«Acheter, réhabiliter, louer, refinancer, répéter» simplifié | Immobilier

Brandon: C’est le spectacle 327 du podcast BiggerPockets. Il est temps de passer à BRRRR.

«David: Ils disent que la nécessité est la mère de l’invention et c’était mon problème, j’ai regardé ma vie, je perds ma vie en ne faisant que travailler pour gagner cet argent et investir dans l’immobilier. Comment puis-je le faire différemment? BRRRR était mon comment? Plutôt que de devoir travailler des heures folles pour gagner cet argent, j’ai simplement fait travailler mon argent pour moi. »

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Brandon: Qu'est-ce qui se passe tout le monde? C'est Brandon Turner, l'hôte du podcast BiggerPockets. Ici avec l'homme, le mythe, la légende, M. David Greene. David Greene. Bienvenue au spectacle, mec. Heureux de vous avoir ici.

David: Merci mon ami. Merci beaucoup. Il n'y a nulle part où je préférerais être.

Brandon: Bien bien. Eh bien, le spectacle d’aujourd’hui, j’espère que non parce que vous êtes l’invité. Non seulement l'hôte invité ou le coanimateur, vous êtes les invités, coanimateur, intervieweur, personne interrogée, je ne sais pas. Est-ce l'interviewé ou l'intervieweur? Je ne sais pas. Vous êtes le gars que j'interviewe aujourd'hui dans la série. Nous allons parler de BRRRR.

David: Au cours de cette heure, j'ai complété mon CV en ajoutant 12 choses différentes, comme vous venez de le dire, très efficaces. Tout comme la méthode BRRRR.

Brandon: Très efficace. C’est ce dont nous parlons aujourd’hui, c’est que nous allons passer par la méthode des bermes. Regardez, voici le deal. Les gens, comme on en parle depuis un certain nombre d’années chez BiggerPockets depuis cinq ans, non? Les gens aiment la stratégie, adorent cette stratégie. J'ai construit mon portefeuille dessus, David a construit son portefeuille dessus. Mais le problème est que beaucoup de gens ne comprennent toujours pas. Ils ne comprennent pas toutes les règles derrière cela, comment cela fonctionne, les dangers, il y a certaines choses qu'il est vraiment important de connaître.

Nous nous sommes dit pourquoi ne pas faire une émission qui soit comme ici est tout ce que vous voudriez savoir sur l’investissement de BRRRR dans un podcast, et voilà. Ainsi, à l’avenir, lorsque les gens diront: «Eh bien, comment puis-je mieux BRRRR?». Nous écoutons l’épisode 327 du podcast. Oh, et David a également écrit un livre sur l’investissement dans le BRRRR, dont nous parlerons aujourd’hui. Il y a ça, mais je ne sais pas, David, vous voulez parler de quoi que ce soit avant que nous entrions dedans?

David: Non, car tout ce qui nous empêche de parler de la méthode de l'oiseau n'est qu'une perte de temps. C'est l'avenir de l'investissement immobilier ici.

Brandon: Eh bien, j'allais vous parler de ma petite fille, Rosie, mais si c'est juste une perte de temps, c'est bien. Si tu veux entendre parler d'elle.

David: Nous pouvons parler de Rosie, mais en général, vous perdez simplement notre temps à parler de vos éruptions cutanées étranges ou de ce que vous êtes en train de déranger. Votre goût étrange dans les vidéos de musique.

Brandon: Ça va. Je n'ai pas de goût bizarre. Je ne regarde pas du tout de vidéos musicales, n'est-ce pas?

David: Je préférerais manger Randy?

Brandon: Ok, je préférerais manger Randy. Tu as raison. C'est le meilleur.

David: Trouve-moi un être humain qui ne dit pas que c'est bizarre.

Brandon: Non, trouve-moi un être humain qui ne rit pas hystériquement en regardant. Rendez-vous sur YouTube plus tard et recherchez Je préférerais manger Randy et regarder la vidéo de musique «Je préférerais manger Randy, c’est la meilleure chose qui soit.

Brandon: Très bien, avant d’investir dans BRRRR, entendons le mot du sponsor de l’émission d’aujourd’hui. Bon, les gars. Le printemps est arrivé, le soleil est dehors et devinez quoi? Plus important encore, la fin avril signifie que la saison des impôts est enfin terminée. Yay. Vous pourriez même avoir un remboursement. Regardons les choses en face, la saison des impôts est la pire, en particulier pour les propriétaires, car nous calculons le loyer, les dépenses, l’amortissement et les zombies sur les feuilles de calcul et les reçus. C’est pourquoi je suis heureux d’avoir trouvé Rentec Direct, car le cauchemar apocalyptique de la gestion immobilière est enfin facile.

Rentec Direct simplifie non seulement considérablement les impôts, mais optimise l’ensemble de votre processus, des listes de postes vacants aux paiements en ligne, en passant par les applications, et la sélection des locataires. La gestion des propriétés peut être facile et vos locataires vont adorer les outils en ligne que vous leur fournirez. Ecoute, je sais à quel point il peut être pénible de recevoir une pile de reçus et un tas de papiers à fouiller.

C'est tellement mieux d'avoir une solution numérique comme Rentec Direct. Croyez-moi, cela simplifiera votre activité et vous évitera beaucoup de stress. Voici ce qu’il faut faire en ce moment, n’attendez pas que la saison des impôts de l’année prochaine se termine. Rendez-vous sur RentechDirect.com/pockets pour économiser 20% sur votre abonnement Tech Rent. C'est RentechDirect.com/pockets. Faites de 2019 l’année où vous optimisez votre entreprise avec Rentec Direct. Allez sur RentecDirect.com/pockets pour économiser 20% dès maintenant.

Brandon: Très bien, avec cela, voyons l’émission d’aujourd’hui sur les investissements de BRRRR. Comme je l'ai dit, nous n'avons pas d'invité aujourd'hui. Notre invité est également notre co-animateur, M. David Greene. L'auteur du livre flambant neuf, Buy, Rehab, Rent Refinance, Repeat. La stratégie d'investissement dans l'immobilier locatif de BRRRR simplifiée. Si vous regardez ceci sur YouTube en ce moment, vous pouvez voir que je tiens le livre. Mais David a essentiellement écrit le livre, le livre, le livre sur les investissements de BRRRR. C'est étonnant. Vous pouvez l'obtenir à BiggerPockets.com/BRRRRbook. C'est BRRRR avec quatre Rs. Nous en reparlerons plus tard, mais je souhaite simplement passer directement aux investissements de BRRRR. David Greene, pour ceux qui ne vous connaissent pas, donnez-nous une vue d'ensemble de 30 secondes sur qui vous êtes, pourquoi enseignez-vous à cette histoire de BRRRR votre histoire et votre couleur préférée, partez.

David: 30 secondes. J'aime le noir parce que je suis…

Brandon: Je ne me soucie pas vraiment pourquoi.

David: Très bon point. Je vous remercie. Super d'être là. Je suis un ancien officier de police qui a travaillé d'arrache-pied pour acheter tout un ensemble d'immeubles locatifs parce que je suis tombé amoureux de l'investissement immobilier.

Brandon: Aimez-vous vraiment le noir? Est-ce vraiment votre couleur préférée?

David: C'est de loin ma couleur préférée, tout est plus froid en noir. Ma voiture idéale serait noire, tous mes vêtements sont noirs.

Brandon: Je ne le savais pas. C'est d'accord. Bon, continuez. Bureau de police, noir, allez.

David: J'ai travaillé beaucoup d'heures. J'ai réalisé que c'était en train de me tuer et que c'était très dur pour ma vie. Je travaillais cent heures par semaine et dormais dans ma voiture plusieurs fois par semaine pour travailler autant que je pouvais économiser de l'argent et acheter de l'immobilier. J'ai découvert ou plutôt entendu d'autres personnes parler de la stratégie de BRRRR. J'ai vendu une de mes propriétés, j'utilise le produit de la vente pour acheter une nouvelle propriété dans une autre et j'ai refinancé 100% de mon argent. En fait, j'ai refinancé environ 15 000 $ ou 20 000 $ de plus que tout l'argent que j'avais investi et j'avais un BRRRR très réussi, puis j'ai commencé à utiliser uniquement la stratégie de BRRRR.

Au lieu d'acheter environ deux propriétés par an, ce que je pouvais me permettre et j'économisais de l'argent et versais un acompte important, puis beaucoup d'argent dans la réhabilitation, j'ai simplement recyclé le même argent encore et encore et en moyenne deux propriétés par mois. La taille de mon portefeuille a été incroyable. J'ai très bien investi dans l'immobilier parce que je le faisais si souvent. J'ai commencé à maîtriser tous les aspects de l'immobilier, puis à devenir la côte, le podcast BiggerPockets et le meilleur ami du charmant Brandon Turner.

Brandon: Wow, c'est toute l'histoire. En passant, il s’agissait de plus de 30 secondes, nous devrons donc l’éditer. Dave, Dave est notre éditeur, je plaisante. Je rigole. Non, mais Dave est génial au fait. Tout le monde a dit bonjour à Dave Messiah. Quoi de neuf, Dave? Bien. Je suppose que les gens ne peuvent pas réellement parler sur un podcast.

David: Est-ce que tu m'as chronométré ou est-ce que tu dis simplement que c'était plus de 30 secondes?

Brandon: Je n'ai aucune idée.

David: Tu fais toujours ça.

Brandon: Bien. Entrons dans BRRRR. David, tout d’abord, pouvez-vous expliquer, nous allons donner un aperçu général des investissements de BRRRR, puis nous allons utiliser le reste du podcast d’aujourd’hui pour chaque partie de BRRRR. Est-ce un acronyme? Est-ce ce que nous appelons? C'est un acronyme.

David: C'est exactement ce que c'est.

Brandon: D'accord, bien. Je ne suis pas bon en Anglais. Nous allons parcourir le reste de l'acronyme BRRRR un par un, mais commençons par en avoir un aperçu. Lorsque nous parlons d’investissements BRRRR, c’est une phrase étrange, qu’est-ce que cela signifie? Ensuite, nous allons en passer en revue les avantages. Mais d'abord, qu'est-ce que c'est?

David: BRRRR est un acronyme qui signifie Acheter, Rehab, Louer, Refinancer et Répéter. Il a été inventé par nul autre que le tristement célèbre Brandon Turner, car il est très doué pour proposer des noms intelligents. En fait, le livre lui est dédié parce qu'il m'a laissé écrire un livre sur un sujet qu'il a créé. C’est ce que cela représente et c’est vraiment l’ordre dans lequel vous investissez dans l’immobilier, non? Ce n'est pas une arnaque. Ce n'est pas quelque chose comme un algorithme top secret que seule une personne très intelligente peut comprendre. Vous changez simplement d’investissement dans l’immobilier afin de maximiser l’efficacité.

Brandon: Pouvez-vous nous donner un peu comme une sorte d’histoire rapide d’un BRRR parfait? Un hypothétique ou un réel que vous avez fait.

David: D'accord. Vous allez ou vous achetez une propriété avec une VDA de 120 000 $. Une valeur de 120 000 $ lorsque vous avez terminé, ce qui correspond à la valeur de réparation, non? Une fois que vous êtes capable de… Cette propriété est dans un état déplorable. Il est juste arraché du sol, non? C'est comme une image d'un problème.

Brandon: Avez-vous fabriqué ça? Déchiré du sol.

David: Quand les choses riment, les gens s'en souviennent.

Brandon: J'aime ça. C'est un peu comme le noyau de quatre de votre dernier livre.

David: C'est exactement ça. Personne ne discutera jamais avec vous si ça rime. Ils ont juste accepté comme vérité. Je n'aime pas que les gens se disputent avec moi. Bon, si vous achetez la maison, elle vaudra 120 000 $. Vous payez 60 000 $ pour cela parce que tout va si mal et que vous obtenez une très bonne affaire. Vous avez probablement dû payer en espèces pour pouvoir le faire, car souvent ces maisons sont dans un si mauvais état que vous ne pouviez tout simplement pas l'acheter si vous en aviez besoin pour obtenir un prêt. Ensuite, vous dépensez environ 30 000 $ pour réparer cette maison. C'est votre budget de réadaptation, n'est-ce pas? Pour 30 000 $ et beaucoup de ces marchés dans lesquels j'investis, comme dans le Sud et le Midwest, où l'on trouve 1% de propriétés, 30 000 $ vont vraiment très loin. Si vous écoutez cela à Seattle, vous vous dites: "Oh, ça me ferait acheter des toilettes". Mais dans certaines de ces zones, je veux dire, c’est presque la rénovation totale d’une maison, y compris le toit, d'accord? Maintenant que vous avez cette maison qui a été complètement rénovée, je devrais trouver quelque chose qui rime comme réparé de quelque chose qui rime avec réparé et vous dépensez un total de 90 000 $, non?

Cela pourrait être votre propre argent, cela pourrait être de l'argent de votre 401k, pourrait être vous et quelques amis ont mis en commun votre argent, peu importe la façon dont vous le faites. Vous allez dans une banque et vous dites «Hé, j’ai cet actif d’une valeur de 120 000 dollars», ainsi que les ordres et évaluations bancaires pour vous assurer que vous avez raison et que vous l’êtes. Ensuite, ils vous permettent d’emprunter un pourcentage de cet actif, ce qu’ils appelleraient le ratio prêt / valeur. La plupart des banques vous laisseront emprunter 75% de la valeur d’un actif. Dans ce cas, 75% des 120 000 $ représentent 90 000 $, ce qui, comme par hasard, correspond exactement au même montant que vous avez investi dans cette transaction. Vous récupérez 100% du capital que vous avez investi et vous vous retrouvez avec une propriété qui a été complètement liquidée, de sorte que vous n'aurez aucune dépense en capital à payer, mais des frais de maintenance pendant une très longue période. Vous avez alors vos 90 000 $ avec lesquels vous pourriez acheter votre prochaine maison, ce serait le BRRRR parfait.

Brandon: Agréable. D'accord. Nous allons plonger dans chaque partie de cela. Je sais que les gens disent: «Eh bien, je n’ai pas 90 000 dollars en espèces», ou «je ne peux pas faire cela» ou «je ne peux pas trouver une maison d’une valeur de 50 000 dollars dans ma région, ou 60 000 dollars. J'arrête, je vais éteindre. Reste avec nous. Comme ça marche, comme BRRRR c'est cool parce que ça marche au centre-ville de Detroit où vous pouvez acheter une propriété pour six dollars et un paquet de cigarettes. Ou vous pouvez acheter, je veux dire, comme je complexes d'appartements BRRRR, n'est-ce pas? Ce genre de concept provient de ce que les propriétaires d’appartements font tout le temps, gros investisseur en appartements.

