The Beginner’s Guide to “Infinite Investing” with the BRRRR Method

David Greene:This is the BiggerPockets podcast show 769. What if I told you that you could make your capital go further? Would there be any interest in that? Is everybody here bleeding money out of their ears right now? Is it like, man, I got all this cash and I just need to find somewhere to put it? You’re probably looking for a way to take the little bit of money you do have and stretch it further, which would be a good thing. Do you want to increase the velocity of your investing? Do you want to make transactions happen more frequently? Do you want to reach your investing goals faster? Are you not wanting to need 50 years before you can save up enough money to buy enough real estate to become a millionaire? Well, you can. Anyone here can using BRRRR.What’s going on? Everyone? Is David Greene, your host of the BiggerPockets Real Estate podcast here today with a special show. We have a full-blown webinar for you on the BRRRR method. That’s right. Are you interested in the BRRRR strategy? Well this webinar is for you, my friend. As the self-proclaimed King of BRRRR … I’ve actually never proclaimed myself of that. I didn’t come up with the name. I just did it a lot and wrote the book on it. I’m going to walk you exactly through how to buy, rehab, rent, refinance, and repeat your way to real estate wealth. And don’t worry, we’re going to address the challenges to BRRRRing as well. It’s not all sunshine and roses, just like all strategies are not sunshine and roses. In these economic conditions especially. And how to make sure you’re running your numbers right to make informed investment decisions. You definitely don’t want to get that wrong.If you are interested in committing to your real estate investing goals, whether that’s through BRRRR or another strategy, make sure to use Code BRRRR20 for 20% off your first year of BiggerPockets Pro membership. We’ll get into those details later in the show, but I wanted to let you know that if you want to save some money, we got a gift for you. And if you are interested in learning more about BRRRR and this wasn’t enough, check out episode 751 where Rob, Henry and I all talked about the BRRRR method, what works, what doesn’t work, and how to make it work in today’s economic environment. All right, guys, let’s get into it.Welcome everybody. I’m David Greene, the host of the BiggerPockets podcast here to date to talk with you guys about BRRRR. In fact, yesterday at my jujitsu class, there’s a young man named Dylan. Dylan, if you’re watching this, what’s up? Who knew who I was and was assigned to work with me and called me Sir BRRRR, which is my nickname given to me by my co-host, Rob Abasolo. So I wrote the BRRRR book, which we will talk about later. I’ve used the BRRRR method to supercharge my portfolio, and I’m here to talk to all of you today about how you can do the same. So if you’ve ever heard this BRRRR word, you don’t really know what it means, you know it has something to do with repeating a process, well, don’t worry, by the time we’re done today, you’re going to have a very good understanding of what it is, how simple it is, and how you can use it to use the same capital to buy a lot of real estate. So welcome, I’m glad you guys are here. I’m thrilled.Let’s go over a couple ground rules. First off, get your phones out. You don’t have to put them away. I want you to have your cell phones out while we are going through this. And here’s why. There will be points in the presentation that I’m going to want you to take a picture of the screen so that you can remember what we talked about. So if you have your phone out and ready to go, that will help us. Also, you can follow me at David Greene 24. I didn’t cover that earlier, but if you guys have a question after the webinar, you want to get some clarity on something, the best way to get ahold of me is to send me a DM on Instagram or Facebook. All right. What if I told you that you could make your capital go further? Would there be any interest in that? Is everybody here bleeding money out of their ears right now? Is it like, man, I got all this cash and I just need to find somewhere to put it? Well, if you’re not Pablo Escobar, you probably don’t have that problem. You’re probably looking for a way to take the little bit of money you do have and stretch it further, which would be a good thing.Do you want to increase the velocity of your investing? Meaning do you want to make transactions happen more frequently? Do you want to reach your investing goals faster? Are you not wanting to need 50 years before you can save up enough money to buy enough real estate to become a millionaire? Well, you can. Anyone here can using BRRRR. By the end of this webinar, you will understand why BRRRR works and the expert tips to follow. All right, let’s get into today’s agenda. What we’re going to be going over. We’re going to talk about some door prizes. We’re going to talk about why experienced investors love BRRRR. We’re going to talk about if BRRRR is the right deal for you, finding a deal, tools to help, expert tips and tricks, and we’re going to analyze a deal together. Pretty cool.So stay all the way until the end for expert tips and tricks because you don’t want to miss those. So who are we here at BiggerPockets? Well, we have over two million members. We have the number one podcast for real estate investing in the world hosted by yours truly. Five million plus forum posts. These are questions that investors have asked and other members of the community have answered. As well as 40 million total YouTube views and counting. It doesn’t take that many properties to achieve financial freedom, but it does take the right goals, the right plan, and the right actions.So who am I? Well, my name’s David Greene. I’m a real estate investor, and I live in the Bay Area of Northern California. I own rental properties, I flip houses. I’m a commercial investor. I co-host the BiggerPockets podcast with Rob Abasolo. I’m the author of Buy, Rehab, Rent, Refinance, Repeat, the BRRRR book. Long Distance Real Estate Investing. That’s the first book I wrote for BiggerPockets. Also, the top producing agent series for BiggerPockets, which is three books written to help real estate and sell more houses. Those are Sold, Skill and Scale. And like you, I was once a newbie to real estate. So let’s talk about what BRRRR is before we get into it. It’s an acronym. BRRRR stands for buy, rehab, rent, refinance, repeat. And this is the order of operations when we’re buying a property. So first you buy a house, then you rehab it to make it worth more, then you find a tenant and rent it out to them to get cash flow. Then you refinance the property when it’s worth more than what you paid for it to get a lot of your capital back out. Then