The Fastest Way to Build Wealth Investing in Real Estate: The BRRRR Strategy
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- Опубліковано 1 жов 2024
- It’s no surprise that this is my favorite way to invest in real estate, and also one of the fastest ways you can grow your wealth….and this is called the BRRRR strategy of real estate investing. Enjoy! Add me on Snapchat/Instagram: GPStephan
Learn my exact strategies to help grow your career as a real estate agent to a six-figure income, how to best build your network of clients, expand into luxury markets, and exactly what you can do to begin taking your career to the next level…these strategies took me to $120,000,000 in sales volume: goo.gl/UFpi4c
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The BRRRR Method: This basically uses the equity and profit from one property to fund the next property through strategic leverage. And then the next property can fund the next one…and so on, until after a few years you’ve amassed an army of homes that just throw cash at your every month.
1. The first step is to buy a property, obviously. But the difference here is that you can’t just buy anything - the property not only needs to cash flow, but there needs to be some opportunity for equity. Your equity is basically just the amount of “worth” tied up in the property, minus your loan balance. So you either need to buy into equity by buying something BELOW what its market value is, or buying something where you can add equity with strategic renovations. Most deals won’t work - you need to be better than the average here and really become an expert in your area to spot the best deals, and the patience to wait around until that happens.
2. Renovate. Once you buy something, you’ll fix it up. Generally this is the best and easiest way to add value to a property. Most places that need work price themselves accordingly. Doing the work yourself saves you from paying someone else’s profit in managing a renovation, and often times you can renovate a property much cheaper than someone else will charge for doing the same thing.
3. The third step is rent…in that you now rent out the property. You should have had an idea of what price you’d get from the beginning when you bought the property, so it shouldn’t be a surprise what you can rent the property for. The property should rent high enough to pay off all of your expenses AND cash flow on top of it. Like I said, not every property will do this - you will need to find the 1/30 where it makes sense to buy, at the right price, that’ll rent for high enough, with enough equity to add to the deal.
4. NOW WE REFINANCE! This is where the bank pays off your previous loan, and gives you a NEW loan based off the new, higher value of the property. This means that you’ll have some “Cash at closing,” as it’s called. Now you pretty much got some money back, you have a cash flowing house, and you can do this entire process over again.
5. And then…you repeat the process and start over again with the next one! The advantage here is that every time you buy something under market value, you increase your net worth. By fixing it up, you increase your net worth and cash flow at the same time. The higher your net worth and the more equity in a property, the more banks are willing to lend you to do it again and continue to increase your cashflow. This is by far my favorite strategy, and you’ll finish this up with a trail of cash flowing properties behind you. Yes, it takes some work to identify and fix up a property - but it’s worth it.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness@gmail.com
Suggested reading:
The Millionaire Real Estate Agent: goo.gl/TPTSVC
Your money or your life: goo.gl/fmlaJR
The Millionaire Real Estate Investor: goo.gl/sV9xtl
How to Win Friends and Influence People: goo.gl/1f3Meq
Think and grow rich: goo.gl/SSKlyu
Awaken the giant within: goo.gl/niIAEI
The Book on Rental Property Investing: goo.gl/qtJqFq
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Chase Sapphire Reserve - goo.gl/sT68EC
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Extra tip: get your license, represent yourself on the deal, and use that commission from your deal towards renovations. :)
How much does that cost though ??
Currently what I'm doing 👍🏽 great advice
Graham said he got his license for $300
In Canada you’re not insured if you represent yourself in a deal. Leaves too much open to go wrong. Bad advice
@@BKNb77 I dont remember exactly but I think something like that applies here in California also.
I’m disappointed. I really thought the first step was to smash the like button.
Love the BRRRR! Awesome to get to see Graham's take on it!
Thanks so much man, it was your BRRRR video that inspired me to make my own version!
Love it the BRRRR!
I was about to comment "Matt McKeever would love this" but then scrolled down and saw this :P
Yessss Matt, BRRRRing up a storm in London!