Cette échelle incroyablement grande. Je veux dire, vous pouvez acheter une propriété de 100 millions de dollars, y consacrer 50 millions de dollars, puis la refinancer pour récupérer ces 150 millions de dollars, car cela représente une valeur de 200 millions de dollars, n'est-ce pas? Comme ne pas paniquer si vous êtes comme je n'ai pas l'argent ou l'emplacement, cela fonctionne partout, tout le temps, n'importe où, si vous le faites bien. J'ai découvert que… je suis tombé sur BRRRR. Vous avez fait votre premier type de l'un de vos premiers projets, moi aussi. J’ai essayé de retourner une maison et elle ne s’est pas vendue parce que le marché s’est effondré, c’était comme ’08. Je me suis dit "Oh merde, que dois-je faire?" Je ne peux pas vendre cette propriété, non? Mes chiffres sont très similaires. Je l'ai acheté pour environ 50 000 $, j'y ai investi 40 000 $, donc 90 000 $.

Il a coûté 130 000 dollars. Parce que je ne pouvais pas le vendre parce que le marché était vraiment, et je me suis dit, eh bien, j'aurais probablement pu continuer à baisser mon prix, mais au lieu de cela, je suis allé à la banque et je me suis dit: 'Hey, j'ai eu cette propriété avec 130 000 $ , puis-je obtenir un prêt de 90 000 $? Ils sont comme, "Ok, pas de problème. Et voilà. Ils m’ont octroyé une belle hypothèque fixe de 30 ans sur cette propriété. J'étais comme si j'avais utilisé un prêteur d'argent dur pour l'acheter et comme un partenaire pour financer la réadaptation, de sorte que je n'avais même pas d'argent au départ. Mais ensuite, je dois rembourser mon partenaire et le prêteur d’argent fort. C’est pourquoi je peux maintenant utiliser leur argent et je me suis dit: "Oh, c’était vraiment génial." . Ensuite, 10 ans plus tard, nous l’avons inventé BRRRR.

David: Eh bien, vous avez également ajouté 40 000 $ à votre valeur nette d'un seul coup.

Brandon: Oui.

David: Ce dont on ne parle pas tout le temps mais c'est assez puissant.

Brandon: C'est correct? En fait, j'aime bien… Je ne parle pas beaucoup de cela parce que j'ai rendu toute ma famille et mes amis bizarre, mais j'ai atteint le million de dollars en équité à l'âge de 30 ans. Je veux le faire à 30 ans, j'étais à 30 ans. C'était comme 30 ans et demi ou quelque chose comme ça. Mais quand j'ai regardé pourquoi j'ai fait cela, je veux dire que c'était entièrement à cause de la stratégie du BRRRR. Je veux dire tout à fait parce que chaque fois que je BRRRR, je gagnerais 20 000 $, 30 000 $, 40 000 $, 50 000 $ en actions. Ensuite, lorsque je l'ai fait dans mon appartement, j'ai gagné 200 000 $ en équité. Comme chaque propriété que je voudrais BRRRR, j'ai commencé à gagner plus d'équité. Puis, lorsque le marché a commencé à grimper, les capitaux propres ont commencé à augmenter car maintenant, j'ai de très belles propriétés et de très beaux quartiers. Boom, ma valeur nette est passée par le toit. Oui, bien sûr, le marché pourrait s’effondrer et me laisser tomber, c’est bien. Mais BRRRRworks et moi adorons ça. Laissez-nous entrer dans certains des avantages de BRRRR. Pouvez-vous présenter comme certains des avantages de faire des investissements dans le BRRRR par rapport à d’autres?

David: Hé bien oui. Le premier avantage est que cela augmente votre retour sur investissement, le ratio de retour sur investissement.

Brandon: C'est trop compliqué, c'est trop compliqué. Je vais essayer de… Où est mon podcast Joe Rogan?

David: Invitons Josh Dorkin à comprendre mes concepts de haut niveau. Cela dépasse les capacités de Brandon.

Brandon: Oui, clairement. D'accord, d'accord, continue. Augmentez votre retour sur investissement, que voulez-vous dire?

David: Vous pouvez améliorer votre retour sur investissement de deux manières, car deux indicateurs le composent. Pour calculer votre retour sur investissement, vous prenez tout l'argent qu'un investissement vous rapporte en une année et vous le divisez par combien d'argent vous avez investi. Vous pouvez augmenter votre retour sur investissement en augmentant le montant que vous gagnez en un an ou en diminuant le montant que vous investissez. Maintenant, si vous êtes propriétaire d’immeubles locatifs, vous savez qu’il est très difficile d’augmenter vos revenus annuels, car c’est principalement en augmentant les loyers, et vous ne pouvez les augmenter que dans la mesure permise par le marqueur. Cela signifie que vous n’avez pas beaucoup de contrôle sur cela.

Ce que vous contrôlez beaucoup, c'est combien d'argent vous laissez dans une transaction et c'est là que la méthode BRRRR est si importante. Parce que dans cette affaire que vous venez de décrire, Brandon, si vous aviez laissé 85 000 $ à la place de cette transaction ou si vous aviez récupéré 85 000 $ au lieu de 90 000 $. Peut-être que vous devez laisser 5 000 $ de votre propre argent dans cet accord. Mais ce chiffre est si petit que votre retour sur investissement aurait explosé. Cela fait que votre argent travaille très très dur pour vous, alors que vous travaillez très dur pour que votre argent investisse ensuite dans l'immobilier, ce que je faisais en tant que flic.

Brandon: Oui. Voici un bon moyen d’expliquer le retour sur investissement aux gens, parfois, s’ils sont un peu confus, comme si je vous le demandais David, hé, 500 dollars par mois, est-ce un bon retour pour un bien locatif? Aimeriez-vous 500 $ par mois? Eh bien, la question est, cela dépend de combien vous avez investi.

David: Oui c'est vrai.

Brandon: Oui. Par exemple, si vous investissiez 10 millions de dollars et que vous gagniez seulement 500 dollars par mois, ça serait nul, non?

David: C'était terrible.

Brandon: Droite. Mais si vous investissez 1 000 dollars et gagnez 500 dollars par mois, est-ce un bon investissement?

David: C'est incroyable.

Brandon: Toute la journée, non? C'est toute la journée, c'est un investissement incroyable, non? ROI dit simplement: faites-vous une bonne quantité de profit en fonction du montant que vous investissez? Je veux dire que les gens veulent toujours comme une formule ou un nombre. Avez-vous comme quoi un retour raisonnable sur un bien locatif normal? Par exemple, avez-vous des chiffres que vous pouvez lancer aux gens?

David: Oui, je reçois habituellement un rendement de 12% lorsque je déposais simplement un acompte sur une maison et que je participais à la réadaptation.

Brandon: Oui moi aussi. 12% est un peu mon minimum. Si je fais juste un versement initial, je peux obtenir 12%, je dirais que oui, c'est très bien. Maintenant, j'ai proposé 12% simplement parce qu'il s'agit du double du marché boursier. C'est ma manière vraiment anti-scientifique. J'étais comme le double du marché boursier, mais je ne sais pas s'il y a un meilleur, je ne sais pas s'il y a une moyenne nationale pour laquelle les gens tirent.

David: Cela sonne exactement comme quelque chose que vous faites réellement comme note secondaire parce que vous obtenez deux fois plus bon que tout autre homme. Oh, eh bien, j'aurai probablement deux fois ce que ces bozos pourraient avoir et c'est génial.

Brandon: C'est plus comme si je mettais tout le travail dur, si je voulais obtenir 6%, je pourrais aussi bien le donner au marché boursier. Qui se soucie, non? Je veux, pour tout le travail que je fais dans l'immobilier, je veux obtenir un meilleur rendement. Maintenant, ce que j’ai trouvé avec les investissements de BRRRR, c’est parfois que je peux obtenir un rendement de 20%, 30%, 50%, cent milliards de pour cent, non? Cela dépend, car si j'investis un dollar, totalement, si j'ai 1 $ investi dans une transaction et qu'en fin de compte, je gagne 10 000 $ par an en cash-flow, c'est un assez bon rendement.

David: Et si vous n'aviez pas d'argent dans la transaction? Vous avez tout sorti. Ou si vous aviez plus d'argent que ce que vous avez investi? Par exemple, je ne sais même pas quelle mesure exactement pour mesurer cela. Vous brisez les échelles de création de richesse avec la méthode BRRRR lorsque vous le faites bien.

Brandon: Bien. Nous parlerons de la façon de l'obtenir et de tout votre argent, mais d'abord, qu'est-ce que cela signifie? Je pense que c'est en quelque sorte lié à Je pense que votre deuxième avantage principal de BRRRR est. Quel est le deuxième avantage?

David: Deuxièmement, cela augmente la vélocité de votre argent. Maintenant, la vitesse de la monnaie est un terme que les économistes utilisent quand ils parlent principalement du produit intérieur brut du pays, de ce PIB. Ce qu’ils disent est comme de l’argent en circulation, combien de fois change-t-il de mains? Plus ce chiffre est élevé, plus l’économie est en bonne santé, car chaque fois que de l’argent change d’argent, des impôts sont perçus, pas vrai? Le gouvernement veut que l’argent change fréquemment de mains, une vitesse élevée parce que l’on perçoit plus d’impôts, ce qui constitue un revenu pour le gouvernement.

Maintenant, nous ne sommes pas le gouvernement. Nous voulons suivre ce même principe et l'appliquer à notre propre philosophie de création de richesse et à notre vie personnelle: si je peux prendre un capital déterminé, l'investir dans une propriété, le récupérer et l'investir à nouveau. Plus vite je pourrai faire cela, plus ma vitesse d'argent sera élevée, plus vite je construirai ma richesse. Maintenant, l'exemple que vous venez de donner, où vous avez acheté une place pour vous, coûte 90 000 $, et il a évalué le montant de 130 000 $, je crois que c'était.

Brandon: Oui.

David: Vous venez de faire 40 000 $ à votre valeur nette, non? C'était avec 90 000 $, non? C'était presque 50% de l'argent que vous avez dépensé. Vous avez ensuite ajouté cela à votre valeur nette et récupéré votre argent, ce qui signifie que vous pouvez le faire à nouveau. Si vous pouviez le faire deux fois par an, non? C'est 100% de retour sur le même 90 000 $. Ce n'est même pas 90 000 $ que vous laissez dans un accord et ne revenez pas. Plus vite vous pouvez envoyer ces 90 000 dollars et le faire revenir avec une fortune de 40 000 dollars, plus vite vous pourrez créer de la richesse. Nous appelons cette vélocité de l'argent et la méthode BRRRR vous permet de le faire, car vous pouvez récupérer la totalité ou la plus grande partie de votre capital si vous le faites correctement.

Brandon: Oui j'adore ça. Les gens me demandent souvent pendant les webinaires ou lors de rencontres similaires. C’est comme: «Vous savez, Brandon, je n’ai que 30 000 dollars.» «Je n’ai que 20 000 dollars.» «Je n’ai que 50 000 dollars». Oui, je peux aller acheter une propriété avec cela, peut-être que je serais alors coincé pendant cinq ou dix ans, ce qui permettrait d'économiser plus d'argent, car leur vitesse de transfert est si lente à ce moment-là. De cette façon, c'est comme ce que je fais à ce sujet? Oh, c'est facile. Allez-y, BRRRR, récupérez vos 50 000 $, 30 000 $, 40,00 $, puis recommencez-le et recommencez-le jusqu'à ce que vous accumuliez suffisamment de liquidités et que vous disposiez maintenant… Vous pouvez économiser sur de plus grandes affaires et vous pouvez commencer les appartements BRRRR ou ailleurs. Vous pouvez sortir de. Vous pouvez quitter votre emploi, vous pouvez obtenir la liberté financière en moins de 20 ou 30 ans. Vous pouvez le faire en trois, cinq ou dix ans si vous êtes BRRRR, non?

David: Oui.

Brandon: Si vous, oui.

David: C'est en fait quoi. Ils disent que la nécessité est la mère de l’invention et c’est mon problème. J’ai regardé ma vie et dit: «Je perds ma vie en ne travaillant que pour gagner cet argent et en investir dans l’immobilier. Comment puis-je faire les choses différemment? ’BRRRR était mon comment? Plutôt que de devoir travailler des heures folles pour gagner cet argent, je me suis contenté de faire travailler mon argent pour moi.

Brandon: Voilà. Bon, numéro trois, qu'est-ce que tu as?

David: Numéro trois. Ceci est probablement la base, le fondement du livre, est que la répétition construit la maîtrise. Vous voulez être bon dans ce que vous faites et vous ne pouvez pas être bon dans quoi que ce soit si vous ne le faites pas très souvent, non? J'ai fait de la planche à neige au total sept fois sur une période de 12 ans, d'accord? Je n'ai jamais été bon en snowboard. Je suis juste assez bon pour pouvoir justifier de partir mais ce n’est pas amusant. Je finis toujours par avoir mal. Alors que je le fais et que mes jambes brûlent et que je tombe tout le temps, je me dis "Pourquoi est-ce que je fais ça?" Surtout quand ce petit enfant de cinq ans vole dans la montagne à côté de vous et qu'il est juste comme humiliant, non? Le problème n'est pas le snowboard? Le problème n’est pas moi, c’est que je ne le fais pas assez. Il n'y a pas assez de répétition. Si je le faisais assez pour devenir bon, je m'amuserais. L'investissement immobilier n'est pas différent de toute autre chose. Une séance d'entraînement chaque année ne vous mettra pas en forme.

En achetant une maison par an, vous ne réussirez jamais à investir dans l'immobilier. Vous n'obtenez tout simplement pas l'exposition, vous ne recevez pas les répétitions, vous n'apprenez pas de ce qui a mal tourné. Vous ne développez pas les contacts, ils vont vous envoyer des offres en premier. Vous n’apportez pas assez d’affaires à un entrepreneur pour qu’il vous offre de meilleurs prix. Vous ne développez pas la relation avec les banques. Je pourrais continuer encore et encore, mais le fait est que nous comprenons tous que vous faites de bonnes choses en le faisant encore et encore et que vous avez besoin de la méthode BRRRR si vous voulez le faire avec de l'immobilier.

