Not sure if now’s the right time to invest because the market seems crazy?
Are you betting on the BRRRR method with single-family homes, thinking just one more property will cover your living expenses?
“Just one more is all I need …”
Many investors dive into the BRRRR method, lured by the promise of passive income and financial freedom.
But is it the golden ticket it's often made out to be?
What’s Good About BRRRR?
BRRRR stands for buy, rehab, rent, refinance, repeat)
The BRRRR strategy is a popular pathway into real estate investing.
It allows investors to build a portfolio quickly, leveraging the value of one property to finance the next.
And it’s praised for its potential to generate cash flow and equity growth. However, it’s not without its downsides.
The Challenges of BRRR
It’s an active way to invest.
Many enter the BRRRR method dreaming of passive income.
But as they tack on property after property to their portfolio, their passive income needle barely moves.
They soon find it feels more like a full-time job, with constant property searches, renovations, and tenant management.
Scaling Issues.
While BRRRR can start strong, it becomes harder to scale due to the increasing complexity and capital requirements.
Income Reliability.
If a tenant stops paying rent, your income from that property completely disappears.
Market Dependency.
The method's success is tied closely to real estate market fluctuations, which can be unpredictable.
Financial Risk.
One significant repair or a tough refinancing term can quickly erase profits, and there's always the looming risk of losing properties if refinancing falls through.
Looking back, there were plenty of moments of both fear and greed.
When I first started pursuing passive income, I opened too many restaurants too quickly. I also invested $300K of my own money with a developer I barely knew in Northern Virginia.
Both of those resulted in hefty losses.
I was greedy, and because of my failures, I had to overcome the fears of picking up a new venture: flipping houses.
And I had to overcome them again when I first started investing in multifamily real estate.
The Turning Point
I don’t hate the BRRRR method. Actually, I find the business model of it very attractive.
What I do have a problem with is applying BRRRR to single-family homes.
For less effort, you can get a 12-unit apartment building, renovate units, rent the units out for more, and refinance.
Same time, 12 times the tenants.
There are multiple income streams, reduced risk of total income loss, and better control over property value and management.
But this does raise some questions:
Aren’t apartments more expensive?
Don’t you need years of experience?
What if all my tenants don’t pay?
You can raise money to buy multifamily properties. You don’t have to put up the whole downpayment yourself.
It’s possible (and surprisingly easy) to raise capital from private investors.
Experience won’t hold you back. Everyone has to start somewhere, so at some point, everyone with apartments didn’t know anything about them.
You can overcome this by educating yourself with blogs and videos or through free courses like Apartments 101.
Why Not Scale With Stability?
The BRRRR method has its place in real estate investing, but the single-family approach has limitations.
By transitioning to multifamily properties, you can achieve the scale and passive income you desire with less volatility and risk.
With the BRRR method, there are many things you can’t control …
The value of your rentals … the reliability of a tenant … major repairs … and if a tenant stops paying, you lose 100% of your income from that property.
Multifamily solves all these problems and you don’t have to shift your strategy to start investing!
BRRR works with apartments (it’s what we do) – and it doesn’t matter how much experience you have in real estate or how much money you have.
To learn more about apartment investing and what you can do to get started, check out my free course, Apartment 101 Investing Masterclass.
It’ll walk you through all the basics.
Just click the link below to get started.