you take that capital and buy another property to repeat the process.So why do experienced investors like me love BRRRR? Well, first off, it’s a low or a no money down strategy. Now you will still need money to buy the property, but if you do this well, you will leave only a little bit of your money or get all of it out of the deal. You will also increase your return on investment and that’s because you’re leaving such a small amount of money in the property, but you’re still getting cash flow that the ROI and the money that you leave in there is astronomically high. You’ll get the most out of your capital. So your money’s going to be working hard for you, just like you had to work hard to make that money. You’ll increase the velocity and the efficiency of your investing, which means you’ll buy more properties and you will buy them better than if you were not doing BRRRR and you will supercharge your wealth. You will get wealth faster, still using sound fundamentals of real estate investing.So is BRRRR right for you? Do you like what you’re hearing so far? Well, here’s some things to consider before choosing to BRRRR. First off, are you willing to do a rehab and are you going to hire it out? Do you do the work yourself or are you going to pay a contractor or a handyman to do some of this work? Because most BRRRRs involve fixer upper properties, which mean there will be a rehab. Whether it’s light or extensive, there’s still a lot of work. They require solid skill planning to find a deal. So we’re going to share some great tools later that make this possible for anyone to do but know when you’re BRRRRing, you have to find a better deal than when you buy traditionally to make this work, which is one of the reasons I like it is it forces me to buy better, but it is going to be harder work.And here’s some of the potential cons of BRRRR. Well, first off, you’re usually going to use a short term loan to buy the property. This could be a hard money loan, it could be private money. We’re going to get into some of the different ways you can finance it. Then there’s the problem that you may have a low appraisal after the rehab. So you’re going to learn in this method, you buy a property and then it has an after repair value, what you think it’s going to be worth after it’s fixed up. Well, sometimes it appraises low and that messes up your whole plan for pulling your capital out of the deal. You’re going to end up with a rehab that ends up over budget. That can happen too. So you plan to spend, say 50,000 for the rehab and it becomes $75,000 that can mess up your numbers.There’s a seasoning period. Traditionally it’s been six months for conventional financing. Now for some it’s up to 12 months. So it can be hard to refinance that property until you’ve waited a period of time. So if you thought you were just going to do this every three months, that can be tough depending on what kind of loan product that you’re using. There are two potential closing costs. So you may have closing costs when you first buy it, as well as closing costs when you rehab it. That’s an added expense. And then the rehab itself is stressful. It can involve pulling permits. It can involve talking to a contractor. It can usually go over the timeline. Rehabs are notorious for being headaches, and when you’re buying fixer upper properties, that’s a part of what you’re buying.So it does have a lot of downsides, and now that I think about it’s probably better that we don’t talk about BRRRR. If something’s hard, it’s usually bad. Eating vegetables is hard, lifting weights is hard, exercising is hard, raising babies is hard. I changed my mind. I don’t think we should be doing this at all. Actually, no, that’s terrible. In fact, we have the word nope written in cursive with paint. That was very, very impressive whoever wrote that on this hardwood floor. That’s actually a really good nope. But nope, we’re not going to run away from things that are hard. BRRRR has propelled many, including myself towards financial freedom, and I believe that anyone here can do the same.So how do we work around the cons? Well, first off, remember that every strategy has unique downsides. How do we address them? How do we address the short term loan? Well, you can use a hard money loan to buy the property, but you’re going to have additional closing costs, so know that when you’re getting the loan, you should contact a mortgage broker. I own The One brokerage, so we can help you with that. You may have a relationship with the mortgage broker. You want to ask questions like, what financing options do you have available for short-term debt? This is not a 30-year fixed rate loan on the property. This is a loan that you want to get for a shorter period of time. Then there’s the low appraisal after the rehab. Well, you want to plan your rehab well and you can contest appraisals. In fact, owning a mortgage company gives me an advantage there. Sometimes we’ll order an appraisal and it will come in low and we’ll go to a different lender and have a new appraisal ordered instead. Sometimes we’ll contest the appraisal and say, “Hey, I think your guy messed it up. Here’s some comps we should consider.” And they may redo their original appraisal. And the more you do rehabs, the more confident you get with knowing what to do when they go wrong.You also have the problem of the rehab ending up over budget. There’s no way around it. You just have to have access to extra money in case that happens. Then you’ve got the seasoning period. One of the ways that we address that problem is we don’t always refinance into conventional loans. Sometimes we refinance into a DSCR loan or a bank statement loan or a portfolio loan that don’t require you to wait the full 12 months. And again, that’s a mortgage broker question. If you work with a mortgage broker, they have many different banks that they can find you financing for versus if you work with a direct lender, they usually have one bank with one program, and if you don’t fit within those parameters, then they’re not going to be able to help you. And then it comes to actually doing the rehab. How do we address that? Well, something that I need to highlight about BRRRR, especially if you’re not familiar with real estate, this does not work when you pay fair market price for a property or you don’t add value through the rehab. This is a method for buying a property below market value and or adding value to the property through the rehab. Upgrading it, adding square footage to it, fixing problems that someone else didn’t want to fix it. This is something that you only do when you can get a property for less than what it’s worth.This doesn’t work for a turnkey property that you’re paying fair market value for. There’d be no way to get your capital back out of it. You’re actually trying