BRRR is a way to make quick profits and build up a sizable real estate portfolio, and until recently, market conditions were very favorable for the approach."That was a real winner in a falling-rate environment. Buy a property, a year later your interest rate is 25 or 50 basis points lower and you're able to add a lot of value quickly," Trench said."We've seen the interest in BRRRR fall off a cliff over the last 12 months.
"The pressure on the market was obvious for long enough to our audience, and real estate reacted more slowly than perhaps the stock market and other asset classes," he said.While the last decade or so was great for renovators and flippers, Trench says real estate investors need to be cautious now. If luck generally broke in renovators' favor in recent years, Trench is warning them not to count on that now."Flipping still seems to be working for people who buy lower than they would have before," he said. But now that it's much more expensive to borrow money, Trench said that listeners and forum members are looking for other ways to finance their purchases.
While experts doubt that rock-bottom mortgage rates are going to come back any time soon, Trench said that when interest rates and mortgage rates stabilize, BRRR will work again — even if conditions aren't as overwhelmingly favorable for the tactic as they have been in the last few years.
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