How to Fail at The BRRRR Method

How to Fail at The BRRRR Method | 4 Steps to Avoid

Рет қаралды 93,124

Күн бұрын

The BRRRR method is undoubtedly one of the greatest (and fastest) ways to build wealth through real estate investing. Even if you’re brand new to real estate, you’ve probably heard someone talking about the BRRRR strategy in some form before. While this strategy can easily be explained in five simple steps-buy rehab rent refinance repeat-the reality of doing a BRRRR is less than simplistic most of the time.
Trust Tarl Yarber on this. As a recovering flipping addict, Tarl realized well into his 500th deal that solely flipping houses wasn’t a wealth-builder, but BRRRRing was. So, did he do his first BRRRR property perfectly? Of course not! But, instead of watching rookies fail on their own, Tarl has been kind enough to provide us with his four steps that will ensure a failed BRRRR, specifically so you DON’T do them.
If you’ve ever attempted a BRRRR before, you’ll probably see a few familiar steps on this list that you accidentally did. Before you buy that beautiful fixer-upper and turn it into a rental, make sure you’ve got your exit strategies in line and you’ve mitigated all of these four risks!
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Check out Tarl’s Video on The “Infinite BRRRR Strategy”:
• The “Infinite BRRRR St...
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Buy the Book on BRRRR Investing:
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Prequalify for Your Next BRRRR with a Great Lender:
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Calculate Your Future BRRRR Profits:
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5 Smart Exit Strategies For When Things Go Wrong Flipping Houses:
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Connect with Tarl on BiggerPockets:
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Follow Tarl on Instagram:
@tarlyarber or / tarlyarber
00:00 How to Fail at BRRRRing
01:00 What is The BRRRR Strategy?
02:29 1. Put in The Wrong Finishes
05:29 2. Get a Low Appraisal
09:33 3. Don't Get Prequalified
16:18 4. Be a Bad Landlord
19:41 What Happens if You Do All Four?
21:07 Plan Your Exit!

Пікірлер: 116

@DCC72 Жыл бұрын

Here's 3 reasons this guy may be the most gifted BG teacher: 1) he knows when you could have been confused . Notice when he gives $100k example, he clarifies it's a new example. 2) he never leaves any concept incomplete and yet is concise. Notice how he says "buy crappy Property " which is the most efficient way to teach the "B" . 3.) He writes down his concepts which form his outline. Like Ken McElroy (who is great but makes mistakes). All in 20 mins. This guy is gifted BRRRR teacher. I learned it well.

@gettz196 2 жыл бұрын

Excellent, excellent advice . Especially the part where KZfaqrs etc make it seem like BRRRR is an easy strategy to do . Maybe pre C-19 but not now in my experience .First you have , sellers prices high . Then materials are high . Contractors are over charging . Then don’t forget the closing costs , the operating cost ( utilities, insurance, payments to hard lender if that’s what you are using interest only ) until you refinance , then another closing cost . Unless you have a renter first month after the closing covering all these cost . Meaning you did the rehab in 2/3 weeks ( unlikely) . Then after all that , hope the appraisal comes in your favor , where 70 to 75 % of the ARV was your total cost including expenses… A lot of videos are misleading and make it seem like you can do this with no to low money . No you need money and hopefully after all that you can make all of your money back from fore mentioned expenses . Very difficult. Maybe I’m not “ in the know “ but deals are hard to find . Any markets with the example he used , please let us all know lol .

@brucebarber8323 2 жыл бұрын

A brrrr is just an under valued house. They are everywhere. Google whole salers in my area. Or contact home owners do all the homework and offer them a price that mAkes the deal work. Then call 30 other houses because it’s a numbers game. Low income neighborhoods are full of these homes. I’m currently doing this strategy on a duplex that a whole saler found. Should be done and on to the next one in 2 month

@MrFrancesconi 2 жыл бұрын

Great video! Thanks!

@bikenraider99 2 жыл бұрын

Always good to hear about failures and how they happened and some.of the solutions to get out of them. Thanks for posting.

@brian4555 2 жыл бұрын

I can listen to this man all day. Great delivery!

@RIB0S0ME 2 жыл бұрын

Nice summary at the end. Love the list and the advice to start on top.

@emilioalvarado-alanis8229 Жыл бұрын

Thank you very much for all your knowledge!!

@newprop9658 2 жыл бұрын

I want to start a wave of trying to get you back on a bp podcast. It always seems the people who are actually ten toes down don't have the time, but one can hope. Always great stuff yarl

@vha0589 2 жыл бұрын

Thank you. Great video.