to create equity when you buy this property and fix it up and then take that equity out and put it back as cash in your bank to invest into the next deal. So that’s another important thing to highlight. That the BRRRR method is not something you just choose to do on some condo in an area that you love and you paid what it was worth. This is something that’s going to take a little bit more work to find the better deal. So let’s talk about how to find the right deal. We’ve got networking and BP can help you there. You can go to real estate investment groups. That’s a way to meet other investors or wholesalers that are actually people out there actively looking for really good deals, putting them in contract and then assigning those contracts to you. You can go to meetups. These are places where people go and they get together and they talk about their businesses and they talk about what they’re investing in, and they build relationships.You can get on the forums, like I mentioned earlier. BiggerPockets has forums with all kinds of different deal finders or agents and different people that you’re going to need in the transaction all conversing and having conversation. Or you can tell your family and friends, “Hey, I’m a real estate investor. I am looking for someone who needs to sell their house.” Especially if it’s ugly, a hoarder house, death in the family, something that wouldn’t work great to put on the MLS and sell for the maximum price possible. You can do what we call driving for deals. Now, this is a method where you get in your car, you drive around neighborhoods. Maybe you’re an Uber driver and you do this while you’re working. Maybe it’s when you’re on your commute, maybe you’re taking your kids to swim practice. And as you’re driving through residential neighborhoods or when you’re waiting for practice to end and you’re driving around listening to the BiggerPockets podcast or BiggerPockets on YouTube, you look for properties that are in terrible condition. You want to find something with overgrown grass, boarded up windows, clearly deferred maintenance. Something that lets you realize that the owner isn’t taking care of their property and may be more inclined to sell it.Then you look up their information using skip tracing technology and you send them a letter or give them a call or an email or whatever you do, and you say, “I’d like to buy your property. Can I make you an offer?” There are wholesalers. This was one of my favorite methods when I was knee-deep in BRRRR is I would find people that had deals under contract for less than what they were worth, and I would buy it directly from the wholesaler and then I would do my rehab. I’d also look for three kinds of distress. I talk about this in my book Pillars of Wealth that will be coming out for BiggerPockets. The first is market distress. This is when a entire market is in a bad position. Something during the recession. If you were buying houses in 2010, we had a lot of market distress. There was a ton of properties for sale. Good time to buy. You also look for property distress. This is like when I was saying driving for deals. You’re looking for a property that is clearly in bad shape and other people don’t want to buy it because of its issues.Then you look for personal distress. That’s when a human being is in a bad point. They’re facing foreclosure. They need money for medical bills. There’s something going on in their life or maybe they’re going through divorce, they don’t want to deal with it anymore. They just want to get rid of a property easily. That’s something investors can take advantage of. You’ve also got investor friendly agents. Agents that are good at finding deals for you on the MLS and negotiating them. BiggerPockets can help you do this with Agent Finder. So if you go to the BiggerPockets website and then you click on tools, you can click on Agent Finder and find an agent in your area that can help you. Now, if you’re in my area, Northern or Southern California, you should definitely email me. Reach out to me because I can help you. But if you’re not near me, BiggerPockets has a great way for you to find another agent that like you enjoys BiggerPockets and speaks the language.So what makes a good BRRRR deal? First off, you should read the BRRRR book for all the tips and tricks. But while you’re here, I’m going to cover some of the big ones. First off, you want to buy under market value. You want to get that house for as far below fair market value as you can possibly get the seller to agree to. There’s some rules of thumb you should look at, okay? The 1% rule is a rule that states the property should rent for around 1% every month of what you paid for the house. Which means if you pay a hundred grand, it should rent for around $1,000 a month. If it’s close to that, it is likely to cash flow and not a waste of your time. Now, the 70% rule is another helpful rule. Now, this is a rule that says you should try to buy a property from a owner for about 70% of what it would be worth after it was fixed up. So you take 70% of what you think it’s going to be worth after it’s fixed up, you subtract your rehab costs and that’s where you make your initial offer to start your negotiating.Now, that doesn’t mean you have to follow these rules to a T, but they are guidelines that give you a framework for where to start when you’re considering pursuing a deal. Also, remember that appraisals can vary by location. So if you look at a four bedroom house on one side of town versus a four bedroom house on another side of town, it’s very possible that one of them will be worth more than the other because it’s in a better side of town. So remember, it’s not just by city, it’s actually by neighborhood when you’re looking for comparables to determine what a property’s going to be worth after it’s fixed up. And then you’ve got rehab best value adds. We all know you can fix up a kitchen, you can fix up a bathroom, you can make a property more desirable, but did you ever think about adding a bedroom? Did you ever think about buying a two bedroom home that has 1400 square feet and converting the bonus room, the den, the living room into another bedroom or two if it has living space like a family room already? This is a fast way that you can take your two bedroom house and have it compared to three and four bedroom houses by adding bathrooms.Same for creating more livable space. Maybe you have an attached garage that’s not being used for anything. Maybe you have a covered patio that’s really big not being used for anything. You can actually wrap that into the house and create another master bathroom, move the kitchen to that part of the house. Adding square footage to small homes is a great way to add value to the property. Now, remember that 99% of the properties out there are not really