Real estate capital raising and syndication

Real Estate Wealth: The BRRR Method and the 1% Rule

Hot Investor Trends - Ep. 2: Real Estate Wealth - The Simple Strategy That Still Works

New real estate investors, especially those in high priced markets, who want to understand a simple repeatable buy and hold approach.

Summary

Lloyd, president of the Los Angeles County Real Estate Investors Association, describes a simple path for new real estate investors. The group began in 1996 and reports 55,000 paying members, with another 50,000 people in its database. Because starting in California is hard, the association opened chapters in 10 cities where single family homes can be bought for under $100,000.

The core method is BRRR, which stands for buy, rehab, refinance and repeat. Members get access to realtors, escrow companies, title companies and contractors in each city. Lloyd says some members are now on their 15th, 16th or 21st house. He also explains the 1% rule, where rent should exceed 1% of the purchase price, and notes that few cities still meet it.

What to take from this talk

1. Start where homes are affordable. Lloyd says it is harder to get started in California than in other places. The association looks for cities where single family homes cost under $100,000, so a new investor can begin with a smaller check.
2. Understand the BRRR method. BRRR stands for buy, rehab, refinance and repeat. The idea is that an investor does not stop at one property but goes through the same steps again and again.
3. Build a local team first. Members are given realtors, escrow companies, title companies and contractors to do the rehab in each target city. This removes some of the guesswork for people buying out of state.
4. Understand the 1% rule. The 1% rule looks for rents that exceed 1% of the value of the property. Lloyd says you are lucky to find 10 cities in the United States where rent exceeds 1% of the purchase price.
5. Repeat to build a portfolio. Lloyd says some members are on their 15th, 16th and even 21st house in these cities. He describes success as coming one property at a time.

Said on the call

Key facts

• The Los Angeles County Real Estate Investors Association started in 1996 and reports 55,000 paying members plus 50,000 more in its database.
• The association has set up chapters in 10 cities, including Pittsburgh, Birmingham, St. Louis and the newest, Baton Rouge.
• Some members are on their 15th, 16th or 21st house using the BRRR method.

General education only. Not legal, tax or investment advice.

Talk to a securities attorney to explore options around property purchase contracts, refinancing and loan terms and entity ownership structure. Do not use AI to write your own legal agreements.

Related questions

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Questions about this video

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