Had they applied the cash flow from rent payments toward the loan principal, the loan mortgage would probably have been paid off twice. (Location 204)
Tags: orange
When you use the BRRRR model correctly, you begin building a foundation that will later become a skyscraper-sized portfolio of properties. (Location 243)
Tags: orange
If I’m going to be sharing why I believe you should be utilizing the BRRRR method, I feel I owe it to you to explain a little about myself and my background so you can understand how it worked for me. (Location 248)
Tags: orange
How did that look for me? I worked about 90 hours a week for several years, slept in my car several times a week, gained a ton of weight, became very unhealthy, and sacrificed my social life, all at the altar of real estate investing. (Location 252)
Tags: orange
to put down payments and cover the rehab costs on two to three properties a year. (Location 255)
Tags: orange
I didn’t inherit anything. All I did was find a way to use the money I was making more efficiently. I finally figured out it shouldn’t only be me working so hard—my money should be, too. (Location 258)
Tags: orange
How BRRRR Supercharged My Success Once I learned BRRRR and started buying more houses, agents started sending me the best deals first. (Location 273)
Tags: orange
Success comes through repeating a process over and over until our brains figure it out—usually by spotting patterns of things that worked and things that did not, and remembering them. (Location 281)
Tags: orange
At its most basic understanding, BRRRR is the best way to buy a property if your goal is to own more than one or two. (Location 297)
Tags: orange
In the traditional method, financing is the first step of the whole process. The home buyer gets approved for a loan, uses it to buy the property, then fixes it up and rents it out. (Location 307)
Tags: orange
Once the property is stabilized and rented, the investor would start saving money to buy their next property and repeat the process. (Location 313)
Tags: orange
The single, most important act a real estate investor can do to grow their wealth is to add value to a property—be it through purchasing below market value or adding value through a rehab. (Location 318)
Tags: orange
When an investor utilizes the BRRRR method, they start off by paying cash for the property, rather than financing it. (Location 325)
Tags: orange
paying cash that I will discuss later. For now, just make sure you note that money is put into the project in step one: buying the property. (Location 327)
Tags: orange
It’s important to note, in the BRRRR method, these are the first two things the investor does. With BRRRR you are adding value before you are financing anything. (Location 332)
Tags: orange
loan to buy a house, but that’s not true. In Part Five: The Refinance Process of this book, we will talk about how lenders give loans. For now, just understand a loan can be secured by an asset at any time, not just upon purchase. (Location 341)
Tags: orange
The best investors use the BRRRR method for several reasons. (Location 347)
Tags: orange
ROI is a metric used to describe how an investment performs. It is one of the simplest ways to compare investments, and it’s used across all investment vehicles, not just real estate. (Location 351)
Tags: orange
Note that when we talk about ROI, we are only talking about the cash flow portion of your profit, nothing else. Because it’s specific to cash flow, ROI in real estate is also referred to as a “cash on cash” return. (Location 359)
Tags: orange
The most basic way is to earn more (raise rent) or spend less (decreases expenses). (Location 375)
Tags: orange
Rents only go up so fast, and if you try to increase them beyond what the market can withstand you’ll end up with vacancy and less rent. (Location 379)
Tags: orange
sample than some of the deals I do myself. I used it to prove a point that even on a deal that isn’t a killer, BRRRR can increase your ROI massively just because lowering your basis is more impactful than increasing your cash flow. (Location 395)
Tags: orange
To me, it was worth working 90-hour weeks! Without capital, you can’t buy deals. If you can’t buy deals, you can’t add equity to your net worth. (Location 401)
Tags: orange
If we make sure the ROI we make on our money is higher than the interest rate we are paying to borrow the money, we come out on top. (Location 410)
Tags: orange
Thinking from a perspective that only considers losing cash flow by borrowing more money against a property is incredibly shortsighted. (Location 418)
Tags: orange
A 70 percent ROI isn’t a bad consolation prize on a property you miss on. (Location 422)
Tags: orange
Velocity of money is a cool term used to describe how many times you can make the same source of capital work for you. (Location 425)
Tags: orange
If I buy a property and pull out 100 percent of the capital I put into it, I can then immediately buy another property. (Location 430)
Tags: orange
If I can pull out 100 percent of my cash from each BRRRR deal (an easy, round number), and buy a new property every three months (time to buy, rehab, rent, and refinance), that is four new properties a year, with the exact same capital. (Location 432)
Tags: orange
Learn to BRRRR or use the traditional method. From all accounts I can see, BRRRR is better from many angles, but one of the biggest is the increase it can have on increasing the velocity of your money. (Location 440)
Tags: orange
The BRRRR method is the most efficient way to buy property, period, and that is why it’s a game changer when you learn how to harness its power. (Location 453)
Tags: orange