deals. You have to analyze for the best one.So let’s analyze one together. We’re going to take a minute here and we’re going to go to biggerpockets.com and I’m going to show you guys how you can actually analyze a deal. Here’s the one we’re going to analyze. We’ve got a nice cute little house. Now, this looks like it’s a single story, but it actually has a basement. You just can’t see it from this picture. See the dining room here, living room here. Looks like it’s in pretty good shape. Just could use a little bit of updating. Maybe replace the carpets, maybe give it a fresh coat of paint. You can tell it’s in a pretty nice neighborhood here. It’s got some good bones. I can tell from looking at this thing. It is a 1950s ranch up down duplex, meaning it has a basement that has already been converted into the lower side. The purchase price is 220,000. That’s what we’re going to try to buy this thing for. The rehab is 50,000. That’s what it’s going to cost to turn that bottom unit into something that is more livable. To upgrade it.And when we’re done, we should have an ARV, meaning an after repair value, this is what we think the property’s going to be worth, of $350,000. So to run through these numbers, we’re going to try to buy it for 220. We’re going to put 50 into fixing it up to spruce it up, make it worth more, and then we’re hoping it’s going to be worth 350 when we’re done. The estimated rents from unit one are going to be 1600, and unit two are going to be 1600, and property taxes we assume will be about 220 a month. And this is what unit one looks like. We’ve got a mud room. Remember I told you to look for square footage that’s not being used well. That mudroom could probably be converted into either additional living space. We could take a bedroom that might be next to it and make it bigger. We could take a bathroom that might be next to it and make it bigger. We can add another bathroom here if the mud room’s not being used for anything.Sometimes you can knock down a wall and there’s a closet on the other side, and you can make this into an actual bedroom. Whatever you do, you want to take space mudrooms that aren’t being used for anything useful and try to add them into the square footage of the property in a better way. Then we’ve got the kitchen here. We can tell it’s a little bit outdated. We can probably spruce that thing up. And then as you see, the bedrooms are fine. They’ve got some pretty nice hardwood floors, but they might need some paint and definitely some new window coverings. This is unit two. It’s a two bed, one bath. So you can see there’s already a bathroom in the basement and there’s a bedroom in the basement. You can see that they had a renovation that they were doing, but had water damage and drain issues, so they had to stop. Now, when I’m looking for properties on the MLS, I love seeing pictures like this. This is what I want to see because it scares away other buyers, but I just see that a lot of the work has already been done. We just have to go put in some drywall. We can make this thing look pretty. The basement also has a rec room and a utility room, so there’s a lot of square footage here that we can try to use for better purposes. I like that.The more square footage that I see, and the lower the price of the house, the better. So this is a very good BRRRR candidate. So we’re going to switch over to biggerpockets.com and we’re going to use the BRRRR calculator, and I’m going to show you how BiggerPockets has tools that can make analyzing properties much, much easier. So all we’re going to do is head over to the BiggerPockets website. We’re going to hover over tools. Then we’re going to go to calculators, and we’re just going to roll down to BRRRR. See how easy that is. We’re going to hit start new report. The report title’s going to be called Up Down Duplex.In this case, I don’t know that we actually had the property address, but let’s say that you found this thing online somewhere. This is where you would type in the property address so that you could just remember, okay, this was the property that I was running. We’re going to say this is in Denver, Colorado because that’s where BP headquarters are. Remember the annual property taxes? We already know we’re 220, but what if you didn’t know what they were? That can be intimidating when you’re a newer investor, you don’t know how to calculate that. You’re going to click on this little guy right here. This will tell you how to find what the property taxes are for an area. So anytime you come across one of these boxes and you don’t know what to do, you hover over the question mark and it will tell you what you’re supposed to be putting into that box.We could add a photo if we want it. In this case we don’t need to, but you may want to put in a property description like, 1950s ranch style, up down duplex with basement value add potential, lots of square footage. That’s something you could do to remind yourself when you’re going over these past reports, which property you were analyzing. Can you click on other property features here? And this is where we could put in, well, it was a four bedrooms and it was a total of say, four bathrooms. You can put this information that will remind you more of the property that you were analyzing because you’re probably going to do this for lots of different properties. All right? Pretty cool. BiggerPockets makes this very easy. Hit next step. And now we’re going to put in the purchase price. We’re going to try to buy this thing for 220. The after repair value is 350.The purchase closing costs are going to be around, let’s say probably $5,000. Don’t know what those are? Hover over the little question mark here. Typically, they are one to 2% of the purchase price of the property, but in this case, we’re going to go a little bit higher. The estimated repair cost was $50,000. Now we could just walk the property with a contractor and ask them what they think it would cost to fix it up. That’s the number they’re going to give us. Purchase loan details. Now, there’s different ways you can buy a BRRRR. We talked about using private money, hard money, cash, lots of different ways. So in this case, let’s assume that we have our primary residence. We took a HELOC on that, and we’re going to use the money from the HELOC to buy this thing.So we’re basically using cash from our HELOC that we’re going to be using. We are planning on refinancing this property after 12 months. That’s when we think we’re going to get the money back. And we’re going to give ourselves an estimated rehab time of two months to do this work. Now, let’s talk about the refinance loan. So this is after the work is done, what are the terms of the loan that we are going to go get? Well, first off, our loan amount is going to be 80% of the $350,000 that we think it’s