@Acollins33 2 жыл бұрын

This is one of the best videos about brrrr I’ve seen, thank you!!

@Andradi303 2 жыл бұрын

Thank you for sharing pitfalls and being real about what to do and NOT to do! Super helpful!

@luo6963 Жыл бұрын

This was great. Thank you.

@JevonMusicGroup 2 жыл бұрын

Ingenious way to reinforce the BRRRR strategy! Never thought of that first one... so glad I watched this.

@rashidbeisenov 2 жыл бұрын

One of the greatest, short and straight to a point vids about brrrr. Thanks for your effort and teaching 👍

@jamescline7877 2 жыл бұрын

Great advice....Thanks!

@laurenbreslin6125 2 жыл бұрын

Very informative! Thank you from this first time real estate investor 😄

@l.a.6522 Жыл бұрын

Beautiful... im gonna listen to it again and take notes... im planning on doing a firs BRRRR... thanks...

@hangarnut5660 2 жыл бұрын

Simply thank you! The market will level out as it has always done.

@Apsaramain 2 жыл бұрын

LOVE. Thank you!!!

@jameshull7693 Жыл бұрын

this is a great video to watch if you want to get into this market! funny and very knowledgeable!

@petervendetti2796 2 жыл бұрын

Great job man I like your KZfaq lessons Some people can’t teach you do a good job Some people think their contractors and get surprised when they’re not. I’ve done three houses so far I’m gonna electrical contractor the stress is tremendous. When you’re trying to do everything yourself and don’t have the skills

@MaPrajna1 Жыл бұрын

This was a great video. Thanks

@davidprice2206 Жыл бұрын

dude you're goated !! excellent job on all of this

@Progressionmusic1 2 жыл бұрын

Great video!

@banaya6973 Жыл бұрын

Very detailed and insightful. Txs

@jyouboty83 Жыл бұрын

Great Stuff, Thanks!!!!

@bionicspuds4616 5 ай бұрын

I needed this! Brought me back down to earth before I even started the brrrr strategy 😮

@morganstubie Жыл бұрын

This video is amazing!!!.!! Hilarious and packed w knowledge!!!

@bldfinancial 2 жыл бұрын

Great insights in this video 🔥

@five-forty3431 6 ай бұрын

Great informative video!

@Lovingmylife24 Жыл бұрын

I appreciate you all sharing the other side of this strategy. It is good to also see that this does not always work.

@waterfoker8558 3 ай бұрын

Excellent breakdown

@LoneVocalist Жыл бұрын

One of the best if not the best video from BP

@algarcia32 2 жыл бұрын

I always invest flip grade materials into my rentals. If I ever need to sell or want to sell, all I have to do is paint the inside and I should be able to sell it to an owner occupant rt away.

@arslanchaudhry9458 2 жыл бұрын

Thank you!

@taye9424 2 жыл бұрын

thanks tarl!

@CRISKILLA1 2 жыл бұрын

Probably the best video on the internet.

@Topics_on_the_Edge 4 ай бұрын

What a great video!

@janicevo5756 2 жыл бұрын

Greatest advice. "WORK BACKWARD".

@toddtowns7793 Жыл бұрын

Loved it

@sftrail4235 2 жыл бұрын

Thank you. all make sense

@MegaSuperEnrique 2 жыл бұрын

#4 how to find good tenants -I have a duplex that I find tenants for, if they are good, I offer to upgrade them to one of my BRRR, I may even find a BRRR with them in mind, and eventually offer to sell them the property.

@travelmikey9 Жыл бұрын

Funny approach to educating on the topic :👏

@krystofpilisiewicz1154 Жыл бұрын

I love this guy. He is funny as hell, and smart

@tylermundy7985 2 жыл бұрын

Tarl Yarber is the man!

@deshawnburton2290 Жыл бұрын

Thank you

@takeitback-financial2808 2 жыл бұрын

Such a great video to show some realistic problems. Everyone makes it seem easy and it’s a lot of work and nothing goes to plan. Especially on the rehab part.

@chihoolee 2 жыл бұрын

Great video! I think if ppl are reading David Greene's BRRR book, they should also watch this.

@jakemillerdoesmoney 2 жыл бұрын

I’m hoping to try my first non live in brrrr this year so great tips!

@masseywillingham2740 Жыл бұрын

Knocked this one out of the park Tarl. The only other thing I hope people who did not make it through 2008 realize is that valuations do go down and banks can call a loan when it’s no longer at an 80% LTV.

