If you're looking to become a millionaire through real estate, wholesaling is often touted as a great entry point. It's ideal for those who want to kickstart their journey without needing substantial upfront funding.
But what comes after wholesaling? How do you transition from quick flips to long-term wealth building? Enter Nate Barger’s BRRRR strategy—Buy, Renovate, Rent, Refinance, and Repeat. In this blog post, we'll break down how you can leverage these strategies to maximize your real estate gains.
The Benefits of Wholesaling
A Beginner's Friend
Wholesale real estate is perfect for individuals getting their feet wet in real estate. It doesn't require huge capital, but it demands keen deal-finding skills. Here's how it works: You find a property, lock it down under contract, and sell that contract to an end buyer for a fee—often without ever owning the property.
Low Financial Risk
Given that you're not actually purchasing the property, the financial risk is minimal. You’re essentially a middleman making a profit off the transaction's spread. This makes it ideal for those who don’t have the capital to own multiple properties or those who are looking to build their skills while earning money.
Skill Development
Wholesaling requires you to become adept at identifying undervalued properties and negotiating deals—skills crucial for more advanced investing techniques like the BRRRR strategy.
Transitioning from Wholesaling to BRRRR
Meet Nate Barger and the BRRRR Strategy
Nate Barger is the founder of BRRRR Invest Academy, and he specializes in a long-term wealth-building strategy known as BRRRR: Buy, Renovate, Rent, Refinance, and Repeat. This method allows you to scale up your real estate portfolio by recycling the same initial capital through multiple deals.
“The real wealth is made in getting in debt. But in America, we're taught to stay poor.” — Nate Barger
Step-By-Step Breakdown of BRRRR
- Buy: Find an undervalued property that you can improve.
- Renovate: Enhance the property to significantly increase its market value.
- Rent: Lease the property to create a steady cash flow.
- Refinance: Obtain a new mortgage based on the improved property value.
- Repeat: Use the funds from the refinance to buy more properties.
To learn more about the BRRRR Method check out our complete guide.
Combining Wholesale and BRRRR
Even if you start with wholesaling, you can transition into the BRRRR strategy. Wholesaling can provide the initial capital and the market insights required for successful BRRRR deals. Nate himself experienced a similar journey, making significant profits in wholesaling before pivoting to the BRRRR method for sustainable wealth creation.
The Real-World Impact: Nate Barger’s Journey
Nate wasn't always a real estate mogul. His journey from dealing drugs to mastering the real estate game is both inspirational and instructive. At one point, Nate considered quitting his illegal activities but found himself unhirable with multiple felonies on his record.
Lessons from Failure and Success
Initial Mistakes
Nate initially bought properties in low-quality areas, thinking they were bargains. However, he quickly learned these cheap properties came with hidden costs and headaches.
“You buy the stuff that people think you buy: Let me buy these cheap section eight houses. Well, they're cheap for a reason.” — Nate Barger
A Shift to Smarter Investments
Nate turned it around by focusing on comprehensive property renovations and leveraging private investors. He recalls gutting a property he bought for $6,000 and putting in $38,000 in renovations. The property then appraised for over $100,000. This deal marked the beginning of his successful application of the BRRRR strategy.
Building a Portfolio
Nate’s approach saw him building an impressive portfolio, including a $17 million property purchased in 2019 that now generates $60,000 a month in cash flow. The asset was recently appraised at $45 million.
Why Both Strategies Are Essential
Immediate Cash vs. Long-Term Wealth
Wholesaling and BRRRR each have unique advantages. Wholesaling provides immediate income, which is essential for those just starting. On the other hand, BRRRR builds long-term, sustainable wealth and cash flow, further appreciating the asset value over time.
Flexibility in Investment
Investment strategies should never be static. Your circumstances and the market can dictate when to wholesale a property and when to apply the BRRRR strategy. For example, a property in a fast-growing market with high appreciation prospects might be best held onto and refinanced later.
Conclusion
Both wholesaling and the BRRRR strategy offer pathways to financial freedom through real estate investing. Wholesaling is your gateway for quick, low-risk gains, while BRRRR provides the blueprint for long-term wealth building. Nate Barger’s story serves as a masterclass in leveraging both methods to maximize real estate success. If you master these strategies, you can navigate the complexities of the real estate world and build an empire of your own.
Remember: The key is to continuously adapt and grow, leveraging the skills and capital gained through wholesaling to unlock the full potential of the BRRRR strategy.
