BiggerPockets Real Estate Podcast - How to Do a “Slow BRRRR” in 2025 (Better Than BRRRR)

Episode Date: September 10, 2025

The “Slow BRRRR” method. It’s less risky, comes with more cash flow, and is easier to pull off than the traditional BRRRR (buy, rehab, rent, refinance, repeat) strategy. A couple of weeks ago, we shared why this was the best rental property investing tactic for 2025, and today, we’re walking through the steps so you can do a slow BRRRR this year.  There are five steps to doing a Slow BRRRR. From finding the right property to planning a stress-free renovation to eventually refinancing, we’ll walk through each step, giving you the exact timeline it may take to get there. Busy job? Have other responsibilities? Need flexibility when investing? Great! This method is what you’re looking for, and it’s also the strategy Dave is using right now to invest. Plus, we’ll walk through an actual Slow BRRRR example to show you that the strategy works, can get you sizable cash flow and equity, and is significantly easier than the traditional BRRRR method. This works even with today’s high interest rates, so you don’t need to stress about rushing through renovations and refinancing. Ready to take the slow, steady, less stressful path to financial freedom? This is it. In This Episode We Cover The Slow BRRRR method explained and why it’s even better than the original  How to find the right property for your BRRRR (on-market, no cold calls/letters!) The best loan to use for a Slow BRRRR that keeps your returns safe  Using the BiggerPockets BRRRR Calculator to run your numbers easily  Why now may be one of the best times to lock in your next BRRRR (buyers have control)  And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1172 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is how you do the slow burr, my personal favorite real estate investing strategy of 2025, and I'm going to tell you how to do it step by step. The burr has been a very popular way to quickly scale a profitable real estate portfolio, even if you're starting without a lot of capital. And it can still absolutely work in today's market, but you've got to make a couple essential updates to the tried and true formula. And today I'm going to show you how to do it. Hey, what's up everyone? I'm Dave Meyer, host here at Bigger Pockets. And on this show, we help you pursue

financial independence through real estate. And we're glad to have you all here today. We released a recent episode of the podcast, episode 1165. It was back on August 25th. And it was called This Is Better Than the Burr Method, all about how to do burrs in 2025. And you guys seem to love that episode so much that today I'm going to go into more detail. and more depth and explain exactly how you can execute a slow burr rental property deal step by step. To me, this is the best strategy right now to use to add value and increase the upside of your deals, but you just need to take into account current prices and current rates when you're figuring out how to actually go about executing one of these deals. Let's dive into it.

So first things first, what is a burr in the first place? Then we'll get to what is a slow burr and how you actually go about it. But burr is an acronym. It stands for buy, rehab, rent, refinance, and repeat. And the idea behind a burr is that you buy a property that's not up to its highest and best use. It can be fully distressed or it might just be a property that needs a little bit of love, but you're buying something that's not really stabilized and being used in its best possible way.

Then you renovate that property to not just raise the value of the property like you would do with a flip, but also to raise the rents that you can generate, because you can generate because this is a rental property deal. Once you've done that, you rent it out at the new market rate that you've brought those rents up to. At that point, you could call the property quote unquote stabilize, right? You've brought it up to its highest and best use. You've got market rents going for you. And at that point, you can refinance at the new appraised value, pull some cash out, and then use the cash that you just used to get that first deal and use it basically a second time, recycle at least some of that money into the next deal that you want to go and acquire.

And there are scales to how effective or how aggressive you want to be on a burr. You could refinance some of it. There is something that some people call the quote unquote perfect burr, where the cash out refinance pays back 100% of your initial capital, both your down payment, your rehab costs, your closing costs. You're able to, in a perfect burr, refinance all of that. So you can basically recycle 100% of your money, but there are other ways to use a burr effectively to increase your cash flow,

to improve your net worth, to grow your portfolio. But no matter how you actually utilize the burr strategy, it is just overall a super appealing option for people who are looking to scale and who are maybe starting with a limited amount of capital. Because as I said, the burr method allows you to recycle that capital. And that means you can use your money that you have very, very efficiently to scale a rental property portfolio. Now, of course, some things have changed since 2012, 2015, even since 2021. Rates aren't near zero anymore. Underwriting is a little bit tighter. Appraisals that you're getting and are super important to refinance portion of the burr are a little bit more conservative. And as we all know, renovations have gotten considerably more expensive.