going to be worth. Most banks will let you borrow around 80%. So let’s take the 350 times 0.8 is $280,000. The interest rate on that loan, we’re going to assume on an investment property is going to be 7.5%. And are there other refinance closing costs? Probably another … Oh, you know what? 5,000. I think I put 5,000 for closing costs to buy the property. Yeah. So we’re going to have another 5,000 when we want to refinance it.Are there any other loans, fees and points? Well, let’s say that if there was, we would wrap them into the loan or you can choose to pay them out of pocket. However you click there is how the calculator’s going to determine extra costs you have for closing costs. This is not an interest only loan, so it’s going to calculate the principle and the mortgage and it’s going to not have PMI because we’re leaving 20% of the equity in the deal by only pulling out 80%. When it asked you how to amortize it, we always want to use 30 years. That’s the best loans to use. And we can skip this typical cap rate for the area. That’s more for commercial property. So we’re going to hit next step.Total gross monthly rent. Well, we calculated this and each unit we thought would rent for $1,600 okay. So that means it’s going to be 3,200. Now, if you don’t know how to calculate what the rent’s going to be, when we clicked on tools and went to BRRRR calculator, you can also just go to Rent Estimator and BiggerPockets has an actual software tool that will look up the address of the property you’re looking at and tell you approximately how much it will rent for a month. And then other monthly income. This is where you would put any information if the tenant’s paying you for laundry or something else. In this case, they’re not going to be.Fixed landlord paid expenses. Some areas require landlords to pay the water, the sewer, the electricity, the garbage, or maybe they don’t always require the landlord to pay it, but it’s written into the lease that the landlord will pay that. Not the case in most areas though. So most people where you’re living, the tenants are going to pay for their own water, sewer, electric, garbage. Now, they wouldn’t pay the HOA fee, but they might have renter’s insurance, so you don’t have to worry about that when you’re the landlord in most cases. The property taxes … We might have done something wrong. Yeah, I guess we calculated them at 220 a year. I don’t think that’s right though. I think we need to fix that. It should probably be 220 a month I’m going to guess. So that’s okay. We will click on previous step.Okay now this will happen and it happens for the best of us when we’re analyzing properties where we either enter the wrong information or we make a mistake. The BiggerPockets calculators make it very easy to fix that. So the property taxes are $220 a month. I put them in as $220 a year. That $220 a month, it actually comes out to 2640. So I’m just going to change that number, make that 2640. Then I’m going to click on the next. Here we go. We’re just going to pick up right where we left off. Don’t have to worry about any of these fixed landlord paid expenses. The variable landlord paid expenses we will have to pay. Now, this is where we budget money for things that could go wrong. So we know at some point we’re not going to have a tenant in the property, so we’re going to have a 5% vacancy.That means we’re going to take 5% of the rent and we’re going to budget that for times when nobody is renting our property. We do the same thing for repairs and expenses. We typically take 5% of the rent. We say that’s how much we’re going to put towards things that break in the house. Capital expenditures are when you set money aside to pay for big things like the roof going out, the air conditioner going out, the water boiler. Big expenses of things that are going to break so we can budget money for that. And then if you have a property manager like you’re not managing the property yourself, you set money aside for management fees. In this case, at this rent range, probably around 8% is what you can expect to pay. That’s about it folks. As I’ve walked you through how to do this, it’s still only been about five minutes of time it took to run through this entire thing, so let’s hit calculate results.All right. Now the calculator does all the work and gives us the results. This is 123 Main Street in Denver, Colorado, a four bedroom, three bathroom property with two units, one up, one down each renting for $1,600 that we purchased for $220,000. Let’s see what the numbers look like here. Now, that $286.20 of cash flow may not sound super impressive. However, I want you to consider that that is an infinite return. What that means is we pulled more money out of this deal than we put into it and it still cash flowed. Now, that may seem too good to be true, but those of you that understand the BRRRR method get it’s not. Now, let me break that down for you. Remember, we paid $5,000 in closing costs. We see this on the left-hand column. We had estimated repairs of $50,000. The total cost, what we paid for the house plus the repairs, plus the closing cost was 275,000, and then we had an after repair value of 350, which means when we got an appraisal after this was done, the bank said it’s worth $350,000.They’re going to give us a loan for 80% of 350,000, which is the same as if we bought it and put 20% down. To the bank it doesn’t matter if it’s equity in the deal or if it’s money that you bring to the closing table. They just care what percentage of the property’s value they’re giving you the loan for. So in this case, we got a loan after we were done for 280,000, but remember the total project cost was 275,000. They gave us 280, which meant they gave us five grand more than what we put into this deal. We ended up with more money after we did the deal because we bought it at such a good price and because we added value through the rehab so well. Which means our cash on cash return cannot be calculated because it’s infinite. There is no cash left in the deal. In fact, we got cash out of the deal and we’re left with $286 a month of cash flow. This is how people like me took the same money and kept reinvesting it and reinvesting it and reinvesting it over and over and over, adding more properties to our portfolio with the same capital.Okay. So you’ve added some equity to your net worth. You’ve added some cash flow every month. You’ve got your money back. You can go buy another property. And if you’re someone that likes numbers, if you scroll down on this calculator, you can see what your total annual income would likely be in year one all the way through year 30, assuming that rents or property values go up by two to 3% a year. All of this is made very easy by these BiggerPockets calculators, so if you’re intimidated by numbers, you don’t