@CovrXL5 7 ай бұрын

Thanks for a great vid ! Quick question. Do you think it's important to get a real estate license to do well with BRRRR?

@jackiphone3g 2 жыл бұрын

So If you do flip grade finishes you are kind of safer. Better tenant and better appraisal… just have to make sure you buy it correctly so you have the buffer to make those finishes.

@gianrenepadilla3671 2 жыл бұрын

Could you buy cash and finance after renting? Would that give us cash out assuming the appraisal is favorable (LTV is equal to initial cash & rehab costs)? In short, would we be able to receive cash back by financing after a cash purchase?

@lvteachme973 2 жыл бұрын

Perfectly presented! Concise, easy to understand. You have explained many financing options and management considerations that are often not discussed.

@5256brkboyz12 2 жыл бұрын

Everyone is making money and these vids on the pop of this strat. But your the first I’ve seen to go through the challenges. Thank you. I have been saving up for about 1 1/2 years now because I want to start buying real estate to rent. I’ve got as of right now 80,000 saved up in the bank so I guess we’ll see how it goes

@5256brkboyz12 2 жыл бұрын

I don’t know if you’re going to see this or not but I really do appreciate it I have my goal set on using the bar strategy for 10 properties then paying them off as fast as possible with the snowball method so hopefully in about 15 years all Tim properties will be paid off and I won’t have to do conventional work anymore work anymore

@Proctic51 10 ай бұрын

@5256brkboyz12 Hey any update to your investing journey?

@Hammeredveracity 2 ай бұрын

Did you do it?

@freespirit2520 Жыл бұрын

GREEEEAAAAT VIIIIDDDEEEEOOOOO!! GEMS!!! THANKS A LOT.

@joeydefaria4941 2 жыл бұрын

If you were debt free and had good credit, would you use your VA loan first before doing your first BRRRR? Or Vice versa? Also Cash purchase deal and financing rehab.

@vic6010 5 ай бұрын

How do you calculate rents based on the new refinanced mortgage since the payment of mortgage would go up right? Is there a method to calculate how much rent to charge to make sure we can cover ourselves when we refinance?

@ckkendrick7861 Жыл бұрын

Make sure you add your down payment when you cash out refi

@doctorleohealth 2 жыл бұрын

At 9:00 you said you have to borrow 8 grand to leave into the house? If it is a cash out refi and I've created equity through rehab, why do I need to add more money into it to get a refi? I think you mis spoke. If not , please clarify

@rauljaimes6739 2 жыл бұрын

Can you do this with a VA loan?

@Thejasonrogers Жыл бұрын

Buy, Reno as if you were selling so you can get more for the refi, cash out, rent, repeat.

@user-sx1uc8pf7o 3 ай бұрын

Where do you get money to put into it?

@MrPeterschmit 2 жыл бұрын

Okay, as far as being a bad landlord, where do we draw the line between raising rents and rewarding prompt payments by not raising rent ? Anyone?

@Justise 2 жыл бұрын

I have tried to work all my BRRRR deals backwards, but I keep getting stuck. I go to repeat and then I repeat it but then I'm back at repeat... it's really a never ending loop. I've been analyzing my first deal for the last 11 years now...

@tarlyarber 2 жыл бұрын

Ha!

@kylemckiernan1445 9 ай бұрын

Brrrr is so great, even if you leave money in a deal, you're likely getting more equity than what you leave PLUS have a cash flowing property

@Mmvexxx 2 жыл бұрын

How much can you typically pull back out in a refi? 70%? 80%? I’m planning on buying in Texas. I have a property that I’m interested in. Planning on buying cash, fixing it up and renting them doing a refi. I have excellent credit and plenty of cash

@flippineddy627 2 жыл бұрын

Not even joking here, but I had a home fire on a property that didn't have no HO insurance. Would you be interested in investing in reno for a % return from home sale on top? Have your lawyer draft up a contract. Property is paid off. Worth 295k for move in condition. I can show you the gofundme and local fire station Facebook profile that contains the pictures. I just need help

@flippineddy627 2 жыл бұрын

I have one more dumpster coming in 2 weeks and it will basically be ripped down to the bones from where damage occurred. My credit took a big hit over the past 6 months and I don't want to sell it for crackhead prices

@sergioblanco4504 Жыл бұрын

I think it’s very important to buy a property correctly from the start. In my opinion and after running lots of numbers for potential brrrr properties, I believe you have to buy the property with at least 50% under the value of the property. For example, if the value of the property is $500,000, you should look at purchasing with a purchase price of 250k. That’s how if seen it’s the easiest way to see if a property is good for this method or not. This means that the properties should bd acquired via Auction or pre-foreclosure. What do you guys think?

