In your next video can you go into more details on the decision making process you go through when deciding on renovation. Your thought process I’m assuming is close to routine or automatic but as a amateur you probably had to think through your options longer or ask more questions so those lessons learned and tips would be very helpful! Thank you Matt!
I just started buying houses. I just bought my first one a August. The thing I question about BRRRR is, if you're constantly refinancing your home to pull out whatever equity you have to buy a new one, wouldn't that basically kill the cash flow you had on the property you refi? Sorry for the ignorance.
@@pohump @pohump You never want to pull out your complete equity from the house you are refinancing. So if you have 100k in it, refi 50k out of it for another down payment. Your rates will not go up that much higher. As much as cash flow is king, you also aren't doing it for the short term 300-400 dollars per month. So if the cash flow dips $100 but you're able to grab another property, you are still ahead and it will balance itself. (appreciation, equity, cashflow). Hope that helped!
Karam Khalil ah, thanks. I’ve read and heard elsewhere that you should always keep around 50% or so leverage. That makes sense. But that leads me to another question, if by renovating you can’t immediately drastically increase the value of your home, then you can’t really refi right? So if want to use this method, sounds like you can really only do it with properties that you know will be worth quite a bit more after a reno.
pohump The main point of refinancing is to pull out equity to move into another property. You keep repeating that process until, well whenever you want. I don’t understand your question to well in regards to the renovation aspect. Only certain renovations will bring your property value up so you need to be careful with that. Message me on instagram @KaramKhalil_ i’d be happy to explain more there and answer your questions. No problem and congrats on your first purchase!
I live in the greater Trenton area . Drove past this house seen it in person looks good. Very inspiring to see you doing things in my same area. I'm 1 duplex in and plan on getting more property. I'm building up the courage to try the brrrr strategy. Great stuff mat
Interesting, but not too informative. Fewer details on the rooms and layout, more details about financing options, how to decide what to renovate (vs what to keep as is), what are some issues to watch for when looking at potential properties. The risk is in buying too high or over-improving a property. How do you manage these variables?
What are the logistics of converting single family homes into multi family rentals? I really like the separate entrance comments you had and find that to be a very marketable attribute.
Very informative video. Where are these $40,000 properties? I can't find anything under $170,000 in Idaho. It would have been nice if he had gone into more detail about that 2% rule and how it applies to this specific property.
X% rule - it should rent for somewhere around x% of the property + renovation costs. This house cost $40k to buy +40k to rehab (if I heard it right), and it rents for around 1600, which is 2% of 80k cost. Anywhere above 1% is decent, 1.5% is good, 2% is great. At least this is what I heard in BP podcasts so far. For more info please go to bigger pockets dot com. Sadly, I don't work for bigger pockets (yet).
Since finding you guys I've totally stopped looking for property in my home area. Equiv property would be almost 5x more here. 90k in, 1600 a month out? I'd have to pay over 500 here to get that kind of rent. Thanks BP, you opened my eyes.
I know he gave rough estimates but that still put him at 1.8% - 1.9% which is below 2%. Am I missing something? However, please do more of these types of videos!!
I really like these walkthroughs! Just a suggestion, anyone thought of doing a before and after?? Would be suuuper helpful to see the before walkthrough, the estimation, then the actual cost and result of everything! My tiny afraid newbie investor brain is making me literally salivate over the thought of that much comprehensiveness...
2% rule is literally impossible in Australia. I bought a property that is considered affordable for 430k (140k AUD is around 100k USD) and rent is 1680/month. Other properties cost north of 700k AUD and have a rent of around 2400/month. Good thing our markets crashing lol it is unreal.
In order to do these kind of deals you need to have alot of cash available to renovate though. Im looking to buy my first house which i will rent out rooms while i live there. Im 26 so i will need to take out a loan on something "move-in ready"
So a 90k mortgage is roughly $800/m. If you’re making $1600 in rent, after repairs and vacancy, you walk away with maybe $500/m... what is this 2% you’re talking about?? Can someone explain pls
If he said he would've preferred gray, or even dark wood flooring, instead of the contractor's pick, I think he is totally wrong. That contractor has a good eye!!!!!