Brandon: J'aime ça. Je veux dire que les gens ne parlent pas assez de ça, du mastering, de devenir vraiment bon dans quelque chose. Comme si je voulais dire vous et moi faisons tous les deux de bons revenus. Vous et moi gagnons tous les deux de bons revenus grâce au travail, comme je parle d’affaires liées aux affaires et à nos biens immobiliers. C’est vraiment parce que nous sommes tous les deux… C’est comme si je ne voulais pas dire ceci pour avoir l’air arrogant mais comme si nous étions tous les deux bons dans ce que nous faisons. Nous deux… Maintenant, je ne dis pas que nous sommes les meilleurs, je dis qu'il y a un million de personnes plus intelligentes et meilleures que nous, mais nous sommes meilleurs parce que nous avons choisi la maîtrise. Comment pouvons-nous, comment essayons-nous chaque jour de nous améliorer? Comment pouvons-nous demander ce qui n'allait pas dans cet accord, comment ferons-nous mieux la prochaine fois? Comment pouvons-nous lire un autre livre, assister à une autre classe, quoi que ce soit, comme pour s'améliorer?

Je pense que beaucoup de gens n'ont pas ça dans leur vie. Ils manquent du désir de devenir un maître quoi que ce soit, non? Comme dans le monde d’aujourd’hui, c’est comme comment puis-je obtenir le strict minimum pour faire quelque chose de bien et peut-être que je serai assez fin pour me débrouiller, pas vrai? Comme quel est le moins d’heures que je puisse travailler pour que mon chèque de paye règle mes factures? En tout cas, c'est une chose que j'aime chez vous, David. C'est que vous êtes très bon en matière de maîtrise.

David: Merci mec. C'est pourquoi tu m'appelles l'homme. Une chose que j’aime chez vous, c’est que vous reconnaissiez les grandes choses qui me caractérisent. Je pense que cela fait partie de vos compétences. Je veux juste appeler cela pour tout le monde ici pour qu'ils sachent en quoi vous êtes bon. Non je rigole. Lorsque nous avons interviewé Robert Greene, il a en fait parlé de ce même concept et Robert Greene est un gars très intelligent. Je ne me souviens plus de la série qu’il était, je suis sûr que nous pourrions l’ajouter aux notes de la série, mais la maîtrise est vraiment importante. Beaucoup d'investisseurs sont très découragés lorsque les choses tournent mal et ce sont des choses qui se passent mal quand vous êtes nouveau. Le problème est qu'ils ne dépassent jamais la nouvelle étape, non? Ils sont comme moi faire du snowboard. Chaque fois que j'y vais, c'est comme la première fois. Ou en surfant, je suis allé surfer avec vous deux fois, je pense, non?

Si j'y vais une fois par an pendant les 10 prochaines années, je ne réussirai probablement jamais à surfer et il y aura des enfants de cinq ans qui me battront dessus. J'ai une citation dans le livre que Bruce Lee dit. Il dit: «Je ne crains pas l’homme qui connaît 10 000 coups de pied. Je crains l’homme qui a pratiqué un coup de pied 10 000 fois. »Quand j’enseignais la tactique de défense aux policiers, c’était comme ma citation préférée. Je l'ai aimé, non? Parce que les gens qui sont les meilleurs dans quelque chose ont la meilleure technique parce qu'ils l'ont pratiquée plusieurs fois. BRRRR vous permet de le faire et si vous n'êtes pas BRRRR-ing, vous feriez mieux d'être simplement riche et d'avoir beaucoup d'argent. Vous pouvez continuer à acheter des biens immobiliers, sinon vous ne pourrez jamais y arriver.

Brandon: Ah, c'est fantastique. Hé, je travaille sur un… Cela me rappelle que je travaille sur une sorte de livre. Nous relançons prochainement le journal du 90 Days of Intention Journal de BiggerPockets. Je suis en quelque sorte en train de changer de nom, ça va être génial. Mais de toute façon, là-dedans, j'ajoute un tas de contenu écrit similaire et l'un d'entre eux, j'ai en fait une section sur la façon de devenir une classe mondiale dans quelque chose. Parce que c'est ce que je fais, j'ai créé un acronyme. Voulez-vous entendre mon acronyme sur la façon de parvenir à la maîtrise?

David: Vraiment mal.

Brandon: Bien. D'accord. Il s'appelle FEEL, non? Vous devez… Pour obtenir une réponse, vous devez la ressentir. Voici. Premièrement, vous devez vous concentrer sur ce que vous voulez être de classe mondiale, non? Comme si tu n'aimais pas… Comme tu dois dire définitivement que je veux être de classe mondiale dans ce domaine, je vais me concentrer sur ce F. Troisièmement, tu dois t'instruire sur la façon dont les plus performants dans ton domaine sont devenus comme ça. Par exemple, éduquez-vous, que font les principaux investisseurs en feu? Que font les meilleurs surfeurs? Que font les meilleurs joueurs de racquetball? Quoi que ce soit, non? Comme vous renseigner sur ce qu'ils font. Troisièmement, vous devez exécuter ce que vous avez appris. C’est là que beaucoup de gens lâchent la balle.

Ils aiment voir ce que fait vraiment une personne de classe mondiale, ils n'exécutent pas ce qu'ils viennent d'apprendre, mais ils recherchent ce que font les autres, puis ils l'exécutent simplement. Puis numéro quatre, L, apprends. Apprenez de vos tentatives et répétez le cycle. Il suffit de ressentir, ressentir, ressentir, ressentir, ressentir toute la journée et si vous faites cela maintes et maintes et maintes et maintes et maintes fois, vous allez devenir de classe mondiale dans tous les domaines. Mais si vous abandonnez l'une de ces quatre étapes, vous allez rater le passage à la classe mondiale. C'est ce que j'aime dans les investissements de BRRRR. Les investissements de BRRRR vous donnent la possibilité de vous concentrer sur ce que vous voulez être de classe mondiale, de vous éduquer, d'exécuter ce que vous avez appris, puis d'apprendre des tentatives et de le répéter encore et encore avec cette vélocité.

David: Voilà. C'est pourquoi je t'aime, Brandon. Vous venez de m'apprendre à ressentir.

Brandon: Je viens de vous apprendre à ressentir. Bon, numéro quatre, qu'est-ce que tu as?

David: Le numéro quatre est que la méthode BRRRR diminuera le risque. Ok, maintenant voici ce que je veux dire par là. Lorsque vous achetez une propriété qui ressemble à un bâtisseur, vous la valorisez davantage et vous retirez votre argent. Diminue votre risque de plusieurs façons. Premièrement, vous récupérez tout votre argent ou au moins la majeure partie de votre argent. S'il ne vous reste plus de capital dans une transaction, peu importe si le marché baisse, vous n'allez pas vendre s'il s'agit d'un flux de trésorerie. Vous allez simplement attendre que le marché revienne. Si vous laissez beaucoup d'argent dans une transaction lorsque le marché baisse, eh bien, cet argent est théoriquement parti. Two, by fixing a house a lot before you put a renter in it and refinance it, you improve its value but you also minimize the amount of work you are going to have to do later. If you buy a fixer upper property and just throw somebody in it, there is a lot of stuff that is going to go wrong all the time and that like you and I know, that eats up your cashflow faster than anything else, right? Then three, you are decreasing your risk using the BRRRR method because of the pure repetition factor.

I am going to get better at what I do so the next deal I am more likely to do even better than this deal and the deal after that, I am going to do even better than that. When you are operating from a place of ignorance or inexperienced, you are operating with a massive amount of risk simply because you do not know what you do not know.

Brandon: Very good. J'aime ça. Hey, funny that you said, actually I was going to bring something up. You ever talk to somebody, like in a  meet up or whatever, and they say things like is not it risky to not have a lot of equity in a property or is not… Let me rephrase that, is not it risky to not put a huge down payment on a property? I get this argument that people make. Like, well, if you are going to do a no money down but I came out with a book on investing with no money down, I got this a lot, if you are going to do a no money down deal, that is way risky, that is way too risky. I would always argue, okay, let us just say you are going to buy $100,000 property, I am going to buy a property with $100,000. We are both buying properties with a $100,000. You paid a $100,000 for yours and put 20% down.

Now, you have got an $80,000 mortgage and you have $20,000 in equity, and you have got this property. I found that exact same $100,000 property. I put it under contract for $50,000 and then I put $30,000 of work into it. Now, I have got $80,000 in as well. We both have $80,000 into a deal, we both have $20,000 of equity, but I put no money. I mean, I BRRRR it so I have no money left in the deal. I have no risk at all of my own capital in that deal. You have got $20,000 in there. At the end of the day, who is riskier at that point, right? It is the person who put the down payment. Down payment has nothing to do with risk and nothing to do with risk, right? It is all about equity is where your risk is. Yes, if you buy a $100,000 property and you pay $110,000 for it, yes, that is risky. If you are losing cashflow every month, that is risky. That is not what BRRRR investing is about. We are investing in about gaining equity magically.

David: Oui. Gaining equity without losing capital, you hit those two things anytime and you hit a wealth building like supercharger.

Brandon: Yes, perfect, perfect. Alright, well that leads us to number five. What do you have for number five?

David: Yes, it does. It allows you to scale to financial freedom faster. This is very simple math. An example you gave, I love your example, you take $90,000 and he added $40,000 to your net worth and then you sent that $90,000 out there to do that for you again. Theoretically, you could do that forever on the same $90,000. I have an example in the book of the guy who did it the traditional way and how long it took him to save up money and park it in an investment versus the guy that recycled the same capital, got better deals and did it that way. At the end of a 10 year period, it was wildly different how many houses one guy had versus the other. That is what this is about. We do not live to be 900 years old like people did a long time ago, that was reported in the Bible, right? Like lose to lose running around.

You cannot waste time. Once you get this thing down, you really need to put your foot on the gas and scale it up quicker. Real estate is incredibly powerful, but almost always, it is over a long period of time. This is not bitcoin, this is not buying a marijuana dispensary. This is not a get rich quick type of a thing, right? You are planting a seed that grows into a tree and that tree will be very powerful but it takes a while to grow which means we want to plant a lot of these seeds as fast as we can, get those seats back and then then replants them again. This helps you to scale much much faster because you need less capital to do so.

Brandon: There you go, perfect. Then number six, the last benefits we will talk about.

David: Yes, we have touched on this one briefly earlier but it lowers your capital expenditure, expenses, or your cap x.

Brandon: Que voulez-vous dire?

David: Because you are fixing your house up, like what I will do is I will buy these trashed houses. I will put a new roof, a new HVAC, new flooring. I will fix the plumbing because the walls are going to be ripped out a lot of the time, new appliances, pretty much all the main things that break in a home or cause problems. I go in there and I fix before I get the appraisal. We will talk about this later in the show why that is the way to do it because it pumps up the value that gets me more of my money back. But as a little sweet bonus, some icing on the cake here, I then do not have to worry about an air conditioner breaking for the next 15, 20, 25 years where when I do not do this, I think I am doing great on our property three years when the HVAC goes out and my cashflow for the next year and a half is gone in one mistake.

Brandon: There it is. It is so true. All the properties that I have ever bought that I did not fix up fully before like renting them, like all of them, like they are unpredictable and I tend to have a lot more repairs. But I mean the properties that I have BRRRR-ed, which is majority of my portfolio at this point, like most of my BRRRR deals, they hardly ever break. They hardly ever go down because of, yes, they got the new… When you are rehabbing them, you are typically doing it like you are rehabbing it knowing that you are going to own this property for the next 20 years. Like what if it is a choice between, hey, I could put this cheap carpet or I can out this better laminate that is going to clean better or tile, you go with the better tenant proof, to use a term from Darren Sager, to tenant proof your property, you use the slightly better things. That also decreases your maintenance and repairs and CapEx over the next 10, 15, 20 years of the life of that property which is another awesome part of BRRRR investing. Très sympa.

David: You do not have to worry about what some other company, like a turnkey company did, because you managed your own rehab. You know what was done, you know what went in there and you know like what was not done so you can prepare for it.

Brandon: Voilà. Now, we are going to go through now… I am going to ask David a few questions on each of the BRRRR method. The Buy, the Rehab, the Rent, the Refinance, the Repeat that. We are going to move on to that next. But before we get there, I did want to quickly talk about in case you guys are interested in learning more about BRRRR directly in book format, this is like a long podcast. Again, David has got an amazing book. It is called Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple and it is literally like, how many pages is this thing? 340 pages…

David: 300 something, yes.

Brandon: Yes, it is a big book. Physical book, there is an audio than an Ebook. There is an ultimate package. You can look, get it. You can get more information about it or check it out at BiggerPockets.com/BRRRRbook. That is BRRRRbook with four R’s, BRRRR Book. You could also just go to a like Amazon, but I would recommend if you want the bonus content that comes with it, there is a bunch of cool bonus stuff like a BRRRR specific PowerPoint presentation David does on how to find private lenders to fund it. There is a 20 page Ebook on long distance BRRRR-ing. There is a live Q&A with David. He is going to doing a live Q&A and a bonus video on how to interview and hire great contractor. If you want those bonuses, you do have to buy it from BiggerPockets and not Amazon. But if you just want the book, Amazon has got it Barnes & Noble should have it as well. Anyway, go to BiggerPockets.com/BRRRRbook and check it out. Anyway, anything else you want to say in the book before we move on to the specifics of BRRRR?

David: Oui. The main thing that… The reason I think people should read the book and why I wrote it is that if you master the five, what I call the five elements of BRRRR, the Buy, the Rehab, the Rent, Refinance, Repeat, you are going to master real estate investing by mastering those. If you learn how to buy great deals, if you learn how to rehab houses well, if you learn how to calculate numbers and rent your house and you learn how to use financing and refinance and how banks work and then the repeat system, our segment is all about systems. How you make this automated so that it just goes on its own over and over and over. By default, you will have mastered real estate investing. You will be what I call a black belt investor, right? It is really simple. If you just focused on those five things. When you are done, boom, you understand real estate investing at a very very high level and can build wealth quickly.