And I should also say in the last year or two, rents have sort of stagnated. And this has changed the way that Burr works. But is Burr dead? No, absolutely not. None of these things kill Burr. If you've been listening to the show, I think you all know, I think this is crazy that this is killed Burr. It just changes the approach. You have to tweak the strategy and the taxis that you use based on what has changed over the last couple of years. One thing, and I think the main thing that you really need to change if you're going to succeed with Burr in 2025 and get all these amazing benefits and be able to recycle your capital is that you have to change your expectations a little bit. Because during the burr, quote unquote, heyday, right, from like whatever, 2017 to 2022,

this sort of idea emerged where that the only bur that is worth doing is that perfect burr that I mentioned before, where you take out 100% of your equity. And of course, if you can do that, you should. But the idea that that's the only thing that makes Burr worth it, I think is really crazy and it's honestly really detrimental to the majority of investors out there because they're overlooking what could be great wealth building, cash flow producing deals because it's not 100% perfect. There's a saying that perfect is the enemy of good and I think that applies really well to the situation with burr. To be clear, I am not saying that it's wrong to look for an 100% per. If you can find that perfect burr, go out and do that. That is absolutely awesome. But

It is important to know that in today's market, being able to do that is an outlier. That is not what should be expected. That is not normal. If you can find it, you've found yourself a home run or a grand slam, but you should not overlook deals that don't meet that very strict criteria because that means you're going to overlook what could be a lot of great, great deals. By all means, if you can find it, do it. But it's just not normal.

And that's okay. You could still use the many fundamentals of burr to scale and grow. and I'm going to share with you the approach that I've been using to Burr over the last couple of years. I've done several deals like this. It works well for me. And I think it's just the right approach to real estate investing in the current environment that we're in. So this is the approach that I have been using. I call it the slow burr. Still uses the same fundamentals as Burr just tweaks it for modern conditions. Here is my basic thesis because I think, you know, before I share with you exactly how to do this step by step. I want to share with you at least my thinking and how I

came about this strategy. Number one, value add investing works really well right now. Some people call this forced appreciation, but value out investing is basically buying a property that's not being used that well or is falling into disrepair or needs a little bit of love, renovating it to drive up the value of that property. And if you're doing it, right, you're increasing the value of the property by more then you're paying to increase the value of that property. So just as an example, you buy a property for 200 grand, you put 50 grand into it, then it's worth 300 grand. That's value at investing because you spent $50,000 to increase the value of your property,

$100,000. And I hope you all agree with me that if you can do a deal like that, you do it all day long. And right now, in today's market, even though cash flow is harder to find and there are real obstacles to real estate investing, value add investing is working really well. There's all sorts of macroeconomic reasons for this, but you see this with flippers who are still making money in today's environment, even though prices aren't going up like crazy. And the same thing applies to burr investing, which is why I use it as the foundation of the investing strategy I'm using right now.

The second thesis that I have that drives this belief is that on-market deals are getting better. They're becoming more abundant and you can negotiate better deals. If you listen to me on the show, you know that I'm a lot of the show. I'm not someone who has some sophisticated deal flow operation out there. I am not sending direct letters. I don't do Facebook ads. I don't do any of that.

I find my deals either through my real estate agent, so on market deals, or from pocket listings that, again, usually come to me through my real estate agent. But in my experience over, I'd say the last year, really, the number of good opportunities on the MLS, just on market deals, is increasing. and as we enter an increasingly strong buyer's market, I think those deals are going to come more and more. And it means that you're going to be able to negotiate better. And that is really key to the Burr strategy

because if you're buying a distressed property, you need to buy it deep. You need to buy it under market comps. And I have seen this myself and I've talked to tons of investors who are also seeing this, but your ability to negotiate down, particularly properties that haven't been renovated yet,

is going up. Your ability to do that is increasing and is probably going to keep increasing, which is another reason I like this slow burr. Third, properties are sitting on the market a little bit longer, which not only means that you can negotiate, which is key to the burr, but it means that you can take a little bit longer to close, which I'll explain it a little bit is an important element of the step-by-step guide I'm going to give you because I think the way you finance a right now really matters. And I actually have sort of a contrarian take about how you should finance Burrs. I'll get into that, but it requires that you can close at a slower pace, which I know is possible in today's day and age. And this is just an example. These are just a couple of examples

of that you can invest in any kind of market, but you have to think about how you can use market conditions to your advantage. Because right now, prices across the country are relatively flat. I think that's going to continue. I think they might even go down a little bit on a national basis in the next year or two. And so what I'm looking at is how can you take advantage of this? Because just like in the stock market, people don't stop investing in the stock. If the market's going sideways or a little bit down, they just adjust their strategy. And this is exactly what we're doing with the slow burn. The last part of my thesis here never changed. This is always my thesis on real estate investing is you got to do it for the long term. You are in this for long term wealth creation. And the burr, as the name implies, it means you're being a little bit more patient about a bur. But that doesn't really matter because to me, real estate investing is a long-term game anyway. And I will take as much time as I need to lock up a great deal. And the slow burr is a perfect example of that. So these are my baseline beliefs right now.