have to be, you just have to know where to find them and how to put them in the box and the calculator will do all the work for you.Okay. Let’s get back to our presentation here now that you’ve seen just how simple it can be to analyze a BRRRR possible project. Now, here’s something that’s cool. Even if you are not a pro member, if you just have a BiggerPockets profile, you will get your first five calculator reports for free. So you can use that calculator anytime you want up to five times just for having a BiggerPockets profile. Two simple questions I want to ask you. Do you understand how BRRRR can help supercharge your investing journey? Does it make sense why this supercharges how quickly you acquire properties? It’s because you’re not saving $85,000 and putting a down payment. Saving $85,000 and putting a down payment. Taking equity from a property and putting into the next one, and then being no more equity to invest. You are putting money into properties, growing money within the property you just bought because you bought it for less than what it’s worth, and you added value through the rehab, taking that money out of the property and then buying the next one. That supercharges how quickly you can acquire properties, and this works best if you’re making and saving money all at the same time that you’re doing these projects.Do you believe that if you have commitment, knowledge, and tools that you can reach your investing goals? Now, you can’t do it without that. If you don’t have the knowledge to do this, it’s not going to help. And if you don’t have the tools, you can have the best intentions, but you’re not going to get anywhere. If you don’t have the commitment that you’re actually going to commit to doing this and go through … Well, you could have the knowledge and the tools and it’ll be useless. You really need all three. And as you’re listening to this, I just want to ask, do you have all three? Are you committed to putting your money into real estate so it can grow and spending less of it on things you don’t need? Are you committed to gaining the knowledge that you need and listening to more webinars like this, more podcasts like this, more books like this so you can do what I did? And are you committed to getting the tools that you’re going to need in order to take this commitment and this knowledge and put them into practice? If you really want to do something, you’ll find a way, and if you don’t, you’ll find an excuse.Now, you guys can tell me maybe in the chat, yeah, David, I’m committed or no, I’m not committed. But you know what’s crazy? Even if you didn’t tell me, I would know if you were. Because if you are committed, you’ll find a way to get this done, and if you’re not committed, you’ll find a way to make an excuse why you didn’t get this done, and that’s how simple life can be. People don’t become millionaires by accident. People don’t hit financial freedom by accident. People don’t get in good shape by accident. People don’t get six packs by accident. They do it by eating carefully, working out the right way, being committed to a process. Now, if you want to be a financial fitness person, if you want a money six-pack, if you want a portfolio six-pack, you’re going to do certain things to make it happen just like people that are into fitness do certain things to make their body look the way it does.If you answered yes to those questions, let’s look at some tools that are going to help you minimize risk, increase confidence in a deal and blast off into success. The biggest one is going to be BiggerPockets Pro. This will be the best bang for your buck if you’re committed to making money in real estate investing. It is a one-stop shop to start, scale and manage your portfolio. BiggerPockets Pro will allow you to analyze investment properties in minutes and determine which ones are worth pursuing with unlimited access to analysis calculators and rent and rehab estimators. Now, you saw what the BRRRR calculator looks like. There’s also just a traditional rental property calculator. There’s a lot of different tools on there. I only showed you one of them, but there are many.This is an example of what kind of reports you can get when you use the BiggerPockets calculators. They’re very easy to read and very easy to use. There are rehab estimator calculators. So if you’re trying to figure out how much it’s going to cost to do a rehab on a property, we got. You put all the information in there and it’s going to give you the report. It will help you become a better investor with curated video content and webinar replays covering everything that you need to make smart investments. You also get access to pro exclusive videos. Now, BiggerPockets has a lot of free content, but these are videos exclusively for pro members that not everybody else has access to that when you join in, you get to watch these videos. We have a couple examples here on tax benefits, multi-family, private lending. Things that the experts use to grow their portfolios that you can learn about.You’ll get access to the Investing With No or Low Money Down Workshop. This is some of the best content I ever made with my best friend Brandon Turner. We hung out at his shed in Hawaii and we got into some really good stuff, including the BRRRR method for how to invest in real estate with no or low money down. A $200 value, which is yours if you’re a pro member. You’ll get access to the Finding Great Deals Masterclass where Brandon sat down with Elliot Smith, Nathan Brooks, Lance Wakefield, and Nate Robinson, and went over door knocking, direct mail marketing relationships and driving for deals. A $990 value where you can learn from some of the best in the business at their respective strategies only available for pro members as well as the book on the Best Ways to Find Real Estate Deals For Investing Success by Brandon Turner.You get to show the community that you meet business with your pro badge. So this year is Blaine Alger. When you see his profile, you know he’s not just a lurker hanging around looking through the window at the other people working out, but he’s in the gym grinding, sweating, and building a better financial body. You get to save time and money and minimize your risk with lawyer approved lease documents for all 50 states. So you can make that deal we just looked at even better on the numbers by managing it yourself. And if you like to property manage or that’s something that you want to do yourself to save money, we have forms that you can use that are lawyer approved for all 50 states that you can have your tenant sign that will function as a lease. Standard lease agreements.You can save thousands of dollars on tools and services that you’ll use in your real estate business with BiggerPockets partners like RentRedi and Invelo. RentRedi is free