Graham, do you know if banks typically require a seasoning period for properties purchased initially in cash? In speaking with a representative from my credit union while searching for properties they suggested a home equity line of credit might be a good way to go as a means of cashing out. Seemed similar in regards to rates for conventional mortgages but I've yet to see that approach mentioned online, any thoughts on that? Thanks
It's just that first property that you have to get under your belt... :P that's the tricky part!
The first is definitely the toughest, it's getting that initial down payment and learning that takes some time - but after the first and second, it's smooth sailing.
Graham Stephan great advice Graham BRRRR is a great method to build wealth!
Buy somewhere where the property is cheap like most of the South East. I got a house for 17k when I was 21.
In a good area too.
You must have bought a box
In your scenario wouldn't you need to get your house appraised for 280K before you can refinance? What does appraisals normally cost, $500-$1000? Are you paying closing cost on both loans? Closing cost on 160k should be around $5,000 and closing on 280k is around $8,000 depending on your location, could be more or less. Depending on how long it takes to fix up the property and find renters, you'll have to make loan payments. On 160k loan $1,300-$1,500 depend on your taxes and interest rate. Multiply that by 3-4 months you're looking at $5,200-$6,000.
appraisal- $1,000
160k closing cost $5,000
280k closing cost $8,000
Loan payments $6,000
Down payment $40,000
Renovation $30,000
total investment $90,000
Then you would need to pray the renovations were good enough to convenience the appraiser the house is worth 280K. I'm I missing something? I'm interested investing in real estate, but it can get really confusing.
I have the same questions as you do..How would the appraiser give $280K value after renovations and what if they don’t give that value?
Graham can you please address this? It is an extremely important concern. It separates the lofty mental conception of all of this from the reality of it.
im also trying to figure that out
It was a simplified example of course. First, the closing costs might be lower when you are a preferred client instead of a normal primary homeowner, and the refinancing on an existing mortgage may be cheaper. Second, you usually wait a few years before refinancing anyways, so you get some of the equity from mortgage payments. Third, most properties will usually have some existing tenants.
Not only was it a rudimentary example on purpose - but that risk falls on you. YOU have to do the research to figure out what renovations (if any) will give you the return you are looking for. This is done by looking at the market.
This is exactly the strategy I'm doing now. Two single family homes at the same time on the same street. Started off with (short term) hard money loans. I'm currently on the refinance stage now. Bought both for 146k after about 130k in rehabs, evictions, taxes, fees and screw-ups. They cash flow and have about 80-95k of equity. I Love the BRRRR strategy!
Nice!!
It's Friday, watching finance clips on youtube while I'm drunk, it's fun. I can't say anything 5 times right now. :)
Your Friday sounds lit AF
Just say Beer 5 times, that’ll do
No its obviously buying youtubers courses....
Does your mom know you're using her GTR for videos and stuff? Doesn't she mind?? I wish I had rich parents like you!!! ;)
Graham Stephan I thought you were making a your mom joke for a second lmao
Heya shitify drop shopper
One thing I LOVE about your videos, is the examples. I love when you go through the math and numbers to explain a concept like refinancing. Thanks Graham, love the content! Keep it up!
Thanks so much!
Where can I learn about buying the right property I live in he LA area and everything is extremely expensive
I’d speak with an experienced real estate agent in the area you want to buy in, and they’d be the best resource!
Thanks! I've been binge watching your videos over the last few days lmao
Freaking amazing. It's like a total domino effect - love it. I rent out bedrooms on a weekly frequency & I'm at the point where I literally forget that people owe me rent. It's often a surprise when then I receive money. "Wednesday already?"
Haha isn't that the best?!
At 6:50 your new loan would increase by $64,000, so why did you consider it as an increase in money? Doesn’t that mean you have another extra $64,000 to pay off? I’m new to this so I’m kinda confused right now, so refinancing is a way to get you the cash which you could use to pay the down payment of the next home, but you’ll still have to pay the $64,000 back in the long run as mortgage? Any replies would be greatly appreciated
Steppin up Gaming but is on equity right?.
