Outside of perhaps David Greene, I have been arguably the biggest proponents of buy, rehab, rent, refinance, repeat—otherwise known as the BRRRR strategy. The BRRRR strategy has been very good to me and many others, but alas, my dear friends, all good things must come to an end.
OK, the word “end” might be a bit hyperbolic here. The BRRRR strategy is by no means completely over—and it will certainly come back in full force one day. No real estate market stays the same forever. That being said, the BRRRR strategy is not the ideal way to invest in real estate at this particular time. And, the reason for that is simple: There just isn’t much out there.
Unprecedented low levels of inventory
It’s strange to think back to the beginning of the Covid pandemic when virtually everyone was screaming that the sky was falling—and that the housing market would be doing a redux of 2008. Yeah, about that…
That is not what happened, obviously. Rather than the bottom falling out, the housing prices have skyrocketed during a nearly unprecedented nationwide lull in for-sale housing inventory. Back in April of last year, Jackson County, where our operation is based, had an unheard of 0.6 months of inventory! For reference, a “balanced market” that favors neither buyer nor seller typically has a full six months of inventory to offer buyers.
And, as late as December, the dial had barely moved—and only 0.8 months of inventory remained.
That means that for every five properties sold in a month, only four remained on the market. The likelihood of getting a property under contract in less than 30 days is over 50%.
For example, I was recently trying to buy a home to live in and everything—I mean everything—was getting multiple offers and going for over asking. (I’ll remind you I live in sleepy old Kansas City, Missouri.) One home had 14 offers in its first week. Eventually, we were able to sneak through for only $15,000 over asking.
I should consider myself…