property management software for pros. If you’re not pro, you’re going to have to pay for this, but this is some of the best in the business when it comes to managing properties. You’ll also get discounts on AirDNA in case you want to analyze short-term rentals or a Keystone CPA Inc that can help with real estate strategy tax planning. If you use Invelo, when you sign up, you’ll also get a $50 credit for marketing cost to send letters with the Invelo software. Plus you’ll gain access to our discounted 10 week educational boot camps. Those are only available to pro members and they’re only $225 per course, but if you’re not a pro member, you can’t take them at all. This is only for the committed. We’ve got a rookie bootcamp, a multi-family bootcamp, a short-term rental bootcamp, a rookie landlord bootcamp, a house hacking bootcamp, lots of cool stuff there only available pro members.But what’s the number one reason to consider going pro? It works. You’ve got Aaron C. here who’s a BiggerPockets pro member that says, “The BP calcs are my go-to for analyzing potential properties. There’s no way I could analyze the volume of properties I do without being a pro member. I locked up my first three unit almost a year ago that I’m now selling for almost a $70,000 profit that will go towards something larger. The BP calculators were a huge factor in making sure my numbers were right.” Patrick M. says, “Back in June, I attended one of your webinars. Right afterwards, I signed up for pro. In the next couple of weeks I analyzed a bunch of deals. Eventually I found a fourplex. I got it under contract three weeks after signing up for pro and a week later I closed on another property that was six units. Big thank you to you and the entire team. Final quick tip, sign up for pro annual. I made my money back at the closing table.”So how much is BiggerPockets Pro? Well, here’s what’s crazy. It’s only $390 a year. That is less than the cost of a home inspection on a single property. Of all your expenses in real estate, this one is one that barely even makes the radar. It’s almost insignificant compared to the normal expenses that we have when you’re buying a property. You saw the numbers that we were putting into the calculator for buying a property. Closing costs, rehabs. That’s not going to be including the home inspection, the pest inspection, the roof inspection. If there’s a pool, you might have a pool inspection. A foundation. The notary signing. It can be around the same cost as this. Buying property, you’re going to have transfer taxes, you’re going to have title fees, escrow fees.There’s a lot of money that goes into real estate investing, which is what allows you to make money out of it. But the BiggerPockets Pro membership is only $390 a year. And because you’re watching this webinar, we’re going to give you a discount of 20%, which means if you sign up now, it’s only $312 a year. It’s getting ridiculously cheap. I don’t know how BiggerPockets is able to offer this at the price that they do. Maybe I guess it has something to do with the level of commitment that the members have. But this is a very, very, very good price for getting access to everything I just showed you, all the education plus the calculators that help you analyze deals. But you just want to use the code right here on the screen. Use promo code ONREPEAT. That’s O-N-R-E-P-E-A-T. Just because you showed up and showed commitment on this webinar, and we want to thank you for doing that and reward you for having the right attitude.Now, just a reminder, if you sign up for BiggerPockets Pro, you’re going to get the Pro membership plus $2,000 worth of bonuses, 20% off your first year of Pro annual membership, a $78 Value. Pro exclusive video workshops, a $1,500 value. The lease agreements templates, which are about a hundred dollars per state. And you’re getting 50 of them a free rent ready property management subscription, a $239 value. Plus unlimited rehab and rental estimates, analysis, calculative reports, and a profile badge all for signing up. You just got to use the code on ONREPEAT at biggerpockets.com/pro. So I’m going to give you guys a minute while we’re here. I’m going to keep talking so you can still hear me, but I want you to open a second tab. If you’re using Google Chrome, just hit the little plus sign at the top where all your tabs are.And once you’ve opened up that new tab, I want you to type in biggerpockets.com/pro. It’s going to take you to the website where you can sign up for the Pro annual. It’s going to give you a couple options. I want to make sure you get your 20% off, okay. So remember you’re going to click on BiggerPockets Pro annual, and when it asks you for the discount code, there’s a little box, put ONREPEAT. And you should click a button and it should tell you that it worked. I want to make sure you don’t miss out on that discount if you’re serious about wanting to start making money through real estate and you need BiggerPockets Pro to do it. What if you’re already a pro? Well, everything that I just mentioned you already have access to, you might not have known. Just go to biggerpockets.com/pro/videos and you can see everything that we talked about. You can also find the bootcamp info at biggerpockets.com/bootcamp.Now, what if you sign up and you decide you don’t like it? David, I actually need that $312 for the year because that can buy me 70 cups of coffee, and that’s more important than becoming a millionaire in my future. Okay, I hear you. Don’t worry. Give BiggerPockets Pro a try for up to 30 days, and if you don’t love it, you can email [email protected] and get a 100% refund and you can still use everything else on the site. This is a no-brainer, guys. If you’re not already a pro member, you need to go do it right now, and if you are a pro member, you know why I’m saying this is great. Look at all the different people that already love their pro membership. There’s a ton of them. This is why you see the people with the badge on their name that says pro. Mine says premium. Even I’ve set up this with BiggerPockets. You guys can do the same, and I hope that you do.Remember, the late Great Jim Rohn, “If you really want to do something, you’ll find a way, and if you don’t, you’ll find an excuse.” If you want a six-pack, you’ll figure out a way to get it. If you want to be a millionaire, you’ll figure out a way to get it. If you want financial freedom, you’ll figure out a way to get it. I’m just sharing with you the way that I did. I walked myself to the top of the mountain and now I’m going back down to the bottom and I’m telling all the people that are down there looking up, here’s the path that I took. Here’s the way I made the journey. Here’s what I did when it got hard. Here’s how I avoided the poison ivy. I’m just trying to share with you guys the path