How to “Infinitely Invest” with the BRRRR Method (Walkthrough)
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- Опубліковано 14 чер 2024
- Episode #769
The BRRRR method allows you to buy rental properties faster, smarter, and with far less cash than ever before. It’s one of the most popular real estate investing strategies around, allowing almost anyone to take a small amount of money and turn it into an extensive rental property portfolio. And while this may seem complicated to imagine for the everyday worker or small landlord, BRRRR can change your life and supercharge your wealth, but only if you know how it works.
Of course, we have Sir BRRRR himself on the show, David Greene, to describe exactly how the BRRRR method works, what’s changed in 2023, and the signs you have a great BRRRR deal on your hands. Not only that, David will show you where to find the best BRRRR deals, how to analyze your properties BEFORE you buy, and the rules of thumb you should follow to ensure you’re getting the best BRRRR property possible. He’ll also sprinkle in some expert tips that allow you to maximize the value of your property while paying the least out of pocket!
Start building wealth with the BRRRR method today! Get unlimited access to exclusive tools, leases, and more when you sign up for BiggerPockets Pro and use code “BRRRR20” for a special discount: www.biggerpockets.com/members...
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Try the BiggerPockets BRRRR Calculator on Your Next BRRRR Deal:
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Grab the BRRRR Book, “Buy, Rehab, Rent, Refinance, Repeat”!
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Why the BRRRR Method WON’T Be the Same in 2023:
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Show notes at: www.biggerpockets.com/blog/re...
00:00 Intro
02:01 Infinitely Invest!
05:31What is BRRRR?
12:18 Where to Find BRRRR Deals
15:32 Signs of a Good BRRRR
17:48 Analyzing a BRRRR Deal
31:34 How to SUPERCHARGE Your Investing
43:42 Expert BRRRR Tips to Try
Just purchased my Pro Membership! I’ve listened to the podcast for about a year now and my wife and I just formalized our LLC for real estate investing today. We’ll finish our first house flip by July thanks to the education gained from Bigger Pockets. I can’t wait to see where this takes us!
Best of the luck Ryan
]p
Is an LLC necessary to invest in real estate?
@@natespnwadventuresYes, you want asset protection in case you are sued. If someone breaks their neck at your house that's owned by an LLC All they can get is the house. If it's in your name then they can go after EVERYTHING you own. They can even take money out of your paycheck (possibly for YEARS)if your insurance company doesn't cover it or the judgement is too big.
@@charlesritter6640 understood! Thanks for the information 🤙
I have flipped 3 houses. I did mostly everything myself because i find it difficult finding Tradesmen wanting to work. I have a full time $140k year job. I think i rather save up 20% and buy a turn key property that needs nothing upfront.
Then, be ready to pay top dollar. I have also flipped properties and done some of the work myself, such as painting the first 2 or 3 properties and installing floors, which would be too expensive. I am now holding long-term because, yes, flipping makes you fast money, but sometimes I found myself borrowing money from my agent or even the contractor to close the deal. I used to pay all cash from my own pocket, but now I prefer to divide the same amount of money among different rentals rather than putting everything into one flip. Another thing I always do is try to put as little down payment as allowed, like 3.5 to 5, maybe 6%, because I don't like to risk my cash when financing. If they foreclose, that's all they're getting if anything. Risk the least possible. Of course, sometimes, depending on the deal, you may have to go a little high, but not really. I don't worry much about the mortgage payment since one of my strategies is to put a qualified tenant in the property once it's ready for rental..
difficult to find tradesmen?? where are you located?
Curious if the turnkey house was better in the end
Tradesmen are not paid enough. That's why you can't find them.
I love your approach- and you are right. The fact that it's hard should not deter us. Being old and poor is hard too.
Thank you for all of this for your information
thx keep blessing us with knowledge
I’m Uber driver and not sure how I can do it without this channel, much knowledge and appreciation
AMAZING! I am already a pro. Super excited
46:45 David is right about rehab. He recommends using quality materials ( in this case, high quality tile ) on smaller touch surfaces. We tell our customers this too. Save money on your rehab budget, earn the buyer’s trust ( and hard earned money), by using quality materials where it makes sense.
How much do you recommend taking out? Do you take out enough so that the property still have a positive cash flow? How much cash flow should be a good amount? Should 200-300 per month be a good flow to do the refinance?
Awesome info than u!! We are doing this exactly!!
Thanks for the informative podcasts and the tools. I went Pro and am excited to use the tools. I was a little disappointed that some of the tools come with an extra fee, but will continue to use the resources available..
Thank you for sharing this video. During plugging in the calculations, you mentioned that renters pay renter's insurance and leaving the insurance field blank. Do the renter pay the property insurance? Newbee needing clarification. Thanks in advance.