And if you're with me, which I'm hoping you are, you then you ask, what is the play? How do you take these market conditions and use them to your advantage? We're going to get to that right after this break. Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most of the cost against your income. Legally, 100% IRS compliant. That's instant cash flow improvement. Cost segregation guys is the number one firm nationwide, specializing and identifying these faster depreciating assets in your property. They've completed tens of thousands of studies across all 50 states from, remote cabins to apartment complexes.

So if you own investment property, this is a no-brainer. So visit Costsegregationguise.com slash BP for your free proposal and find out how much you could save this tax season. We all joke that rentals are passive, but if you're spending nights matching receipts or guessing what a property earned last month, that's not passive at all. Baselaine fixes that part of landlording,

the financial chaos. Their banking and AI bookkeeping system automatically tags every transaction, updates cash flow insights in real time, and builds the reports you need for tax season. You can even automate transfers and move money around without paying wire fees. It's just cleaner. Sign up at baselane.com slash BP and get a $100 bonus.

Baselane is a financial technology company and not a bank. Banking services provided by Threadbank, member FDIC. Okay, we're going to shift gears for a minute to cover something important, especially for new landlords. The shows often talk about getting stuck doing everything ourselves and the cost of sweat equity. The key question is simple. Is my time better spent elsewhere? I use a tool that cuts down on a lot of landlord hassles.

And the wild part is, it's just $12 a month. It handles rental screenings, rent collection, maintenance requests, and accounting, all in one platform via a mobile app or desktop. It saves me time in tenant communication and keeps me organized for tax season. It's called Rent Ready, and you can sign up for a six-month plan for just $1 with promo code BP 2025. Pro users get it for free, because we believe in it. Just sign in through your pro account to get started.

Rent Ready helps ensure on-time rent with auto reminders, keeps communication professional, and lets you post listings to multiple sites. Check it out at rentready.com slash bigger pockets. That's rentrredi.com slash bigger pockets. Real estate investors, the April 15th tax deadline

is coming fast. If you own rental property and haven't done a cost segregation study yet, you could be handing thousands of dollars to the IRS that you don't have to. These studies let you write off as much as 25% of your building

and generate huge tax deductions. Costsegregation. is an online self-guided software that makes cost segregation fast and affordable. So it finally makes sense for smaller rental properties purchased for as low as $100,000. With pricing under $500 and an average savings of over $25,000, it's just a no-brainer. What's more, audit support is included by the number one cost segregation company in the U.S., but you must complete it before the tax deadline. Go to costsegregation.com and use code tax deadline to get 10% of $1.5% of the cost segregation.

off your first report. Don't overpay the IRS. Head to Costsegregation.com before April 15th. Welcome back to the Bigger Pockets podcast. I'm Dave Meyer sharing my strategy for 2025 rental property investing, which is using the quote unquote slow burr strategy. Before I explained my thesis, why I think this works. And now let's talk about the playbook. How do you adjust the great fundamentals of Byrd to the market conditions I just talked about to benefit you and your portfolio? Number one, you find an on-market deal that is habitable and eligible for conventional debt. This is a big difference from the way a lot of people do a burr. A way most people do a burr is similar to flipping a house where you look for something that

is unoccupied so that you can start your renovation immediately. And because of that, you traditionally have to use hard money, private money, or other forms of high interest debt. because what you're going to do is try and renovate this really quickly, refinance as quickly as possible, and so paying high interest debt is not as big of a deal. But when you're doing a slower burr like I am advocating for, you don't want to get caught with that high interest debt. So you need to find something that is habitable and you can get a normal mortgage rate on. The difference in this is if you go out and get a normal mortgage rate right now, even for investors putting 25% down, you're probably around 7%.