that I took and I hope that you follow me on that.A BiggerPockets Pro membership is a great way to get yourself started and get on the same journey because you’re going to need these tools just like I did when I was climbing that same hill. So remember, this is over $2,000 worth of value plus the membership for just $312 a year if you use the code ONREPEAT at biggerpockets.com/pro. So if you’re signing up, I want you to tell me in the chat, how many of you signed up and are you excited to start this journey?Now we’re going to get into the expert tips and tricks that I promised you earlier in the show that we would do. First off, you should analyze deals with more than one exit strategy. So let’s say that you looked at this deal that we did in Colorado, this up down duplex, and you buy it and everything looks great, but the rents aren’t 1600 a month. Something goes wrong. There’s a school that shuts down where this property was. This was a great school district, now nobody wants to rent there. Let’s say you’re only able to get $1,100 a month per unit.It may not give you the cash on cash return that you want. It may actually be losing money if that happens. But you’ve added so much equity to this property because you bought it right and you rehabbed it right that you can still sell it to somebody else and make cash that way. That’s an example of a second exit strategy. Maybe you thought, “Hey, I’m going to buy this thing and I’m going to put it on Airbnb and I’m going to get way more than 1600 a month,” and so you go into it and it just doesn’t work. It’s harder than you thought. The neighbors complain, the city shuts you down. Something goes wrong with your Airbnb plan. Okay. Rent it out traditionally for $1,600 a month and boom, you got a second exit strategy. This is something that the pros all do.Target aspects of the rehab that increase the value of their property for the appraisers. Flooring and paint are two very, very powerful ways to get a high ROI on the money you spent to make a property look much nicer. Landscaping is another way that you can really impress appraisers that you don’t need to hire skilled labor for. It’s not like paying an electrician to go do landscaping. You can find people that will do that work for relatively cheap or you can do it yourself. And then focusing on the kitchen and then the master bathroom is huge. And the last piece of advice is making it an open floor plan. Tearing down walls so that the property feels more open, makes it more valuable.Choose cost-effective value adds to increased ARV. One of the things I talk about in Long Distance Real Estate Investing is if you’re going to be doing a small area like tile in a shower, flooring in a bathroom, backsplash on a kitchen, I splurge for the really expensive materials to make it look really nice. And the trick is I don’t need very much of those materials. So even though I’m paying five times as much for the materials, my budget’s only going from say, $300 to $1,500, which isn’t that bad when you consider that the labor is going to be the same whether I use cheap materials or not, and labor’s a bigger part of the overall cost. So if I’m redoing a shower, the quote might be $8,000 for labor. So I can either pay 8,300 and use the cheap stuff, or I can pay 9,500 and get a beautiful shower.The difference between 8,300 and 9,500 is insignificant, but the difference between a gorgeous shower and a plain basic model is going to hurt my appraise value. Does that make sense? Now, if it’s a material that I need for the entire property, the flooring for the whole house, I’m not going to buy the stuff that’s five times more expensive because if I have to buy a lot of it, that’s going to wreck my budget. So I only use this tip and this trick for when I’m doing something in small amounts. Building a good relationship with a hard money lender because you never know when the deal’s going to pop up and you want to be able to fund it quickly. You can reach out to me and I will put you in touch with my mortgage company, or you can go to biggerpockets.com and click on network and you can look for hard money lenders that are approved by BP, or you can just attend meetups. Or you can go on the forums and ask people, do you have a good hard money lender? Sometimes you’ll see HML is the acronym that people will use for that. But finding one will make it easier to fund deals when you have to close quickly.Have your rehab budget laid out when you’re analyzing your deal. So as you’re looking at the property itself, make sure you have a good understanding of what it’s going to cost to fix it up. In the example, we knew that the rehab was going to be $50,000, but it’s hard to make an offer on a house if you don’t know if it’s going to be 50K or 150K. Have your final financing in the works early in the rehab process to cut down on your fees. So what I would do is I would go to The One brokerage, I would get pre-approved for my refinance once it’s done, then I would use different funding to buy the property and fix it up, and then I’m already pre-approved when it comes time to do my refi so it’s going to be easy and I’m already approved. You don’t want to get stuck paying a hard money loan and unable to refinance out of it. Always add an overage for your budget for contingencies. Assume things are going to be more expensive than what you thought and give yourself a cushion.All right, guys, those are my expert tips and trick for you. I’m excited to see you guys on your journey. Let me know if you went pro on BiggerPockets. It’s the best ROI you could possibly get in your career. I don’t know of a better deal that’s out there. I don’t know why it’s only $312, but I like it. Sometimes I don’t understand why Netflix is so cheap, but I know that I get a lot of value out of that Netflix, right? I end up spending six cents for every time that I watch it. Some things in life are like that, and you just got to take advantage of them.So thank you for joining me today. I really appreciate being able to teach you guys, and I hope that all of you take this information and go apply it to make your lives better. Remember, you could follow me on social media at David Greene 24. There’s a E at the end of Greene. Look for the check mark so you know that it’s actually me. You can follow me on YouTube at youtube.com/@DavidGreene24. I go live every single Friday night on my YouTube channel to take your questions. Or you can check out my website, davidgreene24.com to see all the different things I have going on and how I can help you. When you’re done with this, either listen to another webinar, listen to one of our podcasts, or go to biggerpodcasts.com, go to the website and check out everything that we have to offer you there as well. Thanks a lot. I will see you guys on the next one. Good luck to everyone.