Hi Graham,
This is a great strategy. I wonder if this is possible to do in Mexico.
Cheers Rich
Absolutely correct about the laminate flooring. I did it in our home and it was basically the selling point to the people. Its easy to do! I plan on doing it asap in our duplex
Let me just get the extra $70,000 I have in my back pocket for this method
Lol quit buying Starbucks and work a little more. Obviously you aren’t gonna become a millionaire off of pocket change. Be real brotha
Or you can get a hard money loan to buy, rehab, and rent, the refinance into a traditional mortgage, pay off hard money loan and repeat. You should check out some of biggerpockets books, like no or low money down ;)
Improve your credit score, work to have good debt to income rations and go ask the bank... That's kinda what they do.......
@@KelechiIkegwu0Good comment, exactly what I do.
Get an FHA loan. You can buy a 300,000 dollar home for 9k down
Not sure if you have covered this topic, but could you do a video about how to pick a good real estate agent and contractors for your BRRRR deals? Like what qualities and red flags do you watch out for when selecting a contractor and theoretically a real estate agent. Thanks Graham!
"Woah ..." - Me when you blew my mind at "$64k cash at closing"!
Hey graham can you do a video on how to make sure your rent covers mortgage and all the expense and what not. Like go into detail
That's what I keep wondering. With these bigger loans all the time the repayments will be high.
With all the additional costs on top like insurances, taxes and maintenance.
How do you cover the payments and still make any money? 🤔
I'm assuming by having a larger down payment so you have more equity, and therefore lower monthly mortgage payments. Factor in all of the taxes, insurance, etc and find your total monthly bill. Then rent out your property to cover your total monthly bill with some profit on top. But im assuming alot of homework has to be done to find the right property in the right area that would allow for cashflow, so you don't overprice the amount of rent you charge. And so alot of research would have to be done before even buying the property. This is what I've picked up at least, from all of Graham's videos. I could be totally wrong, not an expert here but someone who hopes to invest one day.
Rule of thumb is the property should rent for 1% of the purchase price. EX: $120,000 house/multi family should bring in 1,200 a month in rent. 80,000 house brings in $800 a month etc..
@Rajeev Vij I believe is just a rule of thumb investors try to stick by for the numbers to make more sense when it comes to positive cash flow. But in your case Is not that the property is "undervalued" Is just that the rule cannot be applied to everything. The higher the price of the house the harder it is to stick to that rule of thumb. For the simple reason that even though house value can affect rent, ultimately rent is rather regulated by the area/rent market. If you really want to know the value of that property, look at what other homes in the area that fit the same criteria are selling for. But the true question is...is the home paid off? if not, are you getting positive cash flow? is mortgage + bills covered and you are left with a couple hundreds in your pocket? if so, then you win more in all aspects long term.. best to analyze all this before buying the property.
Graham i just wanted to say a massive thank you to you for investing into people like me and helping give us the tools to create wealth. Even though we never met i consider you an awesome mentor and am currently 19 y/o saving to get enough money to invest with. I live in the UK and would like to move over to the US in my mid 20s. My question was should i solely focus on saving money for as long as possible until i can afford the down payment and renovations on a property or are there other investments which i should looking at making along the way. Also what would be a strong saving goal to use as capital to invest in a property? Either in dollars or Pounds since i will eventually move to the US.
Thank you so much! There are definitely other investments you could make along the way but it just depends what your goal is. If it's real estate, then save up for real estate. I pretty much just saved everything and dumped it all into property when I had enough, then everything else came second (IRA, 401K, etc). As for a savings goal, it depends - but I'd aim for 20% of the cost of the property + money for renovations + having an emergency fund for anything unexpected that comes up (and it will)
Graham Stephan thanks a million for the fast response. Means the world. What price region of housing should I be looking at for a first property or should I just save and hunt the deals when they pop up. Also is it worth holding out on investing until I move to the US from uk as I'd imagine it'd be a waste to invest in London only to move
Deacoyy u got an update?