Brandon: Sounds like a future book, Blackbelt Real Estate Investing by David Greene. Well, alright, check it out again. BiggerPockets.com/BRRRRbook. Yes, when you buy it, do me a favor guys, take a picture of yourself when you get the book. Take a picture of you holding the book and it tag David on Instagram, @DavidGreene24 and @BiggerPockets. Show it off and we will do a… We will accumulate some of those pictures together and we will kind of do some promo stuff with you and your stuff to try to build up social media presence at the same time.

Daivd: Beautiful.

Brandon: Kind of fun there. Yes, alright, let us go back to BRRRR and walk through each segment there. Before we get there, let us hear a quick word from today’s show sponsor.

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Brandon: Alright, let us get to it. BRRRR investing. Let us talk about buying a property. David, the first question that I get a lot when it comes to like BRRRR investing, or is the how do I buy it? I do not have any money that is why I want to BRRRR. I do not have much money. Is BRRRR investing, the buy part, only for people who have cash?

David: Il ne faut pas que cela passe comme ca. It does not matter where you get your cash from, you just need some cash to buy the house because the seller is going to want money. The easiest ways to have your own cash, but if you do not have your own cash you can borrow money from other people. That is why in the bonus content, I included a video and a PowerPoint presentation for how to give a presentation to people that you know about why they should partner with you on these BRRRR and they can provide the money and you provide the work and find the deal.

You can borrow from your 401K, you can borrow from a hard money lender, you can find private money like I mentioned earlier. You can use like traditional financing or non-traditional financing. The most important part of a successful BRRRR is that you are buying it under market value, you are rehabbing it to add value and you are pulling your money out after the house has been made worth more. If you hit those things, it will go fine. Now, the reason that buying is the most important part of the BRRRR process is that is the only part in the entire investing cycle where you actually make money. I mean there could be an argument to be made that you can make money during the rehab.

Like if you add an extra bedrooms or bathrooms or square footage that are worth more than you spent, you have created some equity there, but the most significant chunk is when you buy the house and that is why you need capital. This is really what it comes down to. Capital is so important because you need it to buy a property and buying a property is where you actually make money. Then everything you do after that is just turning it into like a usable asset that then you can rent out but you are really not making it worth more at that point.

Finding money is really important but the BRRRR strategy makes it easier to find money because the people who are investing can get their money back, right? Like that is a really big thing, I do not want to gloss over. If I go to someone and say, ‘Hey, let me borrow $50,000. I will pay you an 8% return on your money and in 55 years from now, you will have all your money back.’ That is not that enticing, right? If I am like, let me borrow your money, I am going to go use it to buy this house and I am going to pay you back in six months, all of your capital, and you are going to be making interest. That is a much easier proposition for you to the person.

Brandon: Yes, that is true. There is a lot of hard money lenders that will do it or there is a lot of… I mean like there is a lot of hard money lenders that very specifically understand the BRRRR strategy. That is what they work inside of, it is the BRRRR strategy. Now, granted hard money is going to be fairly expensive, but there is companies that will give you a hard money loan just for a year for a BRRRR. But the danger is that like you pay more for that money. Put it into your numbers when you run the numbers, make sure you are accounting for it and there you go.

Speaking of accounting for it, BiggerPockets actually has a BRRRR calculator that we built and you can plug in all the numbers including the purchase amount of closing costs, hard money costs, the refinance amount later on, you can play with all those numbers anyway. Check it out, BiggerPockets.com/calc. But one more question on the Buy, a lot of people question it and you kind of touched that earlier but I wanted to make sure we nail it here. What is the point of like buying it and then refinance it later? Why cannot I just go to a bank right now and just go borrow all the money needed for the property? Why cannot? Like what is the big deal?

David: Well, you can do that? Let us say that you are buying a property that is worth $100,000 and you are paying $100,000 and you are going to borrow $75,000 of that from the bank and you are going to spend your own $25,00. Then once you buy it, you are going to have to paint it, maybe fix a few things. You spend another $5,000 there. The problem is you just left $30,000 in this deal. Like you said earlier, for some people that takes four or five, six years to be able to make that money back and save it to buy the next deal, okay? The reason that we want to spend the money up front and then refinance it is we want the bank to give us a loan value or a loan to value of the after repair value once a place is fixed up. I do not want the bank to be letting me borrow on $100,000 house. I want to be buying it for much less than a $100,000 then make it worth $100,000 then go refinance it once it is worth $100,000 so that I am not leaving equity in the deal.

I am taking the same money. Like when Brandon and I calculate our net worth, it does not matter whether it is locked up in a property or it is in our bank account. It is the same amount, right? It says this very same for your own net worth. If you have $25,000 in the savings account or $25,000 equity in a property, it does not change anything. The difference is $25,000 in your savings account can be used to add equity to your net worth by buying more assets whereas $25,000 in equity is almost useless unless somehow you can access it from a Heloc. That is why you want to be refinancing and getting capital in the bank as opposed to living in the house because it cannot do anything for you when it is in the house.

Brandon: Voilà. Also of course like most banks like you will find do not want to deal with nasty properties, right? Like, yes, if you go on to just a real nasty property and you go to a bank, like, yes, this thing is going to be worth $120,000 and I only need $50,000 for it. They would go there and they look at it and the appraisal comes back and says the roof is falling apart, there is foundation problems or whatever, the bank is going to say yes, no thank you. There are bank programs. I call them BRRRR loans, they do not call them that. But there are loans that banks can do specifically designed for the BRRR process because, again, this is not like we invented the BRRRR thing, we just put a name on it. But like they are hard to find, they are harder to find. But if you can find BRRRR bank… One of my buddies actually has a, what is it, a $300,000… I think he has got a $300,000 line of credit from a local community bank and he has an agreement with the bank.

Actually, like they built a loan for him to BRRRR. They gave them a $300,000 line of credit. He goes out and buys properties with that line of credit, fixes them up, rents them out, then goes back to the bank and they convert that line of credit money. Let us say he has a $100,000 of it immediately into a mortgage for him without having to go redo all paperwork and everything. This is all part of one big thing that he pitched them on and now he just BRRRR like that without any of his own money at all.

He just got equity after equity. He just keeps doing deals like this way and it is a portfolio lender so there are no limits. Now, if you go to like a bank of America, Wells Fargo, they are going to limit you at 10 residential mortgages on your name. Portfolio lenders like the small local community bank, they do not care. He just keeps doing it over and over and over and over. There are banks that can do it but those are a lot harder to find. Typically what I do, and I think David, I am not sure which one you do, but I think we look at private lenders. People I know will fund the deal, people I have met through BiggerPockets, networking conversations and I will buy it with a private money and then refinance it later.

David: I talked about in the book why like how to actually target properties like that because not only will banks not lend on really trashed houses, but it actually gives you a competitive advantage when you are looking to buy. Your competition does not have the cash and you do so they cannot buy that house. You have eliminated 90% of the buyers that are out there and you are only competing with the other cash buyers. Most of those cash buyers are home flippers, which is a bigger margin than you do as a BRRRR investor and you settle into that perfect little area where you can make a deal work that other people can.

Brandon: Oui. Actually, I was just thinking. Like one thing I love with BRRRR investing is that you can pay more than a flipper and a wholesaler but you are also like you are not competing with the homeowners. It is a sweet spot to be for investing because you can pay a little bit more. Now, a lot of people… What do you say about people who are like, well, shoot, ‘You are using these examples of like $100,000 property that you get under contract for $50,000. I cannot find that in my neighborhood, that is impossible.’ What he say to things like that? There are no deals like that in my neighborhood. There is no deals out there. I cannot buy the initial property.’ What do you say?

David: That is why we included that bonus content of long distance BRRRR-ing because I take the strategies that I used in my first book, Long Distance Real Estate Investing and I combined them with the BRRRR method in that bonus content. What happens is the BRRRR method allows you to invest extremely efficiently. The long distance method allows you to invest anywhere. When you combine those two things together, what you are really doing is removing any excuse you have of why you cannot do it. It opens up doors and that is how I was able to scale to as many rental properties as I have over a couple of years as I did.

Brandon: Yes, I love that. I will also say this, anytime somebody tells me that they cannot BRRRR in their area, I always ask is there anybody flipping houses in your area? Because if somebody is flipping houses, you can BRRRR. Because, again, you can pay more than house over. If you tell me, ‘Yes, I cannot find any. There are no deals here to BRRRR,’ and then I can find a single house flipper who is doing it in your area, you are wrong. Like it is just as simple as that because like the real thing you should be saying is, ‘I am not good enough at finding deals like that house flipper is, right?’

If you figured out what that house flipper is doing to get deals, then you can do it, right? Because again, house flippers operate on what we call like the 70% rule. Oftentimes, not always, but like they generally follow something called the 70% rule which basically means they can pay 70% minus the rehab costs in order to… You make a profit on a flip. Well, you are doing basically the same exact thing with BRRRR investing, but you can typically spend less on the rehab and they are because you are not fixing up quite as nice as a flipper might be doing. Anyway…

David: Absolument.

Brandon: Excuse me.

David: The reason those margins work better for a BRRRR investor than a flipper is that you do not have your commissions and taxes and all the quick closing costs that go into a sale, you do not have capital gains on the money that you make, right? Like those are the two biggest pieces and you are taking advantage of low interest rates. BRRRR investors can make this work as opposed when home flippers cannot because of those two very big expenses that we are shaving off. Then we get all of the long term benefits of owning rental property as opposed to, ‘Oh, hey. You hit it out of the park. Great job on your flip.’ Your short term capital gains tax is 45%, half your profits are gone but all that risk is still there.

Brandon: Yes, that is definitely why I like BRRRR more than flipping. I mean flipping is great for some short term money but BRRRR, I think, is far superior for longterm wealth. Alright, moving on from the Buy. The Buy you got there, now moving on to Rehab. Are there any tips you can give for like rehabbing? Like what are some of the things that you have done in your BRRRR investing that have added the biggest bank for your buck? Any kind of BRRRR tips or rehab tips on there?

David: Absolument. You want to understand the concept of highest and best use when you are going to rehab your property, okay? There is two ways the I find equity. One is I find it or I buy it. The house is worth a lot of money and I am paying less money. I just bought equity through the deal. The other thing is I make equity through the Rehab. That can be as simple as taking an outdated house and fixing it up. That will add value. If it compares to houses that are worth more, that are nicer, boom, you just made some equity. Another thing I will do is like knock down walls to make the function of the house actually more appealing and appraisers will give it value that way.

If you have got a kitchen that is closed off from the rest of the house and you can open it up, you just made some value for relatively cheap. The last thing I will do is I will actually change the floor plan of the house. I will take a two bedroom, one bathroom home and I will turn it into a three, two. Or I will take a three, one and I will turn it into a four, two. Or I will take a 900 square foot home surrounded by 1500 square foot home and I will add 500 square feet to it so now my 1400 square foot compared to the 1500 square feet home and the equity is much more than the money that I had to spend to do it, right? These are all prudent rehab strategies that I use and I talked about that in the book. Ways to look for Quick and Easy Win.

One of the things Brandon talks about all the time, and it is great advice, is when he is buying a house that is like 1100, 1200, 1300 square foot, if it only has two bedrooms, he knows there is another bedroom in there somewhere. Because a two bedroom house should be like 800 square feet. It should not it be 1100 square feet. Learning to look for things like that and adding that extra bedroom. One of the ways that I will do is I will look for a house that has a mud room, utility room, a sun room, something like that where the infrastructure is actually built out but that is not included in the square footage of the house, the appraiser will not give it value.

Then, I will go in and make that part of the house. I will run air conditioning to it, I will run electrical and plumbing. I will put up some actual dry wall and framing as opposed to just like the windows that they have out there and boom, I just added maybe 30%. Maybe that made my house 30% bigger for the costs of like $4,000 worth of construction work and I just created a lot of equity right there. That is probably the biggest stuff that I look for during a rehab that makes value. It makes it worthwhile to BRRRR invest.

Brandon: Perfect, I love it, love it. What about staying on budget? I mean it is easy to get cost overruns especially when you are BRRRR-ing from a distance. But how do you typically stay on budget?

David: I stay away from anything that has a potential to blow up to be a really big project, right? But things like plumbing and electrical. When I am looking at a deal and I see that like, oh, these pipes were corroded and we do not know how bad it is, I am probably going to move away from that deal because it is very difficult for me to know how much work this is actually going to take to fix and putting all new plumbing in a house does not necessarily increases the value, like if you put a new countertops, right? Other things like roofs, if I know I am going to replace the whole roof, there is only so many things that could go wrong with that. I know what it costs to put a new roof on. It is not like there is a bunch of surprises that can come up. Roofs hardly ever go over budget on any of the deals that I am doing.

I try to keep it as cosmetic as possible, that is a good strategy to have. If you can go in there and take out cabinets and replace counters and maybe putting an appliance or like flooring, there is only so many things that go wrong on a floor. You take out the old flooring, you put in new flooring. Those are some of the ways that I present going over budget. The times when something does go over budget are almost always related to electrical or plumbing. It is like the infrastructure that makes up the house. That can be very expensive because they have to pull things apart to figure out how stuff was run.

Brandon: Yes, great tips. One more tip I will throw out to you. For those people who are burying multifamily, if you are going to go into like a duplex, triplex, fourplex, 10, 20, whatever, when you are in the middle of the rehab and you are fixing things up anyway, it is a really good time to consider how do I separate the water meters? Electric, not usually electric is not separated, but water meters are oftentimes all just like master metered. But if you can separate that in the process of rehabbing it, then you can go and sub meter the water and now the tenants that are responsible for their own water. Even like a fourplex or eightplex or even a duplex, make the tenant responsible for their water and you will instantly see your cashflow just go through the roof, which on a multifamily means your value goes to the roof. Alright, number three. We went through the Buy, the Rehab, let us talk about renting. How do you know ahead of time what the property is going to rent for? Like after fix.

David: I have got, in the book I talked about a system of like you got your preliminary stuff and then you have got your specific stuff. The most specific ways to actually get a property manager to tell you this is what it would rent for based on what the other houses that they manage or renting for, right? But you do not want to keep going to a property manager every time you are analyzing a deal just to figure out what should I put it in the BiggerPockets calculator, right? For how much the rent would be?

Brandon: Oui.