If you're getting hard money loan, you're probably playing close to 12 or 13%. And that's going to make a huge difference in your returns over the lifetime of this deal. And so getting that conventional debt is absolutely critical for the slow burn. So that's step one, and we'll talk about what to look for in your buybox in just a minute. But that's the thing you need to remember. This is an on-market, habitable deal that can qualify for conventional debt. Second criteria you're looking for is to find a place that can cash flow within three to six months. Ideally, the way that I've been doing this is that you look for deals that are occupied and

cash flow today. So I like to buy small multifamilies, two to four units. And what I look for is a place that is going to be at least break even, ideally a little bit better cash flow today. Or like if I were buying a duplex, I would take one where it's not cash flowing right away if one of the units is vacant or is going to be vacant very soon. Because what I'm thinking in that scenario is if one of the units becomes vacant, and I can do my renovation of that unit soon.

And the new rents are going to get me above cash flow break-even and to cash flow positive. I'm okay with that. That's why I said it needs to be able to cash flow within three to six months. And the reason I'm thinking this and doing this approach, same reason I specified an on-market conventional debt deal, is because we're in a weird market. And my number one priority for any deal that I buy right now

is to protect myself against downside risk. I, of course, want to make as much money as possible on any of those deals, but that is actually a secondary thing for me right now. First things first is how do I protect my principle and make sure even if things go really poorly in the macroeconomic environment, things that I can't control, that I know that I'm okay. I can hold on to this property as long as I need and I will have flexibility in how I execute my business plan.

So these two things go along with that idea of protecting myself. So that's what you need to do. Within a couple of months, you need at least, let's call it 2% cash on cash return. But then you obviously need more upside than that. I just mentioned you got to protect against the downside. But then you also need to make sure that you're earning a good return on this over the long run. And so for me, that means at least an 8% cash on cash return after stabilization. If you haven't heard this term stabilization, it just means the point at which you've taken a property that was a little bit run down and needs or innovation.

and it is actually not just renovated, but rented out at market rates. So you've basically taken something that wasn't being used well, and you're using it really well. That's the point of stabilization. And for me, when I do a slow-bored deal, I need at least an 8% cash on cash return once I've stabilized the property. Now, 8% is the minimum if it's in a great neighborhood. If this is an awesome asset in a great location, I'll take 8%.

To be honest, I probably take 7% also, but I try to find 8%. If the property is not in a great neighborhood and is maybe going to have a little bit more risk, I would target a 10 to 12 percent cash on cash return. Now, those might seem like random numbers and everyone's going to make up these numbers for themselves. But the way I think about it is that the stock market, which is another place that I could choose to put my money, I put the vast majority of my wealth into real estate, but I could put in the stock market.

But the stock market to returns 8 or 9 percent per year, and that is really passive. Like, I'm doing nothing for that. And so I want my cash flow alone to get close to that number of eight or nine percent. And then the other benefits of real estate investing, like appreciation, the tax benefits, the amortization, all of that stuff is taking me from an 8% cash on cash return to a total return that's somewhere between 12 or ideally a closer to 15%. And to me, that's what makes real estate worth it. If I can get a 12 to 15% return, that is so much.

better than the stock market that it is worth my time and energy. And I know that might not sound a lot the difference between 8 or 9 to 12 to 15%. Do yourself a favor. Go look at a compound interest calculator. Put in $10,000 and see what compounding at 8% over 30 years does and look at what compounding 12% for 30 years does. You will be absolutely shocked and you will see why the difference between an 8% return and a 12% return can actually be truly life changing over the course of an investing career. So I want that 8% cash on cash return minimum, and I'm targeting my stabilization period

to be between 18 and 24 months. So just as a reminder, I needed to be breaking even in cash flow within six months, but if it's not fully stabilized for a year after that or 18 months after that, I'm okay.

Those are the deadlines I set for myself. At six months, it's got to be break even, ideally a little bit better. And by two years, it has to be beating the stock market by a considerable margin to be worth my time. So then next, you execute the value ad.

And again, like I said before, ideally you want to do it quickly, right? But the thing about the slow burn and buying something that's occupied is that could take a little bit longer. Because if you have a duplex and your tenant chooses to move out after a year, then you can't do the renovation for a year.

And personally, I'm okay with that precisely because I'm looking for something that has already cash flowing. I am not going to skip over a good deal because I can't do that renovation in the first three months. If it's a great asset and it's going to be a good long-term addition to my portfolio, I'll wait, I'll wait 12 months, I'll wait 18 months, I'll wait 24 months to do that deal. And I know for some people, that's not appealing because that means you can't recycle your capital as quickly. But for me,

this is the best risk-adjusted return that I can earn in this kind of market. It might mean that I don't buy another deal for a couple months using that capital. But that's okay to me because it means that I am protecting myself and getting a rock solid deal with great risk-adjusted returns. Then once you've stabilized it, you have the option to refi. And I know that most people listening to this are going to choose to refi. I do in most situations as well. But I just want to call out that you don't have to. You can just keep the equity in your deal if it's a great deal or you want to preserve your cash flow. Because if you refinance, then that means you were taking out additional debt on top of what your original mortgage was. And hopefully you're still cash flowing.

