on investment … And the best method to achieve this goal is the BRRRR strategy.
I’ve followed this strategy FIVE times now since 2021 on five separate multifamily deals. Most recently, I completed my 5th BRRRR multifamily cash out refinance this week on my 16 unit apartment.
I shared the details of the deal, and how you can COPY my BRRRR STRATEGY and do the same in this short YouTube video: Closing My 5th BRRRR Multifamily Apartment Refinance
Cash Out Refinance: Using the BRRRR Strategy to Build Wealth Through Multifamily Real Estate Investments
In this video, I teach you everything about the BRRRR strategy including the 5 key steps:
1. Learn how to BUY it right.
You make your money on the BUY in the BRRRR strategy. And believe it or not, the price you pay TODAY is not the most important factor. The price the deal WILL be worth when you finish your value add strategy is what you need to focus on.
Newer investors myopically fixate on the price they pay today, and end up missing out on good deals. On this deal, I paid $84,000/door for the 16 units. I definitely felt like I was over paying at that time because the income didn’t support that purchase price. But I knew the money was made in the value add. And a year later, this deal appraised at $115k/door!
Don’t focus on what it’s worth today … focus on what it WILL be worth when you finish the BRRRR strategy.
2. Learn the best type of REHAB and improvements to make to your real estate asset to force the most value appreciation.
Listen, I’m not a construction guy. I don’t gut units and do massive construction plays. But I’ve been able to achieve five 100% cash out refinances since 2021. How? By focusing on STRATEGIC value add.
Big construction projects can come with big returns, but you really have to know what you’re doing and be able to manage all the time and cost that go into them. I’d rather focus on light value add and forcing value by managing and operating the deal efficiently.
3. Learn how to manage your rental properly and RENT it out for max income.
I’ve said it before and I’ll say it until I’m blue in the face … management and operations are where the MONEY is made in real estate investing. A big part of the BRRRR strategy is operating and managing the deal properly.
My 100 unit apartment is a perfect example. I bought this deal with ZERO capital improvement or upgrade work required. The former owners had already completely renovated the asset. However, there were management and operational inefficiencies that caused the property to produce significantly less income than it was capable of. That’s where we came in.
So, don’t solely focus on upgrading units. You need to be able to rent them out and manage them properly to achieve a successful BRRRR strategy. Need help figuring out rent comps for your potential investment? Reach out to us at Stephan Group and we’d love to help you learn more about investing in Michigan real estate.
4. Learn how to choose the RIGHT lender for your cash out REFINANCE (and my $40,000 mistake on this deal!)
Picking the lender on your deal is like picking the person you’re going to marry. The WRONG lender can destroy your success. Make sure you tell your lender you are going to run a value add BRRRR strategy on this deal and inquire if they will be willing to do a cash out refinance in 12-24 months. If not, pick a different lender. I ended up paying a $40k pre-payment penalty to move my loan from the original lender because they were unwilling to refinance the loan as quickly as I wanted to.
5. Most importantly – learn how to REPEAT the process for compounding growth.
My wife and I have 259 units at age 34 because we have re-invested 75 cents out of every dollar we’ve made (we’ve tracked it.) I know some people when they get a big pay day from a sale or a refinance, they go out and spend the money. For us, we want to COMPOUND and MULTIPLY wealth by re-investing our gains into more real estate.
There’s nothing wrong with taking a small reward from time to time. However, I challenge you to remember that discipline and success comes from deciding what you want NOW vs. what you want MOST. Re-invest your refinance capital into another deal for the wealth building power of the BRRRR strategy.
Watch the full video here.
Will a BRRRR Cash Out Refinance Work for YOU?
Listen, if we can do this, YOU can do this.
You just need the right blueprint and some help along the way.
Are you going to be investing in real estate in 2025?
I created The Stephan Group Real Estate Brokerage to help YOU and your family create financial freedom through owning and investing in real estate. Reach out to me today and let’s chat about how we can help you realize your real estate goals in 2025!