David: I use a website called rentometer.com which is free and easy and it gives me a very general idea of what the rents are usually over like a 20% plus or minus. It could be anywhere from $800 to $1200 and somewhere right around a thousand, right? Once I am left pretty interested in a property, I will take the next step and I will start looking up similar homes in the area that are similar to this one on Craigslist. I will see what they are renting for and then I will email a couple of the landlords and I will see how quickly they respond and how long the house has been on the market. I know if the landlord’s like, ‘Dude, I do not really have time to talk to you. I have got 17 people interested in this house.’ That is a very strong rental market and it is a place I want to own a rental property.

If he is like, ‘Oh my God. Thank you for e-mailing. It has been four months and nobody has said anything.’ That might not be a place where I want to be investing, right? That is kind of how I will verify what I just found on Rentometer and then once I am actually going to buy it, I want as many people’s opinions in on this deal as I can get. That is when I loop my property manager and then I say, ‘Hey, here is what I am thinking. This is what I am thinking I am going to get. Can you tell me if you agree? By the way, here is what the agent thinks it is going to be worth, here is what the contractor says I need to do. Can you look this over and let me know if you think that either of those people are being a little too ambitious and it will be worth a little less or we do not need to fix it up as much and I get another counselor in on the deal.

Brandon: Cool. I love that, great advice. What about property managers? Are you always recommending to use a property manager in a BRRRR deal? Is there a case where you might recommend somebody manages themselves?

David: There is people that can manage themselves if they really love managing and they are going to learn a lot from it. If you liked dealing with people, if you like managing your own property, if it is fun for you, then I say go for it, right? Not because it makes financial sense but just because it makes like emotional sense. But for most people, if you are a business, it makes more sense for you not to be there. If I owned a subway restaurant where we make sandwiches and I knew it was going to make $150,000 a year, I would rather pay a manager $70,000 a year and only make $80,000. Let them run it so that I have a completely passive business and I can go earn money in other ways, right? Some people want that full $150,000 and they are happy to work there all year long.

I think the trick is they start to tell themselves that they are making $150,000 a year when they are not. They are really making $70,000 a year. The investment is making them the other $80,000 because they make that $80,000 whether they work there or whether they did not, right? If you are somebody who has other opportunities, a job that you like and new job opportunities, like me, I have the ability to earn commissions as a real estate agent. That is a lot more money that I would make if I put that same time towards managing the properties I have. The other reason I love property managers is what I said earlier is I do not just use them to collect rent. I use them as like an advisor on my team. I am a very big proponent of having as many smart people in your world as you possibly can have. Giving you advice and learning to see the world from their perspective.

They are going to pick up on things that you miss, they are going to have seen things you have not seen. They are going to be looking at like, hey, when I am looking at this house and thinking this is great, they are looking at this house and thinking no way, that is way too small. We are going to have a new tenant every single year because there is not enough bedrooms or whatever the case may be or it is on the wrong side of the street. I get a lot more value out of my property manager than just collecting rent, which is why I like using them. But some people, they buy where they live and they know the area really really well and they enjoy the relationship they have with the tenant. I say, hey, knock yourself out if that is what you like to do.

Brandon: There you go, that is fantastic. Well, what about refinancing the property? One of the biggest concerns when it comes to the BRRRR investing, and this is rightfully so, the biggest danger is what if you buy the property for $50,000. You put in $30,000 to fix it up. You got $80,000 into it. You go to the bank and you are like, ‘Hey, this is $120,000. Can I get a nice loan for, call it $80,000 or $90,000. It is the perfect BRRRR. The bank says, ‘Sure, we can refinance that if it is worth $120,000. They send out the appraiser, the appraiser comes back and says, ‘Yes, property is worth $75,000. All of a sudden you are like, ‘Oh, shoot. I got $80,000 into it. The bank is only going to give me $50,000.’ I am going to be like all money left in the deal. That is a fear that people have going into BRRRR. Rightfully so, right? If they screw up that value, that is a problem. I am wondering, is that a fear? Should they be afraid of that or should they like how do you overcome that? How do you know what the property is worth it at the end? How do you deal with that risk?

David: That is your biggest like risk that you are taking when you use the BRRRR method. It is that appraisal, which you do not have any control over, can come in low, right? Now, it can also come into higher than you thought. That happens to me all the time and we never complain about that. But we always complain if it comes in less than what we thought. Here are some ways that you can minimize your risk when it comes to that. Number one, you can make sure that you are getting your comps from a credible source. Do not just get them from the real estate agent. Get them from the agent, have another agent look at them. Have your property manager look at them. Have another investor look at them. Let people tell you, no, this is not a good comp man. This is not a much better school district or yes, this house is the same size, but this is actually like a border… Like that is a different neighborhood. The street is what differentiates.

Even though it is only two blocks away, it is in a different neighborhood. There is things that either people do not know or do not want you to know and that is usually when you get the case of a low appraisal is your, is the agent provided comps that were different than what the appraiser looked at, right? Another thing that you can do if you are really really worried about this is you can order an appraisal and pay for it yourself. There is nothing that prohibits you from doing that. Now, if you are paying cash to the place, you do not have to get an appraisal, but at the same time it is not like you are not allowed to get one. You can pay for an appraisal if you want. Pay $300, $400, maybe $500, depending where you live. If that comes in at $85,000 before you buy the house or before you drop all this money into the rehab, you can say, ‘Whoa, whoa, whoa. We need to stop here,’ and get out of that deal, right?

I do not know why more people do not do that because this question does come up all the time as an excuse for why people do not buy. But there is no law that says you are not allowed to get an appraisal unless you are getting loan, right? Then the other thing you can do is you can actually challenge the appraisal if you think it was unfairly low and there is a lot of people, I believe you and I interviewed Andresa Guidelli, she said like two or three different times just to Philadelphia alone she challenged an appraisal and she won and they came back and awarded it much higher.

Now, here is a point I want to make. Even if all that stuff you try still does not work, why I love BRRRR, okay? Let us say that you spend $90,000 on this house and you think it is going to be worth $120,000 or $130,000 and it comes back $105,000. You get absolutely hammered. I mean, that is a pretty big difference, like it is a big chunk. Like your 20% off of what you thought it would be worth, right? I would call that a huge loss. In that case, you are going to get 75% of that $105,000 which is $78,750. Now, if we take our $90,000 and we subtract $78,750, that means we left $11,250 in that deal. This is on a huge loss and you have left $11,000 in a deal, okay? If that property where to cashflow $200 a month, which is not ridiculous, right? That is probably around like when I am averaging on the houses that do not cash flow, super great, that is $2,400 a year.

If we take that number, we divide it by the $11,250 we left in the deal, that comes out to an ROI of 21.3%, okay? The point I am looking to make here is even if the appraisal comes in super low, you screwed up you, everything went against you, your consolation prize on a bad deal is a 21% ROI year one. Yes, right? That is why I tell people like BRRRR vesting is like investing with training wheels. Like it is very hard to completely screw it up. Like you would have had to have an appraisal 50% below what it should have been before. You are like, ‘Oh, this is terrible, right?’ It is a much safer. You get a much higher ROI in a bad deal than if you had done the same thing if you would paid for a house and did the traditional method and have the same problem. Well, dude, you just left a lot of money in that house, this means your ROI goes very very low.

Brandon: Yes, that is a good explanation of it. I would also say like if you are concerned about this, like BRRRR investing might not be perfect for you alone if you are flat broke and you are buried in credit card debt and you could not handle a problem like that. The same way flipping is not for you and probably rentals are not for you, right? If you are like completely broke. Like yes, things do go wrong. I did a BRRRR a couple of years ago where ARV is there. It was worth it but the bank at the end refused to give me 70% of what it was worth it. They just said, ‘Oh, we are only going to give you a what you have into it where you can document.’ Like, anyway, that would be like an annoying thing, right? It will end up leaving like $20,000 of my own money into the deal. C'était bien.

I mean, I left $20,000 in there. I make $1000 a month on that property. I am making $12,000 a year on a $20,000 investment. That is okay for me, that is like what? 60% return on my money. Like it happens, right? But I still had a $20,000 to do it. Now, that said, if you are flat broke does not mean you cannot do it but you might need to find a partner who has a better financial foundation to be able to handle those kinds of things. Maybe you do the boots on the ground part and they are more of the risks. Again, it does not mean you cannot do things. It just means you have to start asking how.

David: Well, that would only happen to you one time because now you have learned, right? What that bank basically said is we will lend to you on a loan to cost ratio, not loan to value. That is what that is, right?

Brandon: Oui.

David: Loan to value is we will give you a percentage of the loan that is a percentage of what it is worth at the end. Like the appraised value. What is being said is we will let you borrow a percentage of the money you actually spent, which would be the cost, right? Which is a rip off to the investors. Now, the next time you want to do business with that bank…

Brandon: Correct.

David: To a different bank, you would say, ‘Hey, can you do loan to value?’ What percentage can you do on this, right? Like you, knowing you Brandon, and I knew pretty well, you find a deal. You jumped into it, you say, ‘Hey, I will figure this out as I go,’ because that is what you do.

You are the guy that jumps out of the airplane and puts your parachute together on the way down.

Brandon: Pretty much.

David: In this case, like the parachute opened halfway and you hit the ground kind of hard but it did not kill you, right? Next time, you are like, well, now I am going to make my parachute before I jump out of the plane. It is a very subtle change. It does not ruin your entire investing career, but people hear that and they are like, oh, see that is why I cannot invest because what if the bank comes and tells me this? Well, you can solve that question by asking them upfront. In fact, what I tell people to do is get pre-approved by the bank before you even buy the house.

Brandon: Oui.

David: You pre-approved on a hypothetical basis. Know your target numbers going into it and then try to beat those. Even if it goes bad, you are still very close to what you thought you were going to get so these surprises do not happen.

Brandon: Oui. Voilà. Again, like so much of real estate success both from flipping, wholesaling and BRRRR investing comes down to just knowing how to determine that ARV. If you need more help with that, guess what? There is a website. It just got invented, it is called BiggerPockets.com and it is free. You can find out so much information about like figuring that out. Just go to the search bar and type in how to determine your ARV or listen to a podcast Webinar, blog posts, like forum conversation. There is so much information if you are willing to learn it. Again, mastering ARV is very important and BRRRR investing, to go back to what you said way earlier David, the repetition builds mastery. The more you do this, the better you are going to be at figuring out what that ARV, after repair value, is. Alright, moving on to number… The last of the BRRRR, the Buy, the Rehab, the Rent, Refinance. What about repeating the process yet?

David: This is probably my favorite section of the book as well as the process in general, right?

Buying is where you are going to make your money. Rehabbing is where you are going to keep your money. Renting is how you are going to protect your money because you are getting a return on it, you are getting rent that covers your expenses. Refinance is how you are going to recapture your money and then repeating is how you are going to supercharge this entire thing, right? People ask me all the time like, ‘Hey, can I come be an intern and help you with your investing in?’ While I do appreciate that, the reality is my systems have become so tight with buying rental property that I do not even need an intern. When I buy a deal, it looks like I get a text from a deal finder, which is usually an agent and they say, ‘Hey, here is a house you should buy. 123 Main Street. The ARV is one $120,000. I think we can get it for $45,000. It needs $45,000 in rehab, what do you want to do, right?

I will hover my thumb over that text message, hit copy, and then open up a text thread to my property manager, another investor in the area and a lender. Then I will hit paste and I will send that address to those people. I do not even need to tell them what I want them to do because I have already given them a checklist of all the stuff that I want, right? When my property manager gets that text, he forwards it to the guy on his team that does the administrative work and that guy has my little checklist of stuff I want. He immediately pulls up the address, he sees is this in a good part of town where David wants to buy? Does that ARV look accurate? What would the rents be for a house in this neighborhood? Is this a neighborhood that our company, as a property magic company, even wants to manage in it, right? Are there any tax liens on this house?

Like I have them kind of do a lot of my due diligence for me and I will usually get back and a thumbs up emoji from them meaning, yes, this is a house that you should look further into. It is a good deal. Or a thumbs down with the reasons why, I do not think your ARV is that high. This is a bad neighborhood, those are bad comps. Whatever the case may be, right? The other people do the same thing. If I get three thumbs up, I would go back to the agent and say, write up the offer. They will write the offer, I will sign it on DocuSign on my phone which takes me all of four seconds.

I have gotten an offer in. When the agent comes back, it is usually, hey, they countered at this or you are accepted, right? That is very very fast because there is systems that are in place. But I am not cutting any corners. Just because I am going fast does not mean I am being reckless. I still have contingencies in this contract to back out of this deal if I do not like what I find. If it gets accepted, my agent knows. She immediately calls my contractor and says, ‘When can you go see the house? David wants you to walk it.’ She calls a home inspector and says the same thing to him. My home inspector shows up. It takes them about two hours to do an inspection, okay? An hour and a half into it, my contractor shows up to do his walk through. My contractor, just 30 minutes of the walk through. He gets a list of all the stuff he thinks we need to do. He then meets up with the home inspector who just finished and he says, ‘What did you see that I missed?’ The home inspector points out, ‘Well, we got a problem with the duct work up here. This outlet is not working.’ All this stuff that a contractor cannot see visually, right?

Brandon: Sûr.

David: The contractor then works in those significant items into a bid that he gives me, that is in an itemized fashion, right? He knows exactly how I want that bid to look because it takes me all of five minutes to look it over and have all the information that I need to make up my mind on. Is this a deal I want to move forward with? Now, if all the numbers line up with the $45,000 that my agent recommended, we are good to go. We are going to buy the house, right? If it turns out that they do not and the rehab is actually going to be $55,000, I look and I see is there anything we do not need on here that he just tacked on there because it would be nice but like a house in this area really does not need that nice of something, right?

If everything is essential and we cannot come down, maybe I can get the contractor to lower the price by $2,000 and I go back to the seller and say, ‘Hey, I can pay you $8,000 less than what I said. The repairs are more than I thought.’ If the seller says yes, we got a deal. If the seller says no, we do not have a deal and I move on. But I have invested less than an hour of my own time, probably significantly less than that in this transaction effect. The stuff that takes up almost all of my time is the phone calls with the people where we have to go through all these. Like subtle, ‘Oh, how are you? How is the kids? How is everything? How is your car doing? How is your dog? I saw your Instagram post, little Jason was so cute.’ Right? Like all that stuff is what takes up all your time.

Brandon: Oui.

David: That is what happens when you get a system in place. Is I can be doing that with 20 houses at a time and theoretically that is only taking up 10 to 20 hours of my actual time which is like a quarter to a half of a work week. Not that much time at all, right? When you get these systems down and you do the same thing all the time and the people that are in your sphere know what you expect and you know how they work and they know how to give you the information you want, your stress levels come down all the time. I mean I have people that come talk to me, they are like, ‘I am so stressed. I am analyzing this deal and everything is going wrong.’