When I first decided I wanted to try the BRRRR model, I realized I didn’t have enough capital available to buy a property without financing it. (Location 460)
Tags: orange
This is my goal. To help you master the art of Buying, Rehabbing, Renting, Refinancing, and ultimately Repeating the process of buying rental homes, increasing your passive income, and growing your net worth. (Location 489)
Tags: orange
There is a way to structure your investing so you won’t lose money, or if you do, you can bounce back. The more you understand about what you’re doing, the more likely you are to avoid mistakes and see threats to your wealth on the horizon. (Location 494)
Tags: orange
Those who do the best at their chosen vocation do so because they’ve mastered (Location 499)
Tags: orange
This will make you a better overall investor, because in the process of learning to BRRRR, you will learn how to excel at each individual stage that makes up the process. (Location 504)
Tags: orange
While learning to BRRRR will do a lot for your business, the very best reason to learn is because you get so much more capital back at the end of the deal. (Location 567)
But then Tom realized the impact real estate investing could have on his family’s future. He decided to jump in and start purchasing buy-and-hold rental properties. (Location 588)
Tom focused on building his cash flow. He saw all the late-night infomercials full of yachts, bikini-clad women, and Ferraris that all promised he too could have that lifestyle if he built up enough cash flow. (Location 599)
At the end of 16 years of hard work (year one was spent just saving for the first down payment), sacrifice, and delayed gratification, Tom owned 15 single-family houses. After 15 years of seeing consistent 3 percent rent (Location 621)
Mike would find businesses that made loans to borrowers. Some of those borrowers would default on their debt, and Mike would buy the right to collect on that debt. (Location 628)
When they met, William asked Mike what had made him successful with his distressed debt business. Mike thought long and hard about it. (Location 639)
Mike knew the power of real estate to build wealth long term, but he also wanted to find some way to combine his valuable skill set with the power of real estate. (Location 645)
When Mike bought debt from a lender, he would front cash for the right to collect debt. This debt was often secured by assets worth more than the amount Mike paid for the right to collect it. (Location 648)
Mike decided he would look for distressed houses, much as he looked for distressed assets in his business. (Location 652)
He learned there were people out there that could work on the properties he bought and get them in better shape, improving their value and putting equity into Mike’s new business. (Location 658)
Just like buying distressed debt, Mike knew he wouldn’t be able to obtain financing to buy those assets that were in the worst shape. (Location 664)
He knew it might cause him to start off slower, but he decided he would save up enough money to be able to buy distressed property for cash. (Location 667)
At the end of year one, Mike had $42,000 saved up, just as planned. (Location 671)
Learning to buy right and find great deals is what allows all the rest of BRRRR to work. Because it’s so important, we are going to spend a lot of time going over how to find great deals, how to pay less for them, and how to get the very most out of everything you buy. (Location 824)
Personal distress is how professional, full-time investors target deals. It’s how most wholesalers find deals. Personal distress is when the owner of a property is in some form of distress in their personal life that is affecting their finances. Examples would be a divorce, a lost job, a death in the family, trust sales, sudden medical expenses, etc. (Location 840)
The 1 percent rule is a very simple maxim that states if a property will rent for 1 percent of the price you paid for it, it’s likely to cash-flow positively. (Location 866)
Houses that meet these criteria tend to cash-flow stronger than properties that do not. This is most important when considering what area you want to start looking for deals, which deals to look at, and what price you can offer to the seller. If the area has a high percentage of 1 percent properties, you’re more likely to have success there. (Location 869)
Additionally, I’ve found the more expensive a property is, the less likely the need to conform to this standard. A $500,000 property would not need to rent for $5,000 a month in order to cash-flow positively, (Location 875)
In general, I’ve found a property can rent for around .08 percent of the purchase price and usually still be profitable. (Location 882)
This rule states that I want my total expenses for a property (acquisition plus rehab) to add up to 75 percent of what the property will appraise for when I’m finished. It is essentially saying I’m willing to pay 75 cents on the dollar for what I buy. (Location 889)
My criteria are simple and logical. I look for three things in a deal. To be all-in for 75 percent of ARV. To cash-flow positively. To be in an area that won’t cause me a headache. (Location 936)
LAPS stands for lead, analyze, pursue, and success. It details the process of finding a deal and closing on it successfully. (Location 1154)
Tags: orange
I never considered checking the tax records myself to make sure the numbers I was given were accurate, because I was used to buying through an agent who had already verified this info. (Location 1172)
Tags: orange
“How you do one thing is how you do everything.” The point being, if someone is honest in one area of life they likely will be in others. (Location 1179)
