The concept of the BRRR ladder in obtaining and building an investment property portfolio is a simple and effective system as long as you can perform each step, (repeating the process to build more investment properties). Don’t however let this simplicity fool you into thinking its an easy path. Each step has its own variables that can seriously challenge the overall BRRR approach. Being aware of some of these challenges and having the resolve/patience to overcome them, will dictate the overall success you will personally experience. Look at the BRRR approach as an interlocking puzzle, each piece must fit, (perform as needed) in order for the system to work.
I will discuss each piece of the BRRR puzzle in separate topics and provide the overall big picture in this post. I have loosely followed this approach for over a decade but never had a perfect run on the BRRR approach, hence I apply the term ‘loosely’. The factors at play on the whole of the BRRR strategy of increasing real estate investment, can be completely out of an investors control, surprise! Real estate market trends, personal finance issues, new banking policies and practices and a host of other influences can slightly unbalance the BRRR model and at times severely handicap the intended BRRR timeline or outcome. I would venture to guess that over 80% of persons that have tried to carry out the BRRR type approach to real estate investment growth, have never had that ‘perfect’ BRRR cycle occur. Instead a course adjustment, a holding pattern or a change in plan has to occur to approach the overall goals of the BRRR.
The ability to be fluid within the BRRR approach is critical as the BRRR plan you may have on paper will almost certainly adjust over time. The buy will effect the refinance as will the rehab. Your ability to manage the rentals and the property will effect the refinance and the refinance will certainly effect your plans for the next BRRR cycle.
Plan for the little surprises life can throw at you, (a layoff, real estate market crash) as best you can and adjust your way through these obstacles and the BRRR can still be a successful approach. Don’t be completely ruled in your future decisions by the BRRR approach. At one point in time I should have sold a rental property during a severe upswing in real estate market values, adjusted my BRRR approach for a few years and had more capital in hand for future BRRR cycles. In fact I goofed this up twice, such is life when you do not possess a crystal ball.
I had a hunch that I should have acted on one of these occasions and should have followed my gut , but had just completed a real estate transaction and sprouted to kids in short order. I am not one to stew over the ‘should haves’ in life, but would be in a completely different position, (I think) if I had reacted by putting my BRRR plans on hold for a while. Having a plan for investment growth and retirement capital is critical in today’s economy and I can honestly say that I am on my way to a brighter financial future, thanks to sticking to an over all BRRR approach as a means of investment.