They tell me what it is and I am like, ‘Dude, this is like such an easy problem for you to fix.’ That is just you doing this in a way that is really inefficient and stressing you out. Sometimes I wonder if they just like it. Like the drama makes them feel like they are doing something cool or they are a part of something important. Because the actual analyzation of rental property is probably one of the simplest things… Like there is no way you can analyze any other business as easily as we can analyze a rental. I could never look at that Subway sandwich restaurant and analyze all the data that goes into their income expenses and profit and loss and everything that is in there nearly as fast as I can with the rental nor could I have somebody else to do it for me for free, like I can in real estate investing, because all those people want to get paid.

Brandon: Make perfect sense. Alright, now we have got this repeating process going. We have got systems that are set up to help us out. Did we just scale up indefinitely? Do we shift into larger properties? I mean we kind of talked about that later but…

David: That is kind of where I am, right? Like, I am not buying a ton of properties right now because I do not want to have a portfolio of a bazillion single family homes, right? It is not a bad thing but it is definitely not an efficient thing, right? Like once you have got it, now there is a little bit of time that goes into managing it and when you have got one, two, seven, eight of them, it is not that bad. When you get into like 30, 40, or 50 houses, it starts to be a significant period of your time just cause you have got 30 or 40 houses where something is going to go wrong.

Like every month one or two or three of them is going to have something, right? What happens at that point is now I have to pay somebody to manage my portfolio. I have planted a lot of trees or seats. They have grown into trees, it has become an orchard. I have to hire like a ranch hand, it is probably not a ranch hand, whatever you call the person that manages an orchard, to go manage by orchard for me, right? Well, now that is taking a big cut on my cashflow. Whereas if you get it into multifamily investing at a certain point, which is a pretty easy transition for someone like me because I have got this really big portfolio of single family homes, I can like take the person who is managing it and write them into the expenses of the deal, right? Like they are not an outside expense eating into the profit.

They were literally underwritten into it because they are an onsite property manager or something like that. Yes, you can scale infinitely but you probably would not, right? I look at single family BRRRR investing like the thing that connects the novice investor from the experienced like Grant Cardone of the world that are buying huge huge deals, these big syndicators, right?

Brandon: Oui.

David: You can try to start there and for certain people they can make that happen. Some guys can go from being in terrible shape to jumping into a crossfit gym and they could just catch up to everybody and do fine. The vast majority of people will not. They will pull a muscle, they will break something, they will strain something and they will never go back to work out again, right? It is better for them to start walking around the block and then jogging around the block and then lifted a little bit of weights and then doing some exercises in the pool and some swimming and some bike riding. As they get in better shape, they slowly start increasing the intensity and the complexity of what they are doing investing.

This is why I love BRRRR, right? It is not a complex system to try to learn. C'est très simple. It forces you to master single family investing. You build these fundamentals that will be very, very beneficial to you when you step into like what I call like the big boy category where you have got these multimillion dollar assets that are moving around. But like you said Brandon, the BRRRR strategy came from multifamily investors that are doing this at a huge level. Some of these are deals that you and I invest in. We are using the BRRRR  strategy on really big deals. I have just applied that system to single family houses and made it really really efficient. You can scale and if you really love single family houses, then you probably should. At a certain point, you will not be able to get Fannie Mae & Freddie Mac Financing. Once you have got 10 finance properties, you will not be eligible. Well, then you look per portfolio lenders. Or if you are me, you will look for actual commercial lenders.

I will get similar, what your friend does, I have a line of credit with the bank of half a million. I will take my money or private money, I will buy the house and fix it up. Then I will borrow from that line of credit against the houses picks up and they will let you borrow 75% of the appraised value. The minute I have an appraisal in hand, there is no seasoning. D'accord? I pay back myself where I pay back by private money investor and now I have this line of credit. Let us say the house appraised at $100,000 of $75,000 against the house. When I have used up the full $500, I will buy a couple more houses with cash then I will go to a commercial lender and say, ‘I have got eight cash flowing properties. I want to borrow this much money against them.’

They will make me get another round of appraisals on everything and then they will let me borrow 70% or 75% of what they appraised that. I have cleared off my line of credit, I have got all my money back and I can really start over again, right? That system is infinitely scalable. I can keep going and going and going if I want and just hiring more orchard hands or whatever you want to call them to manage those rentals, right? For some people, that is what they should do. For other people, once you have got a base, you are going to take all that equity that you just made in your portfolio which should be worth several millions of dollars and convert that into something like one multifamily property that is super easy to manage, that is very very easy, like scalable. Like you have got like one guy that can do everything as opposed to me where I am spread out over five or six different markets, right? What I would recommend is like that is what I am going to do. I am going to take this all, I am going to put it into one or two really big multifamily buildings. I am going to have all of my table wiped clean.

Like now, I have got two property managers that managed by entire portfolio because they are into two properties, right? Then I just start building it again the same way I did the first time but way faster, way more efficient, way More simple because now I have got all these systems, right? Once I have got another 30 to 35 houses worth a couple million in equity, I will converted into multifamily again, right? I will be having multifamily for cashflow, single family for equity, building the equity, moving in a cashflow. At a certain point I can refinance these multifamily properties, but that back into the single family things scale faster. I have got both sides that are kind of synergistically working with each other. It should be building my wealth for me as opposed to me having to do it like I did as a cop just by the sweat of my brow and the cut of my jaw.

Brandon: Yes, that is genius actually. I never heard you explain it liked that before but I really liked that a lot. I want to go even a little bit more deeper into the BRRRR strategy here in the next segment of the show to make it just really like drive it home and that is not the Deal Deep Dive.

Hey, I want to take a quick break them today’s podcast episode to invite you to this week’s Webinar which is How To Evaluate An Offer on Rental Properties. Look, everyone knows rental properties can add to your net worth and provide consistent cashflow. But how do you ensure that property, that portfolio, is filled with solid properties that actually gets you closer to your goal? Well, that is what we are talking about it. On this free webinar, I am going to be walking you through the exact step by step process to evaluate part one of the webinars on evaluation, running the numbers, that even if you are brand new can use. Then how to offer. I am going to go through seven sneaky tricks that I use to get more of my offers accepted. Again, it is going to be awesome. Make sure you show up, but you got to register for it by going to BiggerPockets.com/eowebinar, that is EO, Like evaluate offer, eowebinar. I will see you there.

Brandon: Alright, let us get to the deal deep dive. The part of the show where we dive deep into one particular deal that our guests has done. Today’s guest of course is David Greene. David, let us go to the deep dive. Number one, what kind of property is this?

David: This is a property that actually my good friend Derek Clifford bought using the same strategies that I talked about in Long Distance Real Estate Investing and the BRRRR Method. I am using his because I do not want people to think that I am like cooking up my own numbers here, talking about my own deal. This was a duplex that he bought in Indiana.

Brandon: Oh, okay. Where did you guys find it? I knew you guys kind of worked together. It is not just you, but you and Derek.

David: Oui. He found this through a wholesaler in Indiana.

Brandon: D'accord. How much was it?

David: He paid $27,500.

Brandon: D'accord. Negotiation, what went into that?

David: He put it under contract, I believe, for about $34,000 and then after the inspections came back, there was some significant problems and because the seller was like pretty motivated to get this thing sold and really just needed the cash. He was able to negotiate the price down. There is something to be said for buying houses in this price range where the people who own these assets are usually not that financially savvy and just stayed that quick cash that they really need is more important to them then as much money as they could get.

Brandon: Bien. What was the final price then?

David: He ended up being all in after the rehab for $64,500 but the appraisal came in at $80,000.

Brandon: D'accord. What about funding? $80,000. What about funding? How is the initially funding?

David: He bought it private money and then he refinanced out of that private money with a bank loan.

Brandon: D'accord. Did you know what was it like? Like a Wells Fargo, like traditional, like Bank of America, Wells Fargo?

David: Yes, like one of the big banks exactly.

Brandon: D'accord. Then of course he BRRRR-ed it. That is what he did with it. Outcome of the thing? How much did you have invested in at the end then? He had a total of $64,500 into it. When he refinanced it, he got 75% of the $80,000 which means he got to pull out $60,000. He left $4,500 in this deal. Now, he was expecting his rehab to be a lot less. It was like around $30,000 he thought. He spent $7,500 or more on the rehab that he was anticipating because he was a little bit newer as an investor and he did not have a solid core for…

He kind of jumped in before he had all those pieces together. Even on a deal that he did not feel he did well on, he only left $4,500 in the deal. The house rented for almost $700 aside, it was $695 aside, for a total of $1,390 a month. Then after his financing, he cashflowed $450 total on this duplex where he left $4,500 in the deal.

Brandon: That is great.

David: Oui.

Brandon: Sensationnel.

David: That is a deal that went bad, that is the thing I wanted to point out.

Brandon: Oui. Okay, what lessons learned? I mean from what you know of Derek or anything you want to pull out as a lesson. You kind of mentioned it with…

David: Oui. He and I debriefed this one quite a bit, that is why I know it pretty well. I actually put that example in the book because I thought it was so good. The first lesson to learn here is that your contractor can make or break a deal. In my opinion in real estate investing single families, there is two things that go wrong consistently. If you avoid those two things, it is like your 80-20 rule, like you avoided 80% of your problems.

Brandon: Sûr.

David: The ARV can come in lower than you thought and often does and your contractor can screw up your rehab budget or not finish on time or just completely disappeared off the face of the earth, right? Derek did the thing that almost everybody does and he paid the person as an honest and trustworthy contractor should get paid upfront and then the contractor did not finish the work on time, right? Then as they open things up, they saw that more and more stuff was wrong. At that point, you are kind of pot committed at that point like you have left or maybe as pokers a bad analogy here especially when I am talking to you and you there is no rhyme or reason to how you play poker.

Brandon: I just win, that is what I do, David.

David: That is what you do. All I do is win. Tim Tebow of BiggerPockets over here.

Brandon: Hey, what is your strategy? I win, I win.

David: I win dominantly.

Brandon: Oui.

David: He did not have a great contractor, right? We are going to need to do the very same deal and in the very same deal in the very same market a second time, you would get a better contract, right? This is how repetition builds mastery. It is we are pointing out all the things that went wrong but it was the first freaking deal. Like you are supposed to have things go wrong, right? But if that is the only deal you do for the next two years, guess what is going to happen on the next deal, you are going to make all the same mistakes all over again. You go and you invest that money again. You get better contractors, you get better deal finders, you get better referrals. The whole thing starts to pick up steam.

Brandon: Parfait. Alright everybody, we are almost to the Fire Round but we are going to take a quick break here because I want to talk to you quickly about ironically water and how our sponsor, Flo, by Moen can help. Look, if you own any kind of property, water damage is actually twice as likely as theft and fire damage combined. This is why the Flo by Moen system is so great. It helps detect small leaks that end up causing big expensive problems. It is basically a whole home water monitoring and leak protection system in just one device. It also detects if the water has been left running or if a pipe is burst. True story, recently on my mobile home park, a pipe burst and I have not gotten the bill for it yet but it is going to cost hundreds of dollars in extra water, not to mention it could have caused a lot more damage to one of the homes there.

Look, the Flo by Moen System can protect against that. It can even shut off the water to protect your property. Some insurance companies are even giving discounts if you have a Flo by Moen installed. Get this, because you are a BiggerPockets of listener and you are awesome, you get 15% off of Flo by Moen. Go to meetflo.com/bp. That is meetFlo.com/BP and use code BP15. That is BP 15 for 15% off. Again, go to meetflo.com/bp and use code BP15.

It is time for the Fire Round.

Brandon: Alright, time for the world famous Fire Round. Of course, these questions come direct out of the BiggerPockets of forums, which you can visit at BiggerPockets.com/forum. Let us do this. Number one from Tyler, ‘Does anyone else see this major flaw in the mystical BRRRR strategy? At the end of the day, arguably the most important element is the refinance and the appraiser from the lender of your choices as a single event that tells you whether you successfully complete the BRRRR. These appraisers are not investors, they do not understand the concept of buying discounted properties. While I prepare a nice packet for them with my rehab, I acquired it, Blah, blah, blah. Still, how are you going to get that? He is basically saying you are hoping that they are going to agree with your ARV and you are just living on hopium. Est-ce vrai?

David: That is our favorite line right there. Yes, you definitely do not want to be relying on hopium. The first thing I would say to make sure that this does not happen to you is you have to understand the way appraisers think. Tyler here, while he is making a strong effort, is actually trying to convince an appraiser to think the way that he thinks, right? You are saying I prepared a nice packet with my rehab. I explained myself and how I got a discounted. I told them why I think what is worth what it is worth, but really you are better off to look at it from their perspective.

In fact, that is really the case in life, right? The appraiser is supposed to be as objective as possible and they do not really care what you think. You need to look at the comps in the area and say, what would an appraiser think, right? If your agents are giving you comps that are $150,000 but there is other comps that are $60,000 or $70,000 compared to your house, it does not matter what you do, they are going to use those and it is going to drag your value down. Sometimes you just got to pass up on a deal if you are going to be relying on an appraisal because the comps are just too all over the place, right?

Your ideal markets is like where see investors do this really really well at a high level are markets like Kansas City, Phoenix, Arizona, to a smaller degree like Las Vegas. Areas where there is a lot of track homes, right? It is just like the same thing all the time. All the houses around there have a very small margin for error as far as the appraise value. I see this as a real estate agent all the time. When someone comes to me and says, ‘David, I want to sell my house.’ If I pull comps and there is comps at $900,000 and there is comps at $500,000. That is tough. It is very tough to get a buyer to be comfortable paying $800,000 when their neighbor paid $500, right? I am like, man, everything is right here in between $600 and $650. That is a very easy way to value what that house is worth. Because I know that at working as an agent, I applied it to my investing world.

When an agent sends me comps that are $125,000 and I have a property manager or somebody else look at it and they are like, ‘Well, look at this house. This one sold for $60,000.’ Oh, that is a great down the street and it is pretty much the same thing, right? I would just avoid buying that deal. I do not want to give an appraiser any ammunition to find a way to give me a lower value and then spend my effort trying to change his mind. I would rather put the effort in up front looking at what he is going to be looking at and making my decision based on that.