So in order to make this play you need 40k plus 45k plus 5k. Not really a basic investor level move, but interesting for sure. This would be after doing real estate for a while.
Or you need a source of funding for the original purchase (i.e. private money, commercial loan, etc.). You don't necessarily have to use your own cash up front to do it. You just need to be able to borrow the money for the period of time up until you get it rented. Then you can refinance to a more long-term rate and pull the new-found equity out.
I was reading Brandon’s book on rental property investing on page 68 the page is about BRRRR investing I checked my phone and this video was up coincidence I think not 😮
Brent Somme oh BiggerPockets are everywhere and once you search real estate investing once google ads starts bombarding you with Tai Lopez 82% off mentor programs and the guy who is always “ on a hike with some great friends” with fake sweat on his face and talking out of breath
Quick question.. if anyone has any suggestions I will highly appreciate it. My wife and I put a offer in for a investment property at 35k. The offer was accepted but the bank appraised the house at 32k. The property is 5min away from downtown York,pa.. it also a historic home. What would you do after the appraisal came back lower??
Thank the bank for saving you from over paying. Investing with cash is great, but I see cash investors make mistakes on their buys on a regular basis that a bank would have saved them from. Depending on your investment objective, I would renegotiate or go back to the drawing board and spend more time getting to know your market.
This simply means that you’re paying to much for the property. Keep looking. Be patient and you will find a good deal. DO NOT PAY RETAIL. THAT (in my opinion is rule number one in investing).
Try financing through a different bank. Sometimes you just get a bank that uses an appraiser that is very conservative. Check the comparables in his report and see if they make sense. Speak to immediate neighbors, perhaps they did a refinance and they have a different value then you have. Perhaps if they give you , you can send their copy to the bank for re-evaluation. I had a bank order a new appraisal from a different Company in the past. I guess the easiest way is to question the person that told you it was worth more. Where did he get his number?
umm...did the guy that came to the window in the background at 3:08 have on pants? Sorta didnt look like it but the glare off the window didnt give a clear view...lol
It is a rule of thumb. So, not really a rule, but just a quick analysis method. The 2% is the monthly return on the amount invested. Example, if you invested $40k and get $800 gross monthly income, you achieve the 2% rule. In the video, he invested $80k and was getting $1600 gross monthly income, so that is a 2% monthly return on his investment.
That looks like a run-down ghetto in the middle of nowhere and it's in the middle of a nowhere state. Who would actually live there? Like do people even exist there lmao? The fact that this is even possible in such a strange twilight zone-ish area kind of inspires me to actually do it. If it's that easy like why not just go for it
Luca Graziano 2% rule means the rent you receive is 2% of the purchase price. So a $100K home gets you $2000 in rent (all units). You will also hear the 1% rule which is the same concept.
You will never get these deals in California. Not sure how you guys are able to charge 850 per room when a single room in CALI goes for almost 2k lol. interesting
Yeah, hmm... This is a slum house with a lot of worthless facade to mask the true story of this house. Making one house a duplex is slum lording.. Plain and simple.
In your next video can you go into more details on the decision making process you go through when deciding on renovation. Your thought process I’m assuming is close to routine or automatic but as a amateur you probably had to think through your options longer or ask more questions so those lessons learned and tips would be very helpful! Thank you Matt!
Want more of these videos from, Matt?
Like this comment and leave some feedback on what you'd like to see!
A more granular breakdown of reno costs would've been good.
Love how quickly BRRRR allows you to grow your portfolio!
How did you get started? How did you make reno decisions?
