Develop the Growth Mindset for Investing in Real Estate and the BRRRR Strategy
Many people love the idea of becoming real estate investors and becoming their own bosses. They know that investing in real estate should be able to provide them with more income and potentially the financial freedom that they have been after for many years. Yet, to be honest, most people only dream about taking this step and becoming an investor. Most are afraid to actually take the step for one reason or another.
Perhaps they know someone or read about someone who invested in a property that ended up needing far more rehab than they had anticipated. Maybe they heard stories about people who invested in real estate and were not able to find renters for the property that were willing to pay the asking price. Some might not know the right steps to take or how to choose a property. Others might be hesitant to take the step even though they have immersed themselves in learning about the field and how to do it right. They might know the buy-rehab-rent-refinance-repeat (BRRRR) strategy forward and backward and have great ideas and plans … that they will never implement because they fear failure.
Changing the Mindset
Before you can become successful as a real estate investor, or in anything in life for that matter, you need to change your outlook. Instead of being afraid to take the first step and worrying about all of the potential things that could go wrong, you need to think positively about the things that could go right. However, we all know that thinking positively and having a bright outlook is not going to be enough to make sure you are a success.
You also need to fully immerse yourself in the field. You need to understand how real estate investing works, and you need to make sure you are following a tried and true strategy like BRRRR. With the right knowledge and the right investing strategy, you will be acquiring the tools that you need for your first investment.
One piece of wisdom that has always stuck with me – ask yourself, not what could go wrong if I do not get started, but instead, what opportunities and growth will I miss out on if I decide not to go for this?
Why Should You Invest in Real Estate in the First Place?
When the cold feet start as people are thinking about becoming a real estate investor, one of the first things that they ask themselves is why they would even want to invest in real estate in the first place. Aren’t there other, safer investments that they could try instead? They worry about putting all of that money down on a property that might not pan out for them, and they begin trying to talk themselves out of investing. If you have those negative voices starting to creep up in your head, it is time that you start to think about all of the potential benefits that will come from investing in real estate.
One of the biggest benefits of investing in real estate is naturally the ability to provide yourself with a steady income. Having that steady flow of cash month after month is a great feeling. Naturally, the more investments you have the more monthly income you will have. More investments can be a great benefit from a financial perspective, as long as you have taken the time to vet those properties before buying. In turn, this can lead to more financial security for you and your family, and that can help to bring you the peace of mind that you deserve. Our All-in-One platform can provide you with the strategies you need to analyze potential deals and make use of the BRRRR strategy.
In many cases, investors will also find that there can be tax advantages to their real estate investments. There can be tax breaks for property depreciation, repairs, and so forth. You can speak with a tax professional about all of the potential ways that investing in real estate could help with your taxes. Real estate can be a good hedge against inflation, the property can appreciate and go up in value, and you get to become your own boss. You can get the freedom from your current job that you might have always wanted.
As you can see, there are plenty of benefits to real estate investing, and we only just scratched the surface. Some other things we love about real estate:
It is flexible – you can rent it, sell it, borrow against it, gift it, donate it, all among a host of numerous options – options that often do not exist with other investments.
It is historically stable – simply stated, real estate prices historically have not been subject to the drastic ups and downs found with other riskier investment products. It is very likely that if you need to liquidate there will be a market for your investment properties.
What Is BRRRR and Why Does It Work?
If you want to be successful, we think the best and most efficient option for growing your wealth through real estate is to use the BRRRR strategy. This stands for Buy, Rehab, Rent, Refinance, Repeat, and it really can be that simple.
When you buy a property, you need to make sure that you are choosing a property that has certain features and characteristics. It will need to be priced lower than the market value, so you can get a good deal on it. It also needs to be in a location where it will be possible to rent it out after it has been rehabbed. As they say, location is the key to real estate. That’s true with all types of investments in the field. Check to see what the rent is on comparable properties in the area and then run the numbers to make sure that the property – including the price of rehabbing – will be a sound financial investment.
Once the rehab is complete, you need to make sure that you have renters lined up to move into the place. While you can take care of the marketing, renting, and other property management on your own, you might want to consider hiring a property management company to take care of that for you.
After renting, it is time that you look to refinance. Ideally, you will be able to find a company that will be willing to lend you about 75% of the value of the property you just bought. Once refinanced and your cash you previously used is back in your bank account, this should provide you with enough for a down payment and the rehab of a new property so that you can repeat the same process.
The basics are simple. You just need to be willing to put in the time to find the right properties and make sure that you can get the rehab of the property done for a decent price. When you are searching for potential properties, you might also want to speak with some contractors who can provide you with estimates on how much it would cost to properly rehab the home. We have a set of high-quality, effective, and simple to use interview tools so that you can be sure to make the best hiring decisions for your team.
One Property Is Just the Start
Once you have made it through the first investment using the BRRRR strategy, you can start to see that the investing world is not quite as scary as you once thought it could be. You have actual experience under your belt now, and that means you can see that there are some true benefits to be had from continuing investing in more and more properties. Your skills and your confidence in investing will increase. So will your financial security. Oh, and with BRRRR, the one part we love is that you continue to use the same cash deal to deal – if you buy right and refinance you will never put more of your own capital at risk. In other words, the 10th investment is as secure as the first and requires no additional cash out-of-pocket.
The first property you choose should provide you with the confidence and the desire to start looking for more properties, so that you can continue to use this same strategy. You will start to see that not only is it possible for someone to make a substantial amount of money from real estate investing, but you can be the one who does it. The first property can really help to change up your overall outlook.
The Growth Mindset Leads to Actual Growth
The change in your outlook then leads to a change in your mindset. One property is where you start, but you want to continue looking for ways that you can invest in other properties that have the same characteristics you were looking for before. Always keep your eyes open for opportunity!
As you start to bring more and more properties into your portfolio, you will begin to see the possibilities for exponential growth. You can start to invest in properties further afield, you can invest in better quality properties, and you can keep buying more year after year. When you invest wisely, when you follow the tried and true BRRRR strategy, and when you work hard, growth is not just a possibility. It is an inevitability. Make sure to check out our blog post on the domino effect of one good BRRRR deal cited at the end of this article to see the math there.
Financial Freedom Could Be Closer than You Think
It just takes a commitment and one property to get started as a real estate investor. If you have been putting it off, worrying that you need to wait to begin an investment, it is time that you took the first step. Think about the positive outcomes that await you, foster that growth mindset, and start looking for the first property that will be able to ensure that you finally get the financial freedom that you truly want and deserve. We are here to help you on your journey!
Excited about BRRRR Investing? Sign-up for our All-in-One Solution for the BRRRR investor to make sure you are analyzing deals accurately and engaging your contractors, property managers and tenants on terms that are favorable to you with our attorney-prepared, buyer-friendly contracting solution.
Get your free trial completely risk-free to do more BRRRR deals than ever before so you can reach all your goals of wealth and financial freedom through the BRRRR strategy. Get signed up!