Brandon: Perfect, perfect. Alright, next one.

David: It is a BRRRR-fect.

Brandon: BRRRR-fect, funny. Ryan said, ‘Hello, BP. I am looking for insight on the BRRRR method with regards to purchasing the property. If you do not have enough cash to purchase the property alright, can you use other alternatives like a Heloc or 401k or something like that? Then if you did that, would not that just hurts your debt to income ratio when you are trying to cash out refi?

David: Ryan, great question man. You are thinking the right way. I really liked this a lot. Vous pouvez

use things like a Heloc or 401k or cash advantage. I do not know a lot about the 401k world to be honest with you, because I never had one. I worked as a cop, we have a pension and then all my money, I just put it in a savings account to buy real estate with. I know people do it, I do not know the rules and how that works. You got to talk to one of those experts to find out. My understanding though, I am not a lender yet, I am working on that, is that it will not hurt your debt to income because you are not actually taking on. I mean the heloc might be adding a little bit of debt, right? Like if you borrow $50,000 on a heloc and the bank says, ‘Well, if you borrow the full $50,000, you may have to pay $400 bucks a month or something.’ That could affect your debt to income, but it really should not be so much that it prevents you needing a loan unless you are already living on like a razor thin margin, right?

Brandon: I mean if you are going to refinance anyway and pay off that heloc, the lender will not count that anyway, right? Like unless you are going to hold on to that he locked after the refi. But like refi when they are calculator number is, this is the way I did it when I was a lender, like a banker. Like you would say, ‘Oh, they are paying off that credit card with the refinance. Okay, then we do not have to count that payment because it will not be there, right?’ Like when we pay it off, that will no longer…

David: That is a good question. Did you guys make them sign a statement saying that they would be repaying it off with the funds?

Brandon: Yes, yes. We would actually pay it off. Now, granted they would go in and just drive that credit card right back…

David: Bien sûr.

Brandon: Or take out that heloc but they do not… Like that is not the point. The point is like what do you actually have debt and you have paid it off. Je ne sais pas.

David: It should and it should not be a ton of money, right? It is not like you are going out and buying a Ferrari and now you have just set yourself up for $2,200 a month of debt.

Brandon: Oui. If it is a heloc, you are looking at a couple of hundred dollars a month.

David: That is exactly… That is why I recommend at least using heloc prudently.

Brandon: Oui.

David: It is like the cheapest loan you can ever get. A loan you give to yourself based on your own equity. It is interest only and it is usually at a really low rate.

Brandon: Oui. Sûr.

David: The question was is it possible to BRRRR with a conventional loan? It is, but it is not efficient and that is why we do not like to do it.

Brandon: Oui.

David: If you can get a conventional loan, the house is not in that bad of shape, the odds are you are not getting that good of a deal, be your paying closing costs, which are probably like your most expensive costs this entire thing twice. You are paying closing costs once when you buy it and then again when you refinance it which means you might have just taken $8,000 to $10,000 that you have to add value to that home just to break even from the closing cost. You can do it with a conventional loan. In my experience, people only do that because it is convenient, not because it is smart.

Brandon: Alright, good answer. Next one. Brian from Saint George, Utah said, ‘I have been listening to the podcast, learned about the BRRRR method. It makes sense, I get it, but had a clarification question. When you refi, I am assuming that is a cash out refi, right? Are there greater restrictions on a cash out refi? Like could you maybe go to 80% LTV on a cash out refi for an investment property? Is it different or is that pretty much the same? Obviously, you are not a lender here, but based on your experience, David.

David: On my experience, yes, it would be a cash out refi and there are bigger restrictions. The biggest restriction is usually the loan to value will be a little bit less. Not a lot, but like you may not get a full 80%, you may get 75%, and your interest rate will be a little bit higher, right? But these questions are actually incredibly easy to answer if you do what we said earlier and you go to a bank ahead of time and you say, I want to get pre-approved for a loan, here is what they want to do. Because they immediately hear that and say, ‘Oh, this is a cash out refi. Here is your rate and here is your loan to value.’ You are not going to be hit by the surprise if you line your dominoes up before you actually step into the arena.

Brandon: Alright, I like it. Alright, well that was the end of the Fire Round. Before we get out of here today though, let us get to today’s Famous Four. These are the same four questions that we ask every guest every week. Let us throw them at you right now, David. Any current favorite real estate books? Anything you have been consuming lately? Real estate related wise. It is a long break, long pause here. Look at David, thinking up into the right. It is like he did not know this was coming.

David: Je connais. I think that I have just answered this question so many times, I am trying to think of a new book. A lot of the stuff that I am reading right now is like real estate agents stuff when it comes to sales like that. Not quite as much investing. I still really think that like The Millionaire Real Estate Agent is one of the best books that has ever been written. Even if you are not an agent, just to understand like the concept of taking models and applying them to a business.

Brandon: I still need to read that one. Number two, favorite business book?

David: So Good They Cannot Ignore You by Cal Newport. I love that stinking book. I recommend to everybody, read it.

Brandon: Did you read his new one yet, Digital Minimalism?

David: No, but I have heard you talk about it so much I might not have to read it. You are like my own personal, what is it, Blinkist? The company that…

Brandon: Yes, I am your Blinkist, Brandon ‘Blinkist’ Turner.

David: Beard Blinkist.

Brandon: Beard Blinkist. Number three, hobbies.

David: I love sports. I love learning. I have a lot of fun like playing video games. I probably should not admit that as a grown up, a think I really like to do. Then like anything that pushes me and challenges me to do better, I am probably be interested in.

Brandon: Alright, I like that. Last one. What do you believe sets apart successful BRRRR investors from those who give up fail or never get started?

David: Yes, if you want to be good at BRRRR investing, it is really a matter of

educating yourself on what you are going to be doing. The more educated you are, the lower fear you have, right? Fear is what stops most people from moving forward. When you go out there and you take the emotion of fear and you turn it into a question, which is fear is almost always based on the uncertainty, I do not know what is going to happen, right? The more you get those questions answered and so you feel like you do know what is going to happen. Something as simple as getting a pre-approval from a bank before you go buy a house like that is just to remove so much anxiety right there. The more likely you are to be successful. I feel like the successful investors are the ones that take proactive steps to remove the negative emotions that they have as opposed to just waiting to get started for those things to go away on their own.

Brandon: Alright, alright. I like that, fantastic. Well, David, it is the end of the show. It has been a good one.

David: I got to talk about BRRRR for the entire time.

Brandon: Yes, it was like six hours of BRRRR investing talking. That is great. Let me ask you again, well, first of all, where can people find out more about you and then where can they get the book?

David: They can find out more about me on Instagram, I am DavidGreene24 or Facebook. Pretty much all social media, LinkedIn, everything. I am always DavidGreene24. Then if you want to get the book, I would recommend you go to BiggerPockets.com/BRRRRbook, that is BRRRR with four R’s. You get all the bonus content and you really get like… You can see the endorsements of the people who liked it. There is actually quite a few people on there that I respect a lot that really gave me a good review on the book. In my opinion, if you want to be a black belt real estate investor, you have to understand the BRRRR method. If you can get that down, you will understand everything that we talked about at a much deeper level.

Brandon: Perfect, perfect. Bien. Then lastly, David Greene, do you want to end the show? You want to take us out even though you are the guest today, but I will let you take it out if you want.

David: I knew you were going to do this to me because you just do not like being on the hot seat of having to come up with a clever nickname.

Brandon: Je connais. I will call you David Blinkist Greene, but…

David: But I already called you that, right? That is kind of…

Brandon: I know, I am not clever.

David: … at this point. Alright, this is David Greene for Brandon ‘Not Clever’ Turner, signing off.

Brandon: Not Clever.

You are listening to a BiggerPockets Radio. Simplifying real estate for investors large and small. Si vous êtes here looking to learn about real estate investing without all the hype, you are in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com, your home for real estate investing online.

This is a BiggerPockets podcast show 327 and a half.

You’re listening to BiggerPockets Radio. Simplifying real estate for investors large and small. If you are here looking to learn about real estate investing without all the hype you’re in the right place. Stay tuned and be sure to the join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online.

Brandon: What is going on everyone? My name is Brandon, host of the BiggerPockets podcast and you’re about to hear a different type of show. Actually, a show with my cohost, Mr. David Greene. Because yesterday here on the BiggerPockets podcast we talked for like a good hour about the BRRRR strategy, which stands for buy, rehab, rent, refinance, repeat. One of my favorite if not my favorite strategy in all of real estate, how I built my entire portfolio.

You heard about it yesterday. If you didn’t listen to that go listen to that show. C'était incroyable. David Greene just tells us everything you would ever want to know about BRRRR investing because we launched yesterday the BRRRR Book.

It’s called, the official title Buy, Rehab, Rent, Rent, Refinance, Repeat. The BRRRR rental property investment strategy made simple and so today this half episode we’ll call it a half episode. We got kind of a special treat. It’s actually just David is reading an excerpt, excerpt from the book. I never know how to say that right here and we’re going to listen to that so by the way if you get the audiobook, if you end up actually getting the audiobook from Audible or whatever just don’t be throwing off.

There is a professional narrator actually recording that one, but today we actually got David the man to record this episode so anyway. Speaking of which if you liked today’s or yesterday’s show or today’s snippet of the book you can actually pick up the BRRRR Book by just going to BiggerPockets.com/BRRRRBook. That’s BRRRR with four Rs. BRRRR Book, the ultimate package comes with every format of the book and a ton of bonus content.

I’d highly recommend that so you get the audio, digital, physical, and a back rub from David. It’s amazing so you get it exclusive also like a 20 page not really a backrub. You get exclusive 20 page e-Book from David on long distance BRRRR-ing. You get a BRRRR PowerPoint and presentation that you can use to show private lenders the deal and access to a live Q&A webinar with David.

Vérifiez-le. The ultimate package is like $49 bucks. Totally worth it. Without further ado though let’s get to today show, which is just David Greene the man reading part of chapter 2 of the new book about how to buy properties under market value. Hope you all enjoy it.

David: Finding property deals and analyzing them. As I mentioned before the most important step in the entire investment cycle is finding a great deal. There is no substitute for it and if you learn how to do just this one thing well you’d probably do great with investing. Finding great deals is party number one if you want to BRRRR successfully.

Before you can find a great deal you need to be able to recognize one. Every investor needs to know what they’re looking for and only then can you know where to find it. I highly recommend writing down your criteria and sharing them with other investors. I know my own criteria very well and share them with everyone I know.

My criteria are simple and logical. I look for three things in a deal. Number one, to be all in for 75% of the ARV. Number two, to cash flow positively. Number three, to be in an area that won’t cause me a headache. Now, these criteria might seem oversimplified, but take a deeper look and you’ll see why they work so well for me.

If you want to be all in at 75% of ARV there needs to be a significant amount of equity in a deal before I’ll even look at it. This weeds out marginal deals and prevents me from talking myself into a mediocre deal just so I can say I bought something. It protects me from making bad decisions and ensures I have a built in safety net in case something goes wrong with the rehab or the ARV. If I need my property to cash flow properly I won’t be spending much time looking at anything that isn’t in a 1% rule area.

This saves me time and energy. Number three, if I’m avoiding headache areas I’ll also be avoiding a lot of long-term bad investments. Investing is more fun when you’re not constantly frustrated with evictions, destroyed properties, and late rents. I also end up buying in areas that appreciate faster than the surrounding neighborhoods so I can refinance several times over the period of time I own the property and reinvest the money I pull out. Because I know what I’m looking for, I also end up knowing where to find ideal properties.

I spend very little time analyzing the vast majority of properties that other investors waste their time looking into. The more I know what my target looks like, the quicker I realize it when I see it. You should do the same. Knowing what you’re looking for in a deal comes first, but you still have to be able to analyze a deal in order to know if it makes sense to buy.

In my experience, the number one factor that prevents investors from building wealth is the fear of what could go wrong. The more fear someone has, the less likely they are to take the steps required to move forward. We can’t learn if we aren’t moving forward. If you want to overcome fear, get good at analyzing deals. As Brandon Turner, the best-selling author of the book on rental property investing and the BiggerPockets podcast cohost says, “Overcome fear with math. Math won’t lie to you. It’s not subjective. Math won’t confuse you or leave you feeling disillusioned.”

What Brandon is really saying is this, if you’re feeling afraid of the deal, get better at understanding what the deal is with concrete numbers and the fear will disappear. Understand how to analyze a deal will take so much of the fear and uncertainty out of the decision. When I talk to would be investors about what holds them back almost every one of them tells me the same thing. A laundry list of fears or concerns they have about what could go wrong.

When I asked these same people what they have done, learned, or studied about how to handle those problems they almost never have an answer. The solution is simple. Learn to analyze properties and you’ll find yourself feeling much better about the decision to be made regarding whether or not you should buy. The best way to get good at analyzing deals is through practice. Repetition and practice build mastery. When you first start to analyze properties there are two things you should focus on.

Not coincidentally they are the same top two things I consider in my own criteria. The first is how much you’re buying a property for under its value, how good the deal is. The second, is if the property will cash flow positively or not. To know how far below value you are buying a property for you need to understand a few things. The first is comps.

Learn how to find comps and compare them to the property you’re evaluating. Other people like agents, appraisers, and wholesalers can help you with this. You can also do some of this research yourself using listing portals like Zillow.com or Realtor.com. The next thing to understand is rehab costs.

Learning how to estimate rehab costs is really beneficial. Talking to contractors, handymen, and other investors is a great way to build up your confidence in this area and know if you’re overpaying. You want to see the projects from their eyes. If you’re using the BRRRR method, you’re very likely to be doing significant rehabs. Learning how to estimate rehab costs is a skill that will come in handy.

The last thing to learn is being able to determine whether or not a property will cash flow. My favorite method is what I call the napkin method. You’re basically taking the five different inputs involved in just about every purchase and quickly calculating them by writing them down on a piece of paper or a napkin. The five inputs in deals are number one, rent.

Number two, mortgage payment. Number three, property tax. Number four, insurance and number five, property management fees. We’ll talk more later in the book about how to calculate these numbers more accurately.

For now, I would recommend creating a baseline in your mind for an average amount of each one. When you look at enough homes in a specific area, you start to get a basic idea of what they cost to own. This basic idea becomes the baseline you will use to help recognize a deal that stands out. For instance, if you’re looking at houses between a $100,000 and $120,000 in an area and you look at enough of them you’ll start to recognize patterns in the numbers behind them.