Great channel. Would love to see a series of videos showing how you decided to buy a property all the way through to selling or renting it
How did you finance the deal? And what do you suggest for financing for new investors
3:07 in the window scared the shit out of me hahah
This method is one of the best ways to get to financial independence in Real Estate. I’ve done it and it works.👍🏻 Good video :)
I just started buying houses. I just bought my first one a August. The thing I question about BRRRR is, if you're constantly refinancing your home to pull out whatever equity you have to buy a new one, wouldn't that basically kill the cash flow you had on the property you refi? Sorry for the ignorance.
@@pohump @pohump You never want to pull out your complete equity from the house you are refinancing. So if you have 100k in it, refi 50k out of it for another down payment. Your rates will not go up that much higher. As much as cash flow is king, you also aren't doing it for the short term 300-400 dollars per month. So if the cash flow dips $100 but you're able to grab another property, you are still ahead and it will balance itself. (appreciation, equity, cashflow). Hope that helped!
Karam Khalil ah, thanks. I’ve read and heard elsewhere that you should always keep around 50% or so leverage. That makes sense. But that leads me to another question, if by renovating you can’t immediately drastically increase the value of your home, then you can’t really refi right? So if want to use this method, sounds like you can really only do it with properties that you know will be worth quite a bit more after a reno.
Karam Khalil thanks for the reply btw.
pohump The main point of refinancing is to pull out equity to move into another property. You keep repeating that process until, well whenever you want. I don’t understand your question to well in regards to the renovation aspect. Only certain renovations will bring your property value up so you need to be careful with that. Message me on instagram @KaramKhalil_ i’d be happy to explain more there and answer your questions. No problem and congrats on your first purchase!
I live in the greater Trenton area . Drove past this house seen it in person looks good. Very inspiring to see you doing things in my same area. I'm 1 duplex in and plan on getting more property. I'm building up the courage to try the brrrr strategy. Great stuff mat
Great content and thorough in an 11 minute video. Very well done. Thank you. I’m sharing this with my team.
DO MORE OF THESE!
MORE COMING YOUR WAY!
@@biggerpockets Do you have any more coming from NJ, specifically North Jersey? Have some ideas on how to produce these videos at a high level!
@@biggerpockets DO more from CALIFORNIA
Interesting, but not too informative. Fewer details on the rooms and layout, more details about financing options, how to decide what to renovate (vs what to keep as is), what are some issues to watch for when looking at potential properties. The risk is in buying too high or over-improving a property. How do you manage these variables?
Buy a rental property and figure it out. I can tell you don't have one
Thanks for taking the time out to give us an in depth view.
I would be curious to hear your strategies for FINDING properties like this. Great Video. Thank You!!!
Yes, love separate entrances on a multi-family. Looks great!
Awesome job Matt. Really appreciate the detail in the video!
Awesome video, many thanks for the walk through!
What are the logistics of converting single family homes into multi family rentals? I really like the separate entrance comments you had and find that to be a very marketable attribute.
1600/90000= 1.78%. You said it’s over the 2% rule?
He meant under lol
Very informative video. Where are these $40,000 properties? I can't find anything under $170,000 in Idaho. It would have been nice if he had gone into more detail about that 2% rule and how it applies to this specific property.
X% rule - it should rent for somewhere around x% of the property + renovation costs. This house cost $40k to buy +40k to rehab (if I heard it right), and it rents for around 1600, which is 2% of 80k cost. Anywhere above 1% is decent, 1.5% is good, 2% is great. At least this is what I heard in BP podcasts so far. For more info please go to bigger pockets dot com. Sadly, I don't work for bigger pockets (yet).
Great video! Can you share what the ARV is please?
After Repair Value
Love your content. I don't miss New Jersey though.
@Mike Do Hong Houston
Awesome video, thank you for posting
How much is the home appraised for now that renovations are finished?
I like the color of the floor. I am getting very tired of grey. it's all everyone uses and it's getting phased out gradually.
How are they at the 2% mark? I calculated $1600 a month/$90000 total all in price and it brought it to 1.77. Is the refinance giving them the 2%?
He may have meant to say "just under" and said just over by mistake.