Only thing I'll say is to be careful to not over leverage yourself. Its not easy to keep all rented all the time. The pandemic is something that would have killed most landlords if not for the socialist government allowing the mortgages to go months without payment or providing "assistance".
Seen a couple other comments like this but please go on the Bigger Pockets Podcast
I'd love to do that!
no
Bigger Pockets was the people who created the BRRRR strategy.
They didn’t create it, but they did coin the phrase “BRRRR”
You know youre OG when you drive a Lotus
Lotus is the GOAT
Hi Graham, I'm currently working as a property manager and have been working in the industry for the past 5 months. I am currently in a position where I feel like I could no longer continue working for the company as I am handling too many properties. I know that you haven't had the same experience as you started as a sales agent, and have continued to build your career from the ground up. I am not sure if I wanted to continue with this career path as I feel like an admin assistant who is continually dealing with questions, complains and fixing things within a strict deadline. I love the industry because it is a great opportunity to learn about investing. I am currently 22 and I have watched many "career" related videos which encourages people to follow their passion and work hard to achieve success. However, I feel very conflicted about continuing this job as I dreaded to go to work each day. What are your thoughts on this, Graham?
I'd talk with them first about your thoughts of being overwhelmed and see if there's a middle ground where you can enjoy your job a little more, continue making money, and continue learning. Otherwise might be best to look for other options, other companies, or consider looking into seeing if you can start your own property management company? Or at least work for yourself?
Graham Stephan: renovate by yourself, you will have fun!
Also Graham: shows 2 (latino?) contractors doing all the hard work LOL
Why does their race have to deal with it?
Pardon me, are you Aaron Burr, sir?
I’m 16 and use your vids to help me plan my future.
AMAZING! :)
Graham's voice used to be so much deeper damn
I'M NOT THE ONLY ONE THAT NOTICED THIS XD
How do the banks know the value of the house? What do they look for that determines the overall value of the property? Do you have a video on that? I don’t think I’ve seen a video on your channel regarding that topic. Thanks for all the free information graham!
EdVentures banks use an appraisal that is based in comparable sales.
Think this is harder than people make out. Graham is skilled at this, is in the US where can get a 30 year fixed loan. It's not that risky for him. Variable interest rates could kill your cash flow, I need a buffer greater than 20% equity + buying costs + renovation costs to feel comfortable. Doable but need patience
Great video Graham. How should I go about the Renovation process with little knowledge. How would you best suggest I learn. Thanks
When I saw Brrrr i thought it was the sound of an A-10 XD
Great method for buying real estate. Shout out to Brandon Turner. BiggerPockets.
🙌🏼
Easy. Buy a house cash for 60k, renovate additional 30k. You're now at 90k. Rent it. After 6 months, get appraised. Get a loan for 75% of that appraisal. You get your 90k back. Repeat the same steps.
Buying a house for 60k cash...easy. Lol
It's Gordo Well, start saving. 😉
Great meeting you last weekend! Love the filming setup
Thanks so much man, lets for sure keep in touch!
Hey Graham, quick question I know this video is a bit older but when you get to the refinance part of BRRRR won’t that raise your mortgage payments potentially affecting your cash flow on that rental property? Is this something you need to calculate before purchasing the home Just seems a bit hard to have to calculate what your exact arv would be and also how much more your mortgage would be in the future ? Thanks for ur content im just a newbie trying to get familiar with the REI GAME 🚀 🚀 🚀
i didn't understand what you said from 6:30 to 7:10 ... you take a loan on the apartment.. i didn't get it, did you sell it?
No, refinance
Can banks come after you if they feel you're over leveraging? And they feel you're no longer playing a "safe" enough game for them ?