If not, you should not be refinancing. But your mortgage payments are going to go up in most cases, unless rates really drop. But in most cases, your mortgage rates are going to go up. And so you're basically have a tradeoff. You have a decision to make. Do I want to take out more capital to recycle and use in future deals? Or do I value higher cash flow? And what you decide is totally up. to you. I think eventually most people do want to recapture some of that equity to put into another deal. But my recommendation with the slow birth is only do that when you're ready to do your next deal. Don't just go and refinance in three months or six months or nine months just because you can do it when you have an idea of how you're going to use that money. Because if you just leave the money

into your first deal and not refinance, your cash flow is going to be better. And so the only reason, at least in my mind, the only reason to reduce your cash flow is because you have another great deal lined up. And so I recommend just refinancing when it's opportunistic, when it's a good time for you to do that. And all these things together are why I call it slow. Not because it's lazy or anything like that. It's just opportunistic and it's sequenced. You can capture value in stages. You don't need to get it all up front. Because, yes, ideally you do. do want it all up front. But when you try and cram all this value creation into just a couple of months, more things can go wrong. It's like anything in investing. There is more opportunity. Yeah, you have a

higher potential for return, but more things can go wrong, right? Your appraisal might not come back. You might not be on budget. You have a lot of time pressure to execute your renovation really, really quickly. And if you're a new investor, that can be really intimidating. The slow burr basically takes that time pressure away and says you got two years to maximize the value out of this property. And to me, that's a great timeline for pretty much anyone, regardless of how much experience you have, to maximize the value of any asset. And that's why I like this strategy so much. All right. So that's the high level overview of the slow bur. We've got to take a quick break. But when we come back, I'm going to give you some real numbers and real examples of how you can do

this. And then walk you through the step-by-step guide to pulling this thing off. We'll be right back. I bought my first rental, I thought collecting rent would be the hard part. Nope. The admin crushed me. Every night was receipts, tax forms, and checking who was late on rent. I kept thinking, if this is one unit, how do people run 10? Baselaine changed that. It's BiggerPockets official banking platform that handles expense tracking, financial reporting,

rent collection, and even tenant screening, all in one place. It's the system I wish I had from day one. Sign up today at baselane.com slash bigger pockets and get a $100 bonus. Baselane is a financial technology company and is not an FDIC insured bank. Banking services provided by Threadbank, member FDICIC. The rise of the tech-savvy investor is here. You don't need a huge team or tons of overhead to manage rental properties. Just the right tools.

So, I want to tell you about how I use rent-ready to get ahead. For landlords who treat their time like capital and recognize the cost of sweat equity, this tool gives you everything you need to scale. Rent collection, tenant screening, maintenance accounting, so that you're organized come tax season, and you can run numbers in preparation for future deals. And more. All in one platform via a mobile app or desktop.

Modern landlords don't just own property. They optimize it. Rent ready will keep you organized, running leaner, and ready to grow. Start with rent ready. Visit rentready.com slash bigger pockets. That's rentrredi.com slash bigger pockets. And use code BP 2025 to get Rent Ready's six-month plan for a dollar. Managing properties can feel like a full-on circus.

You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners' confidence. One delay can throw everything off, and suddenly your day is all clean up, no progress. That's why hundreds of property managers rely on bill to streamline their finances. Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently without the usual bottlenecks.

It syncs with platforms like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and HOAs, choose, flexible payment methods like same-day ACH, international wires, card, or check, and set custom roles in approval policies. There's even a dedicated bill inbox for each property to keep everything organized. Ready to simplify your workflow, book your free demo at bill.com slash bigger pockets and get a $100 Amazon gift card. That's bill.com slash bigger pockets. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast, Easy, just use Indeed.

When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed, sponsored job posts help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored post. The best part, no monthly subscriptions or long-term contracts. You only pay for results.

And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring, indeed, is all you need. New Year, Clean Slate, and maybe a vacancy that needs to get filled fast? That's where a veil comes in.

