How to Find the Right Property for the BRRRR Method in Australia
The BRRRR method is a popular real estate investment strategy that involves buying distressed properties, renovating them, renting them out, refinancing them, and then repeating the process. The BRRRR method can be a lucrative way to build wealth and create passive income streams, but finding the right property is crucial to the success of the strategy. In this article, we will explore how to find the right property for the BRRRR method in Australia.
1. Identify the Right Suburbs
One of the first steps in finding the right property for the BRRRR method is identifying the right suburbs. You want to look for suburbs that are undergoing gentrification or are up-and-coming. These suburbs tend to have lower property prices but have the potential for significant appreciation in value. Some of the suburbs in Australia that are currently undergoing gentrification include West Footscray and Coburg in Melbourne, Red Hill and Stafford in Brisbane, and Islington and Mayfield in Newcastle.
2. Look for Distressed Properties
The BRRRR method involves buying distressed properties that need significant renovations. These properties tend to be cheaper than properties in good condition, which makes them ideal for the strategy. Look for properties that are in poor condition, such as properties that have been foreclosed or that have been on the market for a long time. You can find these properties by searching online real estate listings, working with a real estate agent, or attending property auctions.
3. Assess the Renovation Costs
After identifying a potential property, you need to assess the renovation costs. The renovation costs will determine whether the property is suitable for the BRRRR method. You want to look for properties where the renovation costs are significantly lower than the potential increase in property value. The renovation costs should be around 70% of the after-repair value of the property.
4. Analyze the Rental Market
Before purchasing a property for the BRRRR method, you need to analyze the rental market. Look for suburbs where there is high demand for rental properties and where the rental yields are good. You can find this information by looking at rental listings online or working with a property management company.
5. Consider the Refinancing Options
The final step in finding the right property for the BRRRR method is considering the refinancing options. You want to make sure that you can refinance the property after renovating it and renting it out. Look for lenders who offer attractive refinancing options for investment properties.
In conclusion, finding the right property for the BRRRR method in Australia requires careful research and analysis. You need to identify the right suburbs, look for distressed properties, assess the renovation costs, analyze the rental market, and consider the refinancing options. With the right property, the BRRRR method can be a lucrative way to build wealth and create passive income streams in the Australian real estate market.