..banks you have mortgages from of course
No. Once they give you a loan, it’s yours for the term of the loan regardless of what you do - as long as you pay on time.
Graham Stephan But the mortgage works differently than the loan, doesn't it? The Bank still owns that house, until you pay it off. It's not your property until it's paid in full. If the bank wants to come after you for some reason, I'm sure they can find a way to legally do so.
That's my understanding, correct me if I'm wrong?
yes you are wrong. standard 30 year fixed mortgages can't be broken unless you default. other kinds of mortgages may have a minimum credit score, or other covenants if you agreed to them.
As long as you pay what you owe each month you’re the bank’s best friend. If they know you’re an intelligent entrepreneur they’ll be pretty happy to lend you more and more money. They’re making 5% interest each year on ever dollar they lend you.
Graham..I love your vids. I really appreciate the education and transparency. You crank out content on the regular. I understand how much goes into these vids so again I really appreciate it. Keep at it.
Thanks sos much Matt!
Wow that you replied.....and that was fast. For sure! I have a huge mouth and will keep pushin your channel brotha!!! Thanks again. No reply necessary.
Seems like closing costs would offset the available cash available quickly
Not necessarily, on a cash out it's maybe 1% of the total amount
I bought my first home(1750 sq/ft log cabin) with over 2 acres at 18. I got it extremely cheap at a tax auction but I had to completely restore the home. I purchased the home for $21,000 and put another $10-15k into it, and it’s just about done now that I’m 20, but I’ve been doing the work myself and paycheck to paycheck. I would say I have $40,000 into it and the estimated value on the home is around $140,000. I know for a fact I could flip the home but I’m young and I have a house that’s paid for and all I have to do is pay my taxes. I definitely want to try it with another home after I save up some more money and see I can pull it off again and Maybe rent some out, but I have a lot to learn.
I've been watching your videos for the past days and this seems a nice way to make money but I still have a question. Now, I'm not from the US, I live in Eastern Europe and I do not know if this process you describe can be applied here too. My question is what happens with the interest from the first loan. Usually banks will give you, like in your example, $160k and you are responsible for paying way more than that (let's say $330k), within the next 30 years for example. So I do understand that by getting a second mortgage you actually will have that $160k to pay the first loan, but that's just the principal part. You will still have to pay the interest and somehow that was not the deal with the bank since you are accountable for paying way more than $160k, over a period of 30 years.
woudn't you pay additional 56k as down payment for the second loan?? so your investment doesn't really make much of a difference!
Then you have 2 properties hopefully earning 2 rents and both properties increase in value. The 2nd can be renovated to increase it faster if you have the cash. Then repeat.
Think this is harder than people make out. Graham is skilled at this, is in the US where can get a 30 year fixed loan. It's not that risky for him. Variable interest rates could kill your cash flow, I need a buffer greater then 20% equity + buying costs + renovation costs to feel comfortable. Doable but need patience
But how many mortgages can one hold using this method? Isn’t there a limit?
I don’t get 1 thing, if you took 224k loan wouldn’t you still be owing money to the bank
Correct. But this is technically also profit you made in real estate by increasing equity. So you’re loaning against existing profit.
you explained that really well. thanks!
Haha Grant spoke in a lower voice two years ago. I have a higher voice like Grant too, so I understand why he did this early on. Hearing your high voice in a recording makes you feel self conscious. 🙃
Great advice like always 🙏👌
Thanks so much!
Best video I have ever watched 👌🏻
Thank you so much!
In Ireland we can not use this system. It was the biggest reason why we had a recession and as a result the banks won't refinance a mortgage at the moment. I own an apt worth close to triple of what my mortgage is but the central bank won't allow banks in Ireland to use equity towards another property. Love to know what you think Graham of the European system?
That's so strange, so what do people do if they own a property outright and want to loan against it? I don't know anything about the European system unfortunately.