Math on the fly ..
Since finding you guys I've totally stopped looking for property in my home area. Equiv property would be almost 5x more here. 90k in, 1600 a month out? I'd have to pay over 500 here to get that kind of rent. Thanks BP, you opened my eyes.
You'd have to spend 5 x that in NYC to get a place that can generate $1600 in monthly rent. How come rent is so incredibly high in Trenton NJ ?
I know he gave rough estimates but that still put him at 1.8% - 1.9% which is below 2%. Am I missing something? However, please do more of these types of videos!!
I really like these walkthroughs!
Just a suggestion, anyone thought of doing a before and after?? Would be suuuper helpful to see the before walkthrough, the estimation, then the actual cost and result of everything! My tiny afraid newbie investor brain is making me literally salivate over the thought of that much comprehensiveness...
2% rule is literally impossible in Australia. I bought a property that is considered affordable for 430k (140k AUD is around 100k USD) and rent is 1680/month. Other properties cost north of 700k AUD and have a rent of around 2400/month. Good thing our markets crashing lol it is unreal.
Yeah I've heard some horror stories about housing in Australia. Absolutely insane
In order to do these kind of deals you need to have alot of cash available to renovate though. Im looking to buy my first house which i will rent out rooms while i live there. Im 26 so i will need to take out a loan on something "move-in ready"
Good idea knocking the old garage down. Created more space and more parking. Less liability
Chow do you find these. I can save like a mad dog. But I don’t know how to look
Brad Pietrzak build relationships with realtors would the first place to start. Not one but many. Sometimes just driving around you can see things.
What’s the ARV?
Looks great from what it was before. Would love to find a gem like that.
So a 90k mortgage is roughly $800/m. If you’re making $1600 in rent, after repairs and vacancy, you walk away with maybe $500/m... what is this 2% you’re talking about?? Can someone explain pls
Prices of the siding and such??
2% of what? ARV or Expenses?
How much was the siding?
If he said he would've preferred gray, or even dark wood flooring, instead of the contractor's pick, I think he is totally wrong. That contractor has a good eye!!!!!
Anyone know the type of LVP hes using that can replace out a single piece?
you didn't mention how much more the house is worth after your renovations.
Awesome, Thanks!
I,nformative, fast, well explained. Great video.
Super helpful thanks BP!
No washer dryer for either? Separate hvac?
Can't hit the 2% rule in springfield mo. Rents are so low compared to acquisition costs.
ARP ? average days on market ? are you hiding something :?
I have to learn the BRRR strategy
So in order to make this play you need 40k plus 45k plus 5k. Not really a basic investor level move, but interesting for sure. This would be after doing real estate for a while.
Or you need a source of funding for the original purchase (i.e. private money, commercial loan, etc.). You don't necessarily have to use your own cash up front to do it. You just need to be able to borrow the money for the period of time up until you get it rented. Then you can refinance to a more long-term rate and pull the new-found equity out.
At 3:05 I thought the house was haunted lol
How do I link up with you? Im local to Trenton
What's the arv on this property
Great! Need a mentor like you
I was reading Brandon’s book on rental property investing on page 68 the page is about BRRRR investing I checked my phone and this video was up coincidence I think not 😮
Brent Somme oh BiggerPockets are everywhere and once you search real estate investing once google ads starts bombarding you with Tai Lopez 82% off mentor programs and the guy who is always “ on a hike with some great friends” with fake sweat on his face and talking out of breath
Metta HD lol
Brent Somme lol I’m reading Brendan’s book too trying to find my first deal with none of my own money and maybe do a flip
great video. Like it. The Mawuena
40 grand is incredible
Please explain he said duplex
But i saw three power meters 🤨🧐🤷♂️
Maybe he's living in one, using an FHA, and figured it wasn't relevant?
More likely it has an illegal basement unit.
One for one unit, another for the other, and one is the house meter which is for the common lights outside, basement, etc
Quick question.. if anyone has any suggestions I will highly appreciate it.