Tags: orange
The more “tools” we have available to ourselves, or the more options we have to fix a problem, the more problems we can (Location 1220)
Tags: orange
fix! As real estate investors, we think we are targeting houses, but what we are really targeting is problems. (Location 1220)
Tags: orange
can write all-cash offers to the seller, with little or no contingencies, for ten days or sometimes less. (Location 1276)
Tags: orange
Consider that many sellers don’t look at a home like an investment. To many folks, a property that is useless (in terrible condition, not renting, etc.) is nothing but a drain on their resources and an anchor holding (Location 1283)
Tags: orange
Most houses that fall out of escrow do so because the buyer found something during the inspection period they didn’t like. (Location 1289)
Tags: orange
My goal as a buyer who wants to “buy right” is to find these sellers when they are at a point where they are about to give up, and swoop in as a savior able to close the deal. (Location 1293)
Tags: orange
Many agents know a cash offer is “better,” but don’t really understand why. If you understand the why, you can replicate all the benefits of a cash offer—even if you don’t have the cash. (Location 1298)
Tags: orange
is a psychological edge to an all-cash offer because it takes the sting out of a “lowball” offer price. (Location 1301)
Tags: orange
consider other options (Location 1304)
Tags: orange
like private money or hard money. (Location 1305)
Tags: orange
Getting funding from these financing sources doesn’t require an appraisal or loan approval in most cases. (Location 1306)
Tags: orange
If you find yourself having trouble saving or finding cash for a deal, but find a deal first, this can be a great option for you. (Location 1309)
Tags: orange
By eliminating competition, you increase the strength of your own position. When there aren’t many buyers, the few out there wield more power! (Location 1315)
Tags: orange
I picked this strategy up after listening to Warren Buffett talk about one of his investment strategies: “Be fearful when others are greedy, and greedy when others are fearful.” (Location 1319)
Tags: orange
Saving the cash is hard. Finding people to borrow from can be hard. Getting pre-qualified for a loan is much easier and candidly feels safer. (Location 1323)
Tags: orange
The lender has a similar interest in the condition of the property. If a lender lets you borrow against a property in terrible condition, then has to foreclose on you, how will they sell the property to recover their investment? (Location 1328)
Tags: orange
If you have the ability to buy a property that the majority of your competition does not, you can offer much less for that (Location 1338)
Tags: orange
same property and still get it under contract! What I love most about this is how well it fits with the BRRRR strategy. The majority of BRRRR success stories were properties that were purchased significantly under value and rehabbed into better shape. (Location 1339)
Tags: orange
Derek is a California-based investor who invests long-distance for cash flow. (Location 1348)
Tags: orange
Rather than addressing his problem with not being able to stand up to sellers, Sam found the best deal he had out of his list, then put the property under contract for about 90 percent of ARV. (Location 1401)
Tags: orange
Also, Sam decided he would flip the house, rather than use the BRRRR model he had originally intended, because it would be easier than trying to recover his money on a refinance. (Location 1404)
Tags: orange
The plan was to close on the house, do a complete remodel, and then market the home as if it was one of the more expensive ones in the nicer neighborhood across town. (Location 1410)
Tags: orange
The inexperienced agent (who was really starving for business and not very good) also agreed to Sam’s demand they reduce their commission. (Location 1416)
Tags: orange
Sam had failed to take into account that the homes across town were in a vastly superior school district, with much lower property taxes, and were much closer to the freeway. (Location 1443)
Tags: orange
Sam lost the deal he had been looking for the whole time because his money was tied up in the deal he’d forced. (Location 1450)
Tags: orange
To add insult to injury, during the escrow process, the buyers ordered inspections where they found significant dry rot, termite damage, and roof damage. (Location 1455)
Tags: orange
Of course, the buyers chose the most expensive company in town to do the work, and Sam had no choice but to pay. (Location 1458)
Tags: orange
Sam realized he had somehow found himself trying to flip a high-end luxury product in the wrong neighborhood, surrounded by miserable non-talent—all when his initial goal had been to purchase a cash-flowing property at a great price and BRRRR! (Location 1462)
Tags: orange
Dejected, forlorn, with his confidence shaken, Sam found himself trolling the forums of Bigger-Pockets and other online blogs, spouting his bitterness and pessimism everywhere he went. (Location 1467)
Tags: orange
Don’t stray from your original goal if it was to BRRRR when the numbers don’t work. (Location 1471)
Tags: orange
My seeds are used to produce more seeds, as my money is used to produce more money. (Location 1482)
Tags: orange
Our goal with BRRRR is to buy something significantly under value, add value to it somehow, then recover as much of that value as we can. (Location 1485)
Tags: orange
Wise investors plan for market cycles. Just as a market can skyrocket, it can also plummet. (Location 1510)
Tags: orange