Rents may average $1,000 to $1,200 a month. Mortgage amounts maybe around $450 to $550. Taxes maybe about $100 to $125. Insurance costs may run about $40 to $50 and property management fees at 8% would be about $80 to $96. If you use all conservative numbers in these estimates you could come up with a baseline to add up either in your head, on a calculator, or on a piece of paper, or a napkin of course.

If you continually do this often enough you’ll start to find patterns in the way the numbers read. Once you recognize these patterns, a good deal will stand out immediately. That is what you’re looking for. The only way you get to this point is by repeatedly analyzing deals over and over and over.

Those who can make the fastest decisions are those who have the most experience. Just like new quarterbacks struggle in the NFL because they don’t have much experience as reading defenses yet new investors will struggle because they haven’t analyzed enough deals. Commit yourself to analyzing several properties a day, five days a week. Do it until you feel you know the result before you even run the numbers.

Once you get to that point, you’ll find your confidence skyrockets and your fear of the unknown decreases significantly. We want to commit to mastering real estate. You can’t claim to be a master of something until you can anticipate what is likely to happen before it does. In this specific circumstance, you want to be able to anticipate which deals will pencil out and which won’t before you make the time to analyze them thoroughly.

Still don’t believe you’ll ever be able to do this well? Compare it to other everyday chores you do without even thinking about it. As you walk through the grocery store, you recognize a good deal when one of your staple food purchases is on sale. The reason is simple, when you’re used to looking at something over and over your mind remembers what falls within the pattern of normalcy for that item.

When a sale occurs that is outside the normal pricing it immediately catches your attention. Real estate isn’t any different. Maybe you just haven’t been looking at it as much because it feels more intimidating. Rockstars know rockstars. Finding talent to help you find deals. Once you know what you’re looking for and how to recognize if it’s what you want the next step is to find people that help you do it.

A personal loan can only do so much, but by leveraging others whose goals align with yours you’ll find that your success will start to come much much faster. Rockstars help you accomplish as much as you can in a short amount of time as possible. Compared to painstakingly going at it alone. Rockstar is a synonym in the world a real estate for someone who is really really skilled at their job. There are many musicians in the world, but there are very few rockstars.

If other people can help you succeed fast, a rockstar can help you succeed at ludicrous speed. They are the cream of the crop, masters over their profession, and are equipped with life-changing talent and often have already endured years in the crucible of real estate investing. Having just one rockstar in your corner can make you immensely successful. One of the core principles of your business practice will be to find, attract, and work with as many rockstars as possible.

When I look to buy in a new area my first priority is to find my core four. The core four are the four people I need to invest in any market any time. These are the people who will be running my business for me, making me money, and helping me become successful all while returning the favor. They are my dream team.

Even if you’re looking to invest where you live, you’ll still need a core four. The following examples of what it looks like to have a rockstar at each position. Number one, the agent. Rockstar agents have the best referrals because they only work with top lenders, contractors, handymen, and property managers. These agents are never hurting for business.

Don’t lower their commission and know real estate like the back of their hand. Rockstar agents got to where they are because they know how to close deals. They found the right people who can fix problems when they arise and they have very low tolerance for people who don’t. Rockstar agents are usually very resourceful, knowledgeable, and creative. These are all the traits you want working for you when it comes to building your wealth.

Finding a rockstar agent should be your first priority because they can help you find the rest of your core four. You’ll recognize a rockstar agent because they aren’t bending over backwards to win you over. They are professional, courteous, and helpful, but they have a confidence in their process that won’t take a second place to a newer investor. Rockstar agents want to educate you on the process, but also get right to the point.

If you want to work with an adept agent you’ll need to be comfortable following the process they have in place. It’s there because after hundreds of deals they’ve learned the best ways to secure them. Number two, your lender. A rockstar lender is the one who doesn’t throw in the towel easily. They have access to the most loan programs and when a loan doesn’t work they know how to go find one that will.

Rockstar lenders know how to help you repair your credit how to find ways to manipulate data to get you better rates and terms and can solve problems when they arise. They are tenacious, resilient, and they hustle. Finding a stellar lender can open up refinancing doors for you that a regular lender cannot. Rockstar lenders become that way because great agents brought them clients.

They understand customer service and they need to go the extra mile. A rockstar lender won’t say no without proposing an alternative solution. When you find the right lender ask them about the best agent they know when it comes to finding investment property or other lenders they know that do the kinds of deals you need. They can’t do the kind of deal you need, a great lender will know someone who does.

The best way to find a great lender is to ask top producing real estate agents would they recommend. If the agent you’re speaking to works with a lot of investors they are more likely to know the lenders who will do loans for investors. Tell your agent you want to buy properties with them, but you need financing. Then ask who they know. If they don’t know of anyone ask them who they can talk to who does.

If your agent simply won’t make an effort to find you a lender look for another agent who will. When you do find a rockstar lender they often have too much business to handle on their own and have hired team members or employees that help them keep up with the demand. For many of those inexperienced in real estate this can feel uncomfortable or offputting. Try to remember it’s a good sign if your lender is doing so much business they need help.

At the end of the day, this is a business transaction and if you don’t always speak to the main lender on every phone call that’s okay as long as the transaction closes. Number three, the contractor. Rockstar contractors may not look like what you think at first. They may not answer your calls right away or be the best communicators. That’s not what makes a great contractor, at least not for an investor.

An ideal contractor for an investor is someone who understand what needs to be done, how to do it, and how to save you money on it. They are the contractor who understands your business goals, not just their own. These are people who can tell you what the best plan of action for your property is before you even look into it. Rockstar contractors get the job done inexpensively and correctly.

These are the people who know when they can save you money with tile they found on sale or can make repairs the existing structural components when an average contractor would go make you buy new materials. These contractors are always looking for ways to make themselves money by saving you money. They understand your needs. Great contractors can communicate with the city for you to get permits approved and can provide you with recommendations that other contractors wouldn’t think of. Great contractors know the best roofers, HVAC services, plumbers, electricians and more.

They are concerned about your bottom line, but they are also concerned about their own. Knowing a rockstar contractor can open up doors for you to buy deals that you couldn’t even consider without them. Number four, your property manager. A first rate property manager is someone who knows the areas you’re investing in. They manage many rental properties in the area you’re investing and they have a large sample size of properties they’ve learned from.

These people know which areas work and which do not. They will share that information with you if you let them. Rockstar managers likely own properties themselves and that’s why they get into property management. They have access to the best handymen or repair crews because they’ve been looking for them for their own properties.

They can be an excellent source of referrals for you and they can also often times be an underutilized deal source. These property managers know other investors who want to sell before anyone else does. They are the ones managing those properties. Top rated property managers tend to take care of your problems without getting you involved and are better at handling them than you would be yourself.

They are more experienced than you, more connected than you and more knowledgeable than you. When you find the right property manager they will teach you more about investing than you could hope to teach yourself and they make you better just from being around them. You know you have found a rockstar property manager when your first inclination is to call them when a new deal comes your way. Rockstars play with rockstars. When you’re a rockstar and you know you’re an actual rockstar, you don’t waste your time playing with mediocre bandmates.

The best will always surround themselves with top talent and demand everyone put in equivalent effort. They search for the best drummers, the best vocalists, best guitar players, everything. In my experience, top-level talent only works with loyal and honest clients. If you aren’t someone who’s serious, they’re going to figure that out pretty quickly. If you aren’t someone who’s honest or fair, they’ll know that too.

If that happens, you’ll likely find yourself kicked out of the concert and listening from the parking lot while everyone else rocks out. In the world of real estate investing that can end up costing you a lot of money. Don’t let that happen. If we already know rockstars play with rockstars start working on becoming one yourself.

Everyone asked me how do I get the best to work with me? La réponse est simple Become someone worthy of working with them. Agents are in this business for the same reason you are, to make money.

So are lenders, contractors, property managers, everyone else. Too many investors think it’s okay for them to make money, but expect everyone else to serve their needs for free. This kind of thinking will never get you anywhere, but frustrated. Top talent expects to be paid for their work and they aren’t shy to admit that. If you are too worried about what someone else is making, you’re not focused enough on the role you’re supposed to be playing in your business.

If you want the best to work with you, start acting like you’re the best. Learn to give value first. Learn to find what these rock stars need in their business or their life and bring that to them. Take the attitude of the servant first, putting your fears behind you and instead focusing on proving to them why it’s in their best interest to help you. I know this sounds counterintuitive, but it’s the best thing I’ve done to help grow my own business.

Now if you’re reading this section and think it’s bad advice, my guess is you probably trusted the wrong person in the past and got burnt for it. Don’t make the mistake you’re trying to prove yourself to mediocre or below average talent. That is the fastest way to get taken advantage of. Bad agents, contractors, lenders, and property managers will screw you over if you let them. Rockstars won’t.

Practical advice for proving your value to top level talent. If you’re looking for some easy ideas for how to bring value to core four you want to surround yourself with, here are a few that worked for me. What I found is before I could learn what others need, I had to first learn how their job worked. Once I figured that out it became apparent how I could help each person.

Trying to bring value to someone before you recognize their business model is an exercise of futility, but taking some time to walk in someone else’s shoes will help you find the best way to assist them. Agents, agents live by referrals. If you can send an agent business, you will be making them money. That is going to lead them to be very loyal to you and make them very happy.

An easy way the send referrals is by talking to your friends about real estate and sending the serious buyers to the agents. Start an online blog, meet up, discussion group, or chat room and send interested buyers to the agents you want to make a good impression on. This will help people remember to send you deals as well as score you points with agents. Remember to only send serious buyers do the agents. Sending them quote referrals who have no intention to buy, but instead only want a free education is a great way to prove you bring work without pay, not the reputation you want.

Communicate openly with your agent. Tell them exactly what you’d like them to do and share your thoughts. Agents want to help you, but they can only do so if you know what kind of help you want. Take it from me, as an agent.

Celui-ci est grand. Give them great reviews online. Give your agent a great review on Facebook, Zillow, Yelp, or Google can earn you some major brownie points. Call your agent’s boss and tell them how great they are. Find out who supervises them and give them a great review. Ask them what they need in their business and help them find it. If they work with alot of investors, they may very well need a solid handyman to fix dry rot or a great roofer who doesn’t overcharge.

If you can give them a referral they need, you’re likely to get to the top of their list when the next great deal comes along. Give them bonuses. Yes, a note to an investor this idea seems painful. Penses-y. I often buy houses for $40,000 that are completely trashed. How much is my agent making on that?

Giving them a bonus to at least help them make a decent amount of money is a great way to stay in their good graces. Lenders, lenders also want referrals. Send your friends their way. Online reviews, this works for lenders too.

Let their boss know you appreciate their hard work. Introduce lenders to websites like BiggerPockets.com. Many lenders don’t realize there are entire communities of people out there who are looking for an investment property and need a lender. Check in with them once you’ve introduced them to BiggerPockets and see if they’ve gotten any clients.

It never hurts to remind someone what you’ve done for them. Give them great references to rockstar agents. This is how lenders get their deals. If you do this, they’ll love you for it. Give them a shout out on social media. Let everyone know how great they are by tagging them in a nice post and make sure they see it too.

Contractors, pay them on time. Seriously, just do it. You have no idea how much this means to a contractor. Pay them in a way that isn’t a pain in the butt for them. I found wire transfer to be the easiest. Don’t ask them to work for free.

If you want additional work done ask them how much more it will be and make your decision accordingly. Don’t micromanage. Nobody likes that. Don’t beat them up over little things like $10 off on the paint quote. They’ll remember and they’ll return the favor.

Posez-leur des questions. Some contractors are willing to do certain jobs, but don’t enjoy it. Things like laying tile as opposed to laminate. If it doesn’t matter to you, have them do the laminate instead so they know you have their back. Ask them what work they’re doing and what they are contracting out.

They can give you better prices on the work they do themselves. It puts them in a bad position when you want them to reduce the price significantly for work they are subcontracting to someone else. They won’t feel comfortable negotiating someone else’s money. Don’t ask them to bid jobs if you’re not serious.

If you do, pay them for their time. Sending someone to bid a job when you weren’t likely to buy the property and not paying them is a great way to let them know you are not a rockstar. Send them referrals whenever practical. Send them leads for people they can hire.

Contractors are always looking for new employees and often frustrated with the process. If you know of a hard worker who is dependable, let them know. Property managers, send them referrals. Are you noticing the pattern here? People love referrals.

Ask them what investors do that makes their job harder and try to stop doing it. Read the actual management agreement and address the issues you see before signing a contract with them. Don’t be that person who throws a fit when you’re charged for something you didn’t bother to look at first then blame them for it. Don’t call them incessantly over unimportant things.

Property management is a low-pay time-consuming job. They have to be very careful with their time. Show them you respect that. Ask them about properties before you buy them.

Get them involved in the process and rely on their expertise early on. If the house doesn’t rent for what you thought it would don’t automatically blame them. They can’t control the market. Reply to them in a timely fashion like you’d want them to reply to you.

Find other investors and introduce them to the property managers. They’re always looking to grow their network. Find out if they are licensed and if they are, let them find you deals. This is good supplemental income for a lot of them. Tell them what you need so they can be on the lookout for you.

Communication here it is also essential. Finding ways to bring value to others is one of the most important business skills you can learn. Considering that one good property can bring you hundreds of dollars in monthly cash flow and tens of thousands of dollars in equity it becomes apparent just how much money you can lose by not treating people well. In business there is a popular maxim. Your network equals your net worth.

Relationships bring and build business. Understanding the rockstars know rockstars concept is the first step in finding good talent to help you accomplish your goals. If you want to work with the best, you need to be the best. Finding a rockstar is better than finding a deal because they can bring you many deals. The search for talent should be number one on your list when looking for great deals in the acquisition stage of your investment cycle.

Brandon: All right, and that was today’s half episode of the BiggerPockets podcast. Hope you enjoyed that little excerpt, excerpt of the BRRRR Book. Make sure you pick up a copy of that. Just go to BiggerPockets.com/BRRRRBook.

That’s BRRRR with four Rs. You can also just go to BiggerPockets store or you can check it out on Amazon or Barnes and Noble or you could just drive to David’s house and you know get a copy from there. Ne fais pas ça. Thank you guys for being a part of the BiggerPockets Podcast. Make sure you’re following BiