Our Journey with the BRRR Investment Strategy
As we navigated our path into the world of real estate investment, we found a powerful strategy that seemed to click with Brandon's finance and economics background learned at university—the BRRR method. This approach of Buy, Renovate, Refinance, Rent not only aligned with academic theory but also proved its worth in practical application. Here’s how we leveraged this strategy to transform our understanding into successful real estate investments.
Buy: Spotting the Diamond in the Rough
Our adventure started with the crucial first step of acquiring the right property. We focused on finding homes priced below market value needing significant renovations, like a quaint house in a desirable neighborhood of a commuter town outside of Toronto. This strategy of selecting the right location wasn’t just about the immediate price—it was about long-term potential, a lesson Brandon’s university days made clear was vital.
Renovate: Making Smart Enhancements
Once we secured our property, we moved onto what could arguably be the most transformative phase: renovations. Here, we aimed to add significant value without overspending. Prioritizing updates in critical areas like the kitchen and bathrooms, where returns are usually highest, we managed our budget meticulously. We did all of the work ourselves and even bought a display Kitchen from a Kitchen and Bath store closing down at a steep discount. Then it was a game of jigsaw to fit the kitchen layout from the showroom into our galley kitchen. It was in this house we learned how to tile, replace stairs, and install kitchens!
Refinance: Unlocking the Property’s True Value
With the property’s value enhanced by strategic renovations, refinancing was the next step. This phase involved reassessing the property’s worth to secure a new, higher-value mortgage. It was a practical application of Brandon’s finance studies, where leveraging assets efficiently is key. By doing so, we were able to extract much of our initial investment to funnel into new projects, a cycle that kept our portfolio growing. It took a of few years for us to reach this step, we completed the renovations during those years while living in the house with Brandon working full time growing an angel investing community in Toronto, while Iuliana worked full time towards her graduate school degree.
Rent: Establishing Steady Cash Flow
Once the renovations were complete we moved back to Toronto and put our home of 3 years up for rent. Setting the right rental prices was critical. We needed to cover our costs and yield a profitable return, balancing market expectations with our financial goals. Effective property management became a cornerstone of this phase, as maintaining high tenant satisfaction and minimizing vacancies was crucial for consistent cash flow.
Reflecting on Our Journey
Through applying the BRRR strategy, we've learned that deep market knowledge is crucial at every stage. Brandon’s background in economics and finance often guided our strategic planning and risk management, while practical experiences refined our approach with each new property. Today, with the help of our many trusted advisors such as our lawyer, accountant, banker and our investment partners we have modified this strategy to work within today’s economic climate and housing market.
Our journey from the theoretical knowledge of a university classroom to the tangible success of real estate investing underscores the power of blending education with real-world application. Each project reinforces the lessons learned and prepares us for the next, illustrating that the right strategy can lead to substantial real estate success.