My wife and I put a offer in for a investment property at 35k. The offer was accepted but the bank appraised the house at 32k. The property is 5min away from downtown York,pa.. it also a historic home.
What would you do after the appraisal came back lower??
I would sue them
Thank the bank for saving you from over paying. Investing with cash is great, but I see cash investors make mistakes on their buys on a regular basis that a bank would have saved them from. Depending on your investment objective, I would renegotiate or go back to the drawing board and spend more time getting to know your market.
This simply means that you’re paying to much for the property. Keep looking. Be patient and you will find a good deal. DO NOT PAY RETAIL. THAT (in my opinion is rule number one in investing).
Try financing through a different bank. Sometimes you just get a bank that uses an appraiser that is very conservative. Check the comparables in his report and see if they make sense. Speak to immediate neighbors, perhaps they did a refinance and they have a different value then you have. Perhaps if they give you , you can send their copy to the bank for re-evaluation. I had a bank order a new appraisal from a different Company in the past. I guess the easiest way is to question the person that told you it was worth more. Where did he get his number?
beside being cold, what is BRRRR?
joey197777 buy, renovate, rent out, refinance, repeat
Lol BRRRRRRR 🥶
What kind of contractor uses blue tape free hand painted
umm...did the guy that came to the window in the background at 3:08 have on pants? Sorta didnt look like it but the glare off the window didnt give a clear view...lol
What’s that arv looking like tho?
What city is this in?
What is brrrr
What’s the 2% rule? Is there a video for that?
It is a rule of thumb. So, not really a rule, but just a quick analysis method. The 2% is the monthly return on the amount invested. Example, if you invested $40k and get $800 gross monthly income, you achieve the 2% rule. In the video, he invested $80k and was getting $1600 gross monthly income, so that is a 2% monthly return on his investment.
Great video nice job. No hate just wondering wtf is up with the eyebrows?
Great video. I am in the irvington location an would love to start my first brrrr. I am looking for contractors to work with.
Im in irvington also. Also looking to start doing brrrr
I guess i should already know what BRRRR means.
Seem to be dong a lot in Trenton. Im in Trenton also and would like to meet up at the local reia
Rent rehab refinance?
Kyle Jacob Buy,Rehab,Rent,Refinance,Repeat
It’s goes in that order
Tenant ghost at 3:06 I'm window
That looks like a run-down ghetto in the middle of nowhere and it's in the middle of a nowhere state. Who would actually live there? Like do people even exist there lmao? The fact that this is even possible in such a strange twilight zone-ish area kind of inspires me to actually do it. If it's that easy like why not just go for it
Wo Jak Jesus man. There are many levels of income and people. Sometimes this is all they can afford with the low paying jobs.
Are landlords responsible for shoveling snow off entrances???
I prefer lighter colors, myself.
I am all about smaller pockets...living financially free, broke.
Could anyone tell me what the 2% rule is?
Luca Graziano 2% rule means the rent you receive is 2% of the purchase price. So a $100K home gets you $2000 in rent (all units). You will also hear the 1% rule which is the same concept.
Pierre Eade thank you
What's the other r
Kyle Jacob buy,rehab,rent,refinance,repeat
Ibk
sorry its 3:08
MotorMouth
the hood
👌🏾💥
You will never get these deals in California. Not sure how you guys are able to charge 850 per room when a single room in CALI goes for almost 2k lol. interesting
Settle down Matt
A duplex for $40,000? Hmmmmmmmmmmmmmmmmmmmmmm
camera man horrible
Looks like a terrible flip house, invest in better design options
NO NOT A GOOD PROPERTY FOR A FAMILY WITH NO KIDS. Who wants to hear kids, people all day? totally too close. Im sure you got that place dirt cheap.
Just showed us a shitty house
Yeah, hmm... This is a slum house with a lot of worthless facade to mask the true story of this house. Making one house a duplex is slum lording.. Plain and simple.