Great Information
@david, in your example, did you capture the interest you're paying for 12 months? For a loan of that size, you'll probably paying over $1,000 per month or $12,000 per year. That means you're probably leaving some money in this deal.
I’m committed! Noobie here! Learning what it takes to get my first deal! Thank you for this great training!
It’s worth it man!! Got my first home and paying $350 a month to live in my own apartment:)… gonna be making 10k a year when I move out!!! All cause of this channel:))) KEEP WATCHING!
@@jackhenderson4784 heck yea brother!!!! Thank you so much 👊
@@canteromedia The best opportunity is here for you! My channel description has the info ℹ️ you need to get started
This stuff is amazing!!!😆
The 1% rule seems pretty brutal unless the property is really in distress. For example in Mesa AZ a $350K home goes for like 1900 which is like .6%
Think about what the rent will be 4 years from. Your mortgage payment will likely be fixed but rent will likely go up over the years. In other words you should consider what the numbers will look like as time goes by. Rentals are long term investments.
Question, how do you pay your help back and how is that represented in the calculator?
What are the cons of using a 30 yr fixed loan compared to the short term hard money?
Especially if it is a renovation loan (203k) type of loan..
Sometimes I tune in just because I find David's voice calming. Just sayin'.
Where are you getting an 80% loan on a duplex?
Also no interest payments on the loan?
Almost everyone, including the media, is anticipating a market catastrophe, and as a result, many are turning a blind eye to the opportunities in the market. I began investing in stocks and Def earlier this year and it is the best choice I've ever made. My portfolio is rounding up to almost a million and I have realized that when a stock makes it to the news, chances are you're quite late to the party, the idea is to get in early on blue chips before it becomes public.There are lots of life changing opportunities in the market, maximize it
You Rock!!!!!
What if I get a get a home that doesn’t need rehab and passes the 1% rule even 2%? Good deal?
Mind doing a video on the new 15% tax increase on str income in California?
30:31 What I'm failing to wrap my head around is how many loans an investor will end up after repeating....multiple times? If you cash-out refinance each property that you BRRRR, won't there be a loan for every single home or is the refinance linked to the money and not the home?
Refi is linked to the title of the home held by the bank....but u can chase ur tail like a dog and refi all your properties and cash out for a down payment on a mega property
Most investors I've seen using this strategy usually get a commercial loan once they've acquired multiple properties, say 5 or 10 units. They package them together and get a blanket loan on all of them together.
I wish it were this simple
How long does it take until you can refi cash out
Hi, I am interested in Bp Pro do you support with any questions.
Was the full 275k investment cost aquired through the short term loan?
Yes I am Committed
Good morning Mr. Green,
Is it advisable to use your HELOC to acquire properties below market value & rehab and rent….Or is it advisable to take a hard money loan?
I'd advise using a HELOC if you have a good relationship with the financial institution. Make sure you are in a position to be able to make the HELOC payment so that you don't jeopardize your primary residence. Your financial institution is more flexible than a hard money lender, and the rates and costs are lower.
Skip to roughly 5:15. That's where any useful information starts.
Ha I posted exact same
I'm curious if you think this could still be possible in North East cities given our housing situation after covid. Places are still going over asking with cash offers and waived inspections. Total frenzy. So hoping to get rent equivalent to 1% of purchase price seems unlikely.
There was also a graphic being passed around on Real Estate Twitter and Reddit yesterday showing how much more expensive it is to purchase a home vs current rent prices. Like 490 out of 500 of the US's largest metros were extremely disconnected in the two numbers. I could buy a place for $450k, put money into it and make it worth $550k, but I'm definitely not getting $4500/month rent. The absolute nicest 2 bedrooms in my section of city would be $3500; I bet the number would be closer to $3k.
Thoughts?
If you had the opportunity to break free and gain financial freedom, more than you ever imagined, would you take it?
I’m new to this but I calculated that you’ll only get 10k back after you pay hard money lender…280000 refinance hard money put up 270000 to purchase home and rehab, your supposed to get all your money back with 30% equity cause you had to put down 20% which is 70k
How do you estimate your arv before purchase??
Look for properties that have recently sold. They're called comps. They should be as similar to the subject property as possible.
I heard its not a good time to do BRRRR right now. Is it possible to start investing with no job?
Anyone live in central pa? Im only 22 and ive saved up quite a bit of money to start my real estate journey and id love to find investor friends, cause tbh these college kids arnt for me
where does he account for the repayment of his HELOC? These numbers are misleading due to the fact that he would monthly have to pay back 1% or so on the 200K he used from his HELOC, correct?
Don’t pay it back 😅
I love fictitious properties you can buy for cheap and lease for $3k+/mo.
I was under the impression that you refinance to improve your interest rate. Does it still make sense to refinance with the interest rates they are now in January 2024? For example, if the interest rate was going to be higher on the refinance, does it still make sense?
Also, how do you know the ARV? is it just by looking at similar homes in the area and guessing, hoping the appraiser agrees with you? Thank you!
You refinance to lower your interest rate and take cash out to purchase another property. As long as it doesn't impact your cash flow, then no big deal borrowing against your equity.
Thanks David! I'm also in the Bay Area of San Francisco and you got me really curious to know how you find properties that will rent for about 1% of the purchase price. I recently started to look and I can't find anything for more than 0.5%. Thanks for all your content man!
San Fran is probably not the place to do this. I recommend you research other markets.
Same in Seattle, a 4 bedroom goes for 800+ in North Seattle, ain't no way you're going to get 8k a month in rent.
Best part of brrrr is you can hybrid it with anything.
My biggest thing is finding these deals? MLS seems to get eaten up by cash buyers and over bidders, but could just be my market
If you had the opportunity to gain financial freedom, more than you ever imagined, would you take it?
It's every market!
Every video is 5 mins of information than 20 mins of him trying to sell you bigger pockets pro lmao
What’s hilarious is now more than ever, guest after guest on the very podcast this guy hosts, is saying how the BRRR method is nearly dead considering the higher rate environment combined with high purchase prices combined with cost of materials for renovations. This was a great method when there was constant, almost guaranteed appreciation and lending rates were almost free. Back in the real world, you need to be extremely conservative with your RE investments to be able to BRRR and not get wiped out.
When interest rates go back down it will be worth it again.
I love when people talk about that like it’s not a cycle lol. Everything goes up then down then up again. Been happening for decades without fail.
The seller stopped mid renovation, had water damage and drain issues, shouldnt that be a sign to look elsewhere?
I thought about that too
I must pull a BRRRR this year.
I put a house under contract in Tulsa Oklahoma for $85,000 it needed $15,000 in repairs the after fixed up value appraised for 150,000 the bank gave me a loan of 103,000 and the repairs will be paid directly to the contractor from the bank the rent is $1500 a month once it’s fixed up so I was able to buy a property with $2000 out-of-pocket that is going to generate a positive cash flow of about $500 a month, that was one of the best Deals I’ve ever done
@@freeestyleobsessed how did you manage to get the bank to pay the contractor? Sounds like you did very well
@@Brian-uv3kp the bank holds back the money for the rehab in an escrow account. So the bank is financing the rehab and the purchase in one large loan
@@freeestyleobsessed Thank you for the info! do you mind sharing what bank this is and what this loan program is called?
@@Brian-uv3kpthe bank didn’t pay the contractor. once the repairs were completed and this guy got his appraised value out of the house or the 80 percent of the 150,000 he paid his contractor in full with that money. And he gets to keep the $500 dollars cash flow every month and the rest goes to pay the loan off and all the property taxes. This method is all about using the banks money as a tool to build wealth in a property and it’s no scam. I have family that do this same process or did this same process in the 80s they still have all the properties that have equity built up in them and long term tenants. Equity is more valuable then money and if your cash flowing a few properties you don’t need a 9-5 anymore because your properties are your business. Basically you’ll be riding the banks money till all the properties are loans are paid in full and after that you take the complete rent amount and if you increase with market trends over time you’ll be cash flowing big and you will also be debt free with tons of equity at your fingertips you can use to back another loan to buy another house. This is something I have always wanted to do as well and figured most of it out on my own but finding right properties and actually getting it done are two different things but look for those signs of distress.
What's the difference btw BRRRR and a regular fix and flip?
You keep the property
How do you come up with the $350k ARV?
He used comparable properties in the area to calculate the ARV.
When we need to renovate or rehab the property do we send the plan to city for approval First?
For most repairs you don't need to ask the city
You may need to pull permits, which normally require an inspection upon completion. It's based on the repairs.
When you refi and take a lot of your capital, you are also assuming a much larger loan. At that point you are eating into your cash flow significantly. I am not sure I understand how you can keep increasing yoru cashflow with this method.
eventually banks will cut you off bc of debt to income ratio no?
Generally a nice one, but unrealistic for people that don't have $220k cash. 12 months holding costs will change the whole deal.
I thought you weren't allowed to use a HELOC as a down payment?
Some banks won't let you, others will, you have to shop around. Also once you get approved there really isn't anyone checking around to see what you are using the HELOC for..
The agent finder tool in Jacksonville FL… resulted in a few “hits”… BUT …NONE….were “ “ BUYER friendly agents…” … two were straight up wholesale businesses with an agent on staff.. and by wholesale.. I mean they get a wholesale deal and then mark it up ALL THE WAY to well above ARV…. purchase price = x… plus closing, holding rehab..etc… ended up ALWAYS being a retail deal…. and the others agents had no interest in finding nor negotiating FOR a strong deal for a buyer investor.
None…. Zero success.
Ymmv
People are always putting these at 30 year loans. Unless you are house hacking you aren't going to get a 30 year loan on this property. It will most likely be a 15 or 20 year at an investment percentage rate. Right now 7.5 to 9.5 percent. Just saying
I got a 30yr on a dscr product just fine
You’re going to the wrong lender then
I think new construction and then short term renting it out and refinancing is the best option right now. The rest is a bit risky at the moment.
The pressure on str rentals is also high risk. California looking at adding a 15% tax off the top of all str income. Combined with already high operating costs and local taxes. That is going to destroy us.
The risk of str is increasing as we enter a recession.
Anyone from the Milwaukee area and want to talk about investing and getting to know the city together?
Love the content. You slightly out of focus tho chief.
I am in Edmonton I have my $20000 down-payment but I still can't get financing
Canada rules are going to be different in important ways. Hope you can manage with higher govt intrusion and rules. Good luck and Go Flames!
Hey you forgot to include insurance!
We use the brrrr method with new construction.
Hi, Can you elaborate a little bit on how you used brrrr with new construction.
We build a house for less than the price of a new home. Then refinance the construction loan into a 30 year and get our capital back to start a new deal.
I don’t have a stable income and I do have 25k. How I can do BRRRR with 25k?
You can do subject to where you can take over the mortgage
Look into land flipping. It’s less competitive than house flipping and you don’t need debt to do it. A land flip deal can be done with around 5k, and you can get 100% returns. Do that twice a year and assume half goes towards taxes, then your money would grow by two times each year. In 6 years, starting with 25k, you should be at 1.6 million. Then I would instead buy up some rentals all cash. And fix them up to maximize returns. By doing that, you should be able to bring the cash flow from 6% to 8.5%. I would also want to be liquid, so I would put 30% of that money in index funds, and 70% in real estate. And then withdraw 3-4% depending on age from index funds, and then you have your 8.5% from the rentals. Then you could easily retire making anywhere from 109k to 114k per year. Due to high interest rates, nows not a good time for borrowing, and who knows when they’ll come back down. However, I would definitely get in on land flipping or even land wholesaling before it gets saturated. And if it does, just remember that it can also be done overseas in unsaturated countries. You’re not limited to one country. Either that, or I recommend something called surplus funds. Look up Spencer Vann on UA-cam. It’s another unsaturated opportunity that can make millions. Best of luck on your journey if you plan to go the same route as me.
I live in denver and would love for someone to show me anhouse for 220k...
Figures theres a catch losing my cashflow to you annually
Start the video 5 minutes in
Ok so what can I do with 20k it's all I got. Oh and I'm not that smart
Heartless ask for pro memberships today? Last episode was infact truth. This episode released 5/23/2023 as rates spike over 7% again. Very misleading to new investors. You made BP feel the same as Brandon's out of touch deminor just before he left the show. I've watched 99% of BP since episode #1. Investing since 2010. Have a nice day.
first
ZzzzZzzzzZzzzz
Christ enough of a plug. 30 minutes of plug for bpp
imho thats a lot of upfront cost for $286 bucks. I guess you factor if it really doesnt rent well you could flip it and get out but thats a tough roi to swallow - cashflow or not.
Equity tho
@@pinkribbonskies5731 over a long period of time, and if the neighborhood doesnt go to shit, and if taxes dont go up... the real estate game isnt as easy as everyone makes it out to be. I had a homie fully leveraged take a bath because phony politicians said it was ok for renters not to pay during covid but the banks still wanted their mortgage. Lost almost everything. Sold a nine digit Manhattan property for 7 just to survive. Scamdemic.
Cash flow is just one part of your total return. You also have equity from forced appreciation when you buy below market and then rehab, amortization equity as you pay down your mortgage, tax benefits, and just normal appreciation.
Assuming you can pull out all of your equity after refinancing, then it's infinite ROI. That money is going into your pocket and you can reinvest in another property.
i remember at a point in time on zillow and redfin, shows a house for sale with $50,000 less than original offer. freakin' hilarious
Been listening for years….did a few BRRR’s before and after finding this channel. Never knew your backstory until recently. Acquired 2 rentals that cash flow well and continue to flip with private money. Just took my vested retirement from the NYPD as a detective just wanted to say thanks! 🫡