With Avail, rental listings can be published to 24 top rental sites with one click, completely free. That includes places renters are already searching, like Realtor.com, Apartments.com, Redfin, and more. No copying and pasting. No juggling multiple platforms, just one listing that shows up everywhere. If getting rentals organized and filled fast is on the list this year, start with Avail. up for free at avail.co slash bigger pockets. That's a VAI-L dot CO slash bigger pockets. Welcome back to the bigger pockets podcast. I'm Dave Meyer talking about my favorite rental property strategy right now, which is the slow bur. Before I gave you a high level overview of the things you should be thinking about if you're going to do the slow bur, but let's talk some real-world

numbers of how you can actually go make this work. I just threw this into a bigger pockets calculator and ransom the numbers and came up with, I think, is a pretty realistic deal for you to target that people can actually go and do. So I like small multifamily. So let's talk about doing a duplex. You're going to target, in this example, target a duplex for $320,000. And I know if you're in California, that might not make sense, but most of the country, you can find a duplex. Again, we're finding something that's not been renovated. You can find a duplex for $320,000. That means you're putting $80,000 down. And I'm expecting to put about 20 grand into each units. So buying for 320, 80 down, and I'm putting all in $40,000, meaning my total cost that I'm putting into this deal

is my 80K down payment, 40K for rehab, which comes out to $120,000. Because this is an investor loan, that means that I can take out a loan for 75% of the value of the property, meaning I'm putting 25% down. it's owner occupied, you could do 20% down, but I'm going to just assume you're not doing that. You're putting 25% down, which means you're getting a loan for $240,000. And let's just assume in this scenario, I've seen deals like this in the Midwest, that pre-rehab rents will be about $3,000 per month. If you run the numbers on that kind of deal and you are using a 7% interest rate like you're getting today, you're accounting for vacancies, capital expenditures, turnover costs,

insurance, taxes, you're doing the whole thing right, you're really doing the underwriting. Those numbers will actually come close to break even and probably will do a little bit better than that. So if you can target a deal like that, again, these are available in the Midwest. You can find some of these in Western New York, in parts of the Mid-Atlantic, in parts of the Southeast, you can absolutely find these kinds of deals. You might be able to find these kinds of deals in expensive markets, but you're going to have obviously a higher acquisition price, but you also have higher rents. But this is sort of just the flavor of deal

that you should be looking at. So if you bought this deal and wound up never renovating it, it would still probably be a pretty good deal because it's a cash flowing rental property that you have ownership over. But if you do the slow burn, let's just imagine that this takes us 18 months in which time we renovate the two units that we have here

and we actually drive the property value from $320,000, up to $420,000. And that's not just pie in the sky made up math. We invested $40,000 into that renovation. And if we were doing this right, you are going to be earning well more than that $40,000 investment in terms of equity. And in this example, I'm assuming you earned $100,000 in equity by investing that $40,000.

Now, that renovation didn't just drive up the value of the property. It also drove up your rents from what was about $3,000. dollars per month to I'm going to estimate 3,900. I actually ran these numbers on a real deal and tried to figure out what this was. And in my experience, just doing my own investing, taking a property that's not really renovated and renovating it really nice, 30% jump in rents is not unheard of. Like that is pretty common from what is going to be the lower end of the rent spectrum in this neighborhood to probably what I would hope would be mid to higher end of the spectrum in rents, 30% growth, definitely not unattainable.

that's amazing. You've driven up value in terms of the property value, but also rents. And now, once you have that appraisal, you can go and try and refinance. Now, because this property is now worth $420,000, you got to keep 25% equity in it, right? You're basically getting a new mortgage and that 25% equity you're keeping in the deal is going to be your down payment for that new loan. That means you can borrow $315,000, which is awesome. You have a loan that you have to pay off, which was $2.35, and that means that after closing cost, you're going to walk between $65,000 and $75,000 in equity that you're pulling out of this property.

And even after that refinance, you are getting rents at 8% cash on cash return. That is an unbelievable value proposition, right? You are getting an excellent cash flowing property. and although you are not taking out 100% of your equity, remember we put $120,000 into this, you're getting more than half of that back out, which means that you are more than halfway to getting your next deal. And that is awesome.

I know it's not the same thing as getting 100% out, but if you're starting with limited capital, the ability to reuse half of it is phenomenal. There is no other strategy. There is no other asset class that you can do this in and being able to recycle 60, 70% of your capital is amazing. I'm tired of people saying that that is not good enough for your deal. I would take this deal all day.