Graham Stephan Right now the banks will only lend you 3 and half times your salary and even if you own a property that is paid for they still won't use the equity from that property to increase the size of your new mortgage. Very frustrating. In my case i would have to register my apt for rent and get a new mortgage again 3 and half times my salary and go from there but it is very difficult with increasing property prices with a limitied budget. Basically they are scared to lend after the crash. I can understand the caution because Ireland is millions still in debt. Rules might ease as economy gets better i hope. Thanks for the reply!
currently doing this, surprisingly successful. bought my first cash flowing property 312k refinanced now evaluated at 392k and was able to get 23k out which is a decent portion of the downpayment on my next one. refi both in 5 years and i can buy big
Great vid mate, I'd be all over real estate if Melbourne prices weren't ridiculous haha...I'll stick to the stock market for now.
Yeah, prices are getting pretty ridiculous here, too. It's still doable to invest, but it takes a LOT of searching and a TON of patience to find the right deal.
I have my own method I call UBRRRR.
The U stands for undercut - secure deal below market value. Allows you to gain equity before renovations even occur. Get loan through broker with LoC you could renovate the house using a LoC from the immediate equity rather than saving money.
$230,000 - Property Value
$205,000 - Undercut and get deal
$20,500 - Deposit
$179,500 - Mortgage
$25k - Equity
$20k is accessible equity
20k in renovations increases value by $50k
$205,000 + $50,000 = $255,000 - New property value using old evaluation plus renovations
$179,500 Original mortgage + $20k LoC/renovations = $199,500
LVR = 78%
Rent
Refinance:
- Includes revaluation of $230,000 + $50,000 = $280,000 new property value
LVR = 71%
Repeat.
Also if you plan on renovating a property, 20% deposit is kind of a waste isn't it? Whole point is to avoid Lenders Mortgage Insurance, but if you're increasing the property value, you're better off spending less on the deposit and more on renovations. Your aim should be to increase equity as soon as possible if your intention is to make fast growth.
so when you're doing this how do you get the money for the renovations if you don't have it? Say its 30k for renovations, does that mean that you have to save up 30k of your own money before you can buy your first property?
Is this how the BRRRR method works ? I am a newbie so can someone help?
Amount you buy it for is $100,000
ARV is $180,000
Closing Cost and Rehab is 30,000
Appraisal $135,00
Now you rent the property ( I don’t know after how long do we refinance ) and then you refinance it and get $135,000 ( going to the bank and the appraisal thing ). Now the $135,000 covers the amount you bought the property for, Closing Cost and Rehab and then you will have $5000 left. Is that how you use the BRRRR method? If I am wrong can you explain it in simple terms to me?
Graham, does the knowledge you provide in your vids come from not only personal experience but the Millionaire Real Estate Agent? I retain info better when reading it so I’m just curious
Great video! Could you go over some of the risk in this method during economic downturns and how you would handle that?
I am highly interested in BRRRR investing once I get enough cash to cover the 15-20% down payment, plus repairs. My wife and I have a concern. So what happens when the market drops, and the price of rent drops BELOW what the property owes (for mortgage, insurance, and all that)? For example, right now, maybe I can rent out a property at 1000, but I only owe the bank/insurance company about 800 per month. Let's say the market crashes, and rent values go down to...for example, 700?....and on top of that, I have repairs that are proving more costly. How do I combat against that? Especially if I have 5-10-15-20 properties?
The example he’s using is a good one, original home price 200k put 30k in it, 40k down. That’s 70k. So all together 230k. Get it cash flowing, appraised and boom 280k, cash out refinance 224k. 64k difference after using the 224k to pay off the 160k debt. Don’t sell property. Use 64k cash to buy another property. If he dicided to sell that one. He would get capital gains of 50k. 280k - 230k. 50k gains. Cash flow property plus have a good equity property. If you was going to use 64k on next property, then you gotta come out of pocket renovation costs then repeat.
It seems like every upload is exactly what I want to ask lol. Thanks for the videos brother. Starting to own a home in SF with my family. Rare for us natives. Itd be great if maybe you can give me more advice. Thanks again!
Thanks so much for watching man!! :)
Graham, I own outright a 4 bedroom 2 bath manufactured house on 3 acres in Florida, I live in Dallas Texas. I inherited this house when my mum passed away. It has sat vacant since her passing in August of 2014. I'm thinking the rehab on this house won't be more than 20k. Rent for this property is estimated at $1,100.00 / month and the property taxes are $600.00 a year. A realtor told me the house should assess for $ 135,000, once I rehab it. Would this be a good launch pad for the BRRRR method? Best regards,
I was thinking then I could take out a loan on it and use that to put a second manufactured house on the property, I mean why waste all that land, right? I was thinking this could "gravity assist" me onto other properties. What do you think? JA
George: 10 minute BRRRR Method
TLDR: Property Development
Will the cash out refi part work in a down real estate market?
Yes. You can refinance at any time. Although in a down market obviously values will be lower.
Say for example we do this over and over and for some weird reason the house, Reno and everything was the same wouldn’t the $64,000 end up being in all the houses as equity in the end? Or am I missing something here? what capital would I have to fund the next deal when the last $6000 in equity is in the last home I just bought.
this method is true and works but graham stephen, along with others like morris invest, chris krohn, etc, sugar coat their numbers. not many places in the world where you can find a property for 40k , put 30k of material in, and have it appraise at 280k come cash out refi / home equity loan time...
What kind of cash flow do you have to have on a property for it to keep cash flowing after doing a refinance for such a higher value. Obviously the mortgage would be higher.
Really good point, thanks for pointing that out. I suppose we'd need to account for that in our math 👍
How can you buy the house first if you don’t have $200k, but you only have $70k for down payment + renovation.
I love your videos and see you constantly doing well with them, but I was thinking realistically you would get 10% off stocks based on historical results, and over extremely long periods it would be 8%, or roughly 6.5-7% after taxes, where do you think real estate would get you long term?
Hey Graham Steven i bought my first house and paid cash that i had saved and now im renting it.can you please give me any tips on how to invest into my 2nd home? Thanks
If you are 70,000 into a property how is walking away with a cash out of 64,000 good? You’re negative -6,000
Once you refinance for the new loan them that would make your mortgage payment on the house higher correct? Which means you still have some cash flow from that property if you based monthly rent off of the new estimated price before you got it financed. So now you have less cash flow, but that's ok because you have they extra money to invest into buying more assets..... so don't get a loan for more than what you can charge for rent in your area or you'll either not have a tenant because rent is too high or you'll be paying for some of the mortgage costs out of your own pocket. I'm just making sure I understand this correctly.
How will you get 2 loans on the same property?
(1st one= $160,000
2nd one= $224,000)
The 2nd loan pays off the first loan.
its alot of work but i love the sound of everything
and i love that lotus in the background
i see some asians over here where i live in canada that look like they are completely KILLING the real estate game
driving lambos and ferraris like its casual
JmansFragments yes, I’m Asian and I live in Toronto and I was thinking the same thing. Lol I need to get with the program.
lool kill it brotha whenever you do
im voting for you
If I don't want to do the "repeat" yet, should I still do a cash out refi and just invest in stocks instead, or just leave the equity in the house?
Do you normally work with the same bank or mortgage company?
I shop around. Some banks give better options than others.
what's a good percentage of ROI in cash flow would you think is Ideal for rental properties? would you do a detail video on refinancing. basically after you refinance, you have to paid back the amount that the property was appraise for plus the new mortgage right?
But what if its a hardmoney loan with hi carrying costs, u gotta hold that type of loan even if u get a renter untill the seasoning is over? Thats ridiculous. Isnt the seasoning period only a thing if ur refi into a fanne and or freddie mac backed loan? What if its a dscr loan/investor loan?
No Seasoning period with a private money lender!! I'm scaling quick!!
FYI you can get around the seasoning period by using a commercial loan. I know pros & cons, but just another tool for everyone.