@dn3772 Жыл бұрын

how the hell u gonna buy a property for 50% off?

@dinerochaser1100 Жыл бұрын

Advice for someone without income to get a property. With or without option for co-signer

@nickfazzio5277 2 жыл бұрын

Never mind the BRRRR strategy here, my man has flipped 500+ properties…. It sounds like that’s where his gift is.

@jaygames7145 9 ай бұрын

Yes but he realized that he wasn’t building wealth or passive income when just flipping houses.

@kenmarquis5320 2 жыл бұрын

I love Tarl's lessons, but we gotta get him off the marker board 😆. I don't mean this as an insult! But I feel like that would clarify and speed up and shorten his talks.

@tarlyarber 2 жыл бұрын

Ha! Yep, my hand writing sucks

@kenmarquis5320 2 жыл бұрын

@@tarlyarber 😄 just as long as you took the joke.

@youtubecarspottersguide1 2 жыл бұрын

how does one qualify for the loan ? no cash flow while you are rehab the house , so I have to personally make the paymnet

@mikebevan1034 2 жыл бұрын

You rent prior to the refi.

@TheAceMoneyShow 2 жыл бұрын

Can you get a dscr loan for the refinance of the property? Edit- Wow 13:00 he mentioned it 😂 Watch whole video guys.

@cwebbhouston 2 жыл бұрын

I've done 5 BRRRRs, and every single one of them was a home run. You have to have an earned income job and your debt to income ratio can't be off.

@robertsavello4120 2 жыл бұрын

Can't be off what? What Debt to Income ratio is a good one?

@cwebbhouston 2 жыл бұрын

@@robertsavello4120 can’t be above 50

@robertsavello4120 2 жыл бұрын

@@cwebbhouston thanks

@leahholmes9928 Жыл бұрын

Can you just refinance into a DSCR loan?

@maikaimakena9424 2 жыл бұрын

Public SERVICE announcement 📣

@dennisdanielsen8741 9 ай бұрын

super content. but guys, whats with the camera angle? xD

@serioushamster 2 жыл бұрын

It seems BR^4 hinges on the appraisal after the rehab being much higher than the money you put into the rehab.

@KiraBKADestroyerOfWorlds 2 жыл бұрын

So basically, begin with the end in mind.

@zack8247 2 жыл бұрын

yes that is what he said

@raymondweaver2023 2 жыл бұрын

This should apply to most (if not all) aspects in life.

@lovelinksmusicbratta8610 2 жыл бұрын

You didn't mention failure to add enough value.

@jasonfulton2154 2 жыл бұрын

That's was essentially all of step 1 and 2

@steeve3386 Жыл бұрын

What does point one mean? 1) is an infinite BRRR???

@lescobrandon8162 Жыл бұрын

7:47 What’s a comp?

@biggerpockets Жыл бұрын

A "comp" is comparable properties to your own. Check out our video all about comps! kzfaq.info/get/bejne/sKuIhJqmxs-rlnU.html

@kylekotecha153 2 жыл бұрын

Is this ok: Paid 220k for duplex Needs 30k rehab Arv 280k Rental comps: 1350 each side

@ckkendrick7861 Жыл бұрын

You put 20 percent down

@axaflaxar 2 жыл бұрын

When u refinance won't you end up with a higher interest rate on the new loan and less cash flow

@djcook Ай бұрын

you sound like Woodysgamertag

@garciavashchino1 2 жыл бұрын

20:21 Murder, Burn the place, Gas Leak, Kidnap... just to name a few ideas.... I mean... J/K

@davidadamson3664 4 ай бұрын

....or the tenant stops paying.

@andersongeorge459 2 жыл бұрын

I have about 5% of my portfolio in uranium stock any advice on any other stock that I can grow my $300k capital to a million dollars?

@4homemail Жыл бұрын

Good advice. You better have a nice job and a good credit score or you will be doing the FUBAR strategy 😢

@CloudFly99 Жыл бұрын

This doesn't work in every market

@Adrian-yi8fl Жыл бұрын

😂 yeah I could crash my car into a light pole or drive off the cliff. But that doesn't mean I'm not going to go to the store.

@charliesizemore9971 Жыл бұрын

You flipped 600 houses? Sure you did.

@brianbordenkircher52 2 жыл бұрын

Thank you!