I am taking this deal. I am doing deals just like this. And I'm doing it because you're getting a cash-flying asset. You are building equity. You are recycling some of your capital so you can go do another one. This is a rinse and repeat kind of deal that everyone should be considering. All right. So now that we've talked about those numbers, I do want to go through this step-by-step guide.

and I covered some of this earlier, so we'll go through some of this quickly, but there are a couple of things that I omitted earlier that I think are important for us to talk about. Step number one that you need to figure out is define a buy box that you can repeatedly source. So figure out what market you're going to be investing in and also figure out what level of renovation that you are willing to take on. For me, I prefer things that are, I would call cosmetic plus. I won't only do cosmetic, but since I do a lot of these deals out of state, I don't want to be moving a lot of walls. I don't want to be doing foundations.

I ideally don't really want to be doing systems like electrical and plumbing. I'll do floors, I'll do roofs, I'll do windows, that kind of thing. But I don't want to really be taken out the walls. So that's personally the buy box that I feel like I can do confidently at a distance. That might be a little bit different for you. But that is the first thing I would do is figure out where that buy box is. The second thing I would do is figure out where you're going to get that deal flow. And to me, especially if you're investing in the Midwest or honestly, most markets in the

country right now, we're in a buyer's market, which means that more deals are going to come on the market. So I would go out, step two would be go out, find a real estate agent who can help find the specific types of deals that you're looking for. You're going to give them your price point, how much you want to spend, and you're going to give them the condition of the property that we just talked about. What level of renovation are you looking for? and you're probably going to need to talk to that real estate agent about what ARV you're targeting.

ARV stands for after repair value. But basically, you want to be able to say, I'm looking for duplexes that are $320,000. And after I stable of them, they have to be worth north of $400,000. Like that's the kind of guidance that you should be giving to your real estate agent. And hopefully your real estate agent is able to find that in your market. And if not, hopefully they'll be honest with you. tell you that's not possible. And if they say that, adjust your strategy, adjust your numbers, or you can consider investing in a different market. So those are the things you need to do.

Set up that buy box. And sure, you can target things like specific numbers of bedrooms and bathrooms. I do that. But that is less important to me in this Burr strategy right now. I think figuring out how much you're willing to pay, what condition you're looking for and what the ARV in your neighborhood is are the most important parts of your pie box. If you have other things you care about like having a ranch or you don't like properties with crawl spaces or whatever, put that into your buy box as well. But those are the first three criteria I would define. Then go find an agent who's going to send you those deals consistently. Next thing to do, you can do this at the same time. But step three here is to figure out how

you're going to finance this. So what I would do personally is while you're waiting for these deals to come in or you're starting to analyze these deals, go out and talk to a mortgage broker or your bank or your local community, credit union, whoever you want to, and get pre-approved or pre-qualified for your acquisition. This is one of the main differences between the slow burr and the fast burr. A regular burr using a hard money,

these people can usually close on a loan in a week, two weeks, three weeks. Conventional mortgages take more time, and so you want to get a head start. You want to go out, and whether you're working with Chase or Wells Farger or Rocket Mortgage or whatever, start getting your paperwork together

so that when you find a good deal, you'll be able to execute on it quickly. Now, these loans, even if you do it right, it's probably going to take 21, 30, 35 days to close. That's okay because we're in a buyer's market. Again, this is one of the reasons I like the slow burr in this market. It's because it allows you to do these types of things because sellers, frankly, aren't going to have as many buyers competing for this property. And that gives you the ability to negotiate for these longer closes. This is something I talked about earlier. You will, in almost all cases, be able to negotiate a 30-day, 45-day close, whereas a couple of years ago, people were closing for two weeks in cash.

This is what I mean by taking what the market is giving you and taking advantage of these conditions. So go get your financing in order. Now, one thing we haven't talked about yet is that if you get a conventional mortgage, you probably won't be able to finance the renovation using that conventional mortgage unless you do a 203K loan. but that's the other thing you need to figure out here and is one of the challenges of the slow burr is how do you finance that renovation? Now, there are different ways to do it. You can look for a two or three K loan, which is a conventional mortgage that wraps your renovation costs into that mortgage. That's one good way to consider it. The other way to do it is to pay cash. So if you have the money to be able to do that, you can pay cash. Another way to do it is if you own your

primary residence, you could take out a home equity line of credit and use that to pay for the That's probably going to be cheaper than a hard money loan. So that is an advantageous thing to do. And when you go and refinance the deal later, you just pay down that line of credit. Or you can partner with someone to take on that renovation cost. Or you can also just take out a hard money loan for the renovation cost, not the acquisition cost. That would allow you to get that 6, 7% loan on the acquisition. And then for the 40,000 using our example, you take out a hard money loan.