How do you know when you’re over leveraged. Can you keep buying houses as long as the bank loans you money? Where is the line on this while you’re in your late 20s and early 30s?
You on BiggerPockets Graham?
I made an account but I'm never active on there.
Graham Stephan you gotta do their podcast if you haven’t already
Yep yep I've been slacking big time on that one
Graham Stephan You should be on, Graham.
If you do this does your monthly payment go up? It’s that just taking out a bigger loan to pay off a different loan and have left over money from the second loan, not really earning money right isn’t that just taking out more loan money essentially?
This was a great video graham. I'm 19 and interested in getting into real estate to start a passive income flow.
Gonna be going to Afghanistan with the army for 12 months that will generate tax free income. Hopefully I'll accrue a large enough amount of capital that I can start when I get back.
Thanks man! And thank you for your service!
Where are you investing right now. So hard to find any property to BRRRR in my local market.
Use cash to pay for real estate or take out a HELOC and invest the cash elsewhere? If you have a video about this I’d love to see it!
What questions should I ask a previous owner before buying their revenue property?
So in a sense you only spent $6000? and the first house is almost (not regarding interest rate) paid off?
I was surprised you didn't say the first step was to smash that like button... I did it anyway ;)
Great video ! In your next video can you talk about comercial real estate like buildings, hotels, etc. I’m learning a lot from you ! Thanks
I dont know enough about those unfortunately :(
I keep coming back to watch this, just so I fully understand the concept and can apply it. Can't wait to have the money for my first multi-unit!
Did you buy your first multi-unit?
@@noxau5153 not yet, still in school but once I graduate and start saving I'll get the cash together for a purchase
Great video Graham. so how to buy a first house with zero own money. Or how to start from zero?
Just SMASHED!! that Subscribed button after so many vids! Lol Really good info Gram! 🖒
Thanks so much!
Hey gram! Love your stuff! Can you do a super detailed video on how to calculate a good deal vs a bad deal. Like go all the way into your mindset. How you calculate how much you’ll need how much you’ll get, the time for renovations so on so fourth. Just a super detailed video of your mindset
Yeah, I want to do this!
When you refinance, the monthly loan payment goes up right? Do you typically still at least break even?
U would have to do your own research to make sure that your monthly rental income would be enough to cover your projected loan after the refinance. If u only do enough to research to see if the rental income will cover the mortgage payments of your first loan and not your second loan, then when you get your second loan you’ll be screwed if u didn’t prepare ahead of time by asking for a higher monthly rent.
I love the BRRRR method. But I want to introduce the SHHH method. .....Graham, peeps are taking this strategic approach and the competition is killing me! Brrrrr! Bahaha! Awesome video btw.
Hahahaha 😂
Great video! My question is about the refinance phase. Once you refinance into a bigger loan, doesnt that new larger mortgage eat away at the cashflow you were receiving with the previous loan. Thank you
I’m confused on the same thing, did u find the answer for your question yet?
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Someone in the comments please correct me if I'm wrong. What bank will give you a loan of 80% of appraisal while you still owe 160k on the property? Wouldn't the second lien or mortgage be on the portion that is paid off? Thanks. 👍
Yes. They’ll refinance meaning if you have additional equity, they’ll give you a loan including that equity, which pays off the previous loan you have. Just imagine it like an entirely new loan from the beginning.
Hey Graham, what do you think of commercial triple net properties? Many of the properties I’ve looked at are fast food restaurants, dollar stores, etc. They’re advertised as having zero landlord responsibilities. Sounds pretty good. What are the downsides? Can you do a video on triple net investments? Thanks man.
SUPER easy to manage, but I just don't think commercial real estate will do that well over the next 20-30 years
Is there a seasoning period if you bought and renovated the house with cash you had on hand? No loans.
Great video Graham, question
Did you use the BRRRR method yet, if so, mind telling us the story?
Yes! I have a few videos I've already made about my own experiences!