But that's a much smaller loan. And so that high interest debt is on a lower price. principle, and that's going to make your deal pencil out a lot better. Those are just some ideas, but whatever you do, think about how you're going to finance the renovation, because that is probably the biggest hurdle, I think people come across in the slow burner, is that you're not going to be able to wrap this loan altogether, or you might not want to because then you'd be giving up that benefit of the conventional mortgage. The other thing I should mention about paying for the renovation is if you have a positive savings

rate, if you are working a full-time job and you are saving more money than you were earning every month, you could also just save up money and make these renovations over time. That's the beautiful thing about the slow buries. You only need to do it in 18, 24 months. And so you can save up maybe a thousand bucks a month, two thousand bucks a month. I don't know what your financial situation is. But if you're in that kind of situation and you need, you know, 10 grand per unit, maybe you can save up that money between renovating two units. And that's part of your strategy. But whatever you choose, just figure out the way that you intend to pay for that financing. If none of these work for you,

then the slow bear probably won't work, but I'm confident that most people can figure out a way to finance this if they have the money for the down payment. Next up, when you find a deal that you like, negotiate hard on that deal right now because right now sellers, they need you. They need investors to come out of the woodwork and buy deals. I just saw something today that the percentage of homeowners that are first-time homeowners is the lowest it's been in history. And that's bad for society. in all sorts of ways. But what it means is that increasingly, most of the transaction volume in the housing market is coming from investors. And so that means that sellers of these homes

that are distressed want investors to come in and renovate and beautify and make these properties nicer. And so they are going to be willing to work with you because they need you. And so use that leverage and negotiate as much as you can. This is going to really allow you to build more equity, it's going to allow you to take out more when you go to refinance, and it's just going to generally give you better numbers on your return. Once you've done that, go through the transaction process. Not going to get into detail of that today, but just go through escrow, figure out how to close. Next up, do your rehab opportunistically. The first thing I would do when I close is figure out the scope of work that you want to do. You can even do this before you close, but figure out the scope of

work that you want to do for your renovation, even if you're not going to do that right away. So go walk the property, figure out in every unit what you need to do. Does it need floors? Does it need a bathroom? Does it need a kitchen? Does it need paint? Whatever it is, get that list together so that when your tenants move out on their own accord, you are ready to strike right away and start that renovation as quickly as possible. The last thing you want is a tenant tells you, hey, I'm moving out in 30 days and you have to say, oh, shoot, now I need to figure out the scope. I need to go find a contractor. And then what should be a one month vacancy or a two month vacancy turns into a three or four month vacancy. You don't want that. You want to have your plan ready to go. Ideally, you have

your contractor ready to go. And that way, when the opportunity arises to do that value add project, you are ready to go and you can do it as quickly as possible. You get your rents up as quickly as possible and you minimize vacancies at all costs. And that's really it. Once you've stabilized these properties and you've made them nice, you lease them up at market rents. And once you've done that to all the units in the building, you can go and decide if you want to refinance or wait if you don't have a good use of the money that you're going to pull out of that deal. And honestly, that's it. I know it sounds pretty simple, but I like simple investing. That is kind of my whole thing, is I look for strategies that are repeatable and easy and that the average person could do because

that's me. I just am an average person. I've been buying rental properties for a long time, but I don't have any secrets. I'm not trying to do time intensive, super complicated things. This kind of deal can get you financial freedom. It has worked well for me. And so I'm going to keep doing this as long as market conditions allow me to do it.

So that is my guide to the slow burn. Just as a reminder, the slowber is a way that you can acquire a cash flowing rental property. You can build equity and you can recycle a considerable amount of your capital, all using low risk on market deals.

To me, that's an incredible value proposition. That's a great investment that you can make in today's market or really in any market. So I hope you all consider using a strategy like this because I think it's a great thing for whether you're starting your investing career, you've done a bunch of deals. I think this can work for almost anyone. If you have any questions about how to pull this off, please don't hesitate to ask me. You can find me on Bigger Pockets or on Instagram where I'm at the Data Deli. Thank you all so much for listening to this episode of the Bigger Pockets podcast. We'll see you next time. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new

episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. On the host and executive producer of the show, Dave Meyer, the show is produced by Ian K, copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can

afford to lose. And remember, past performance is not indicative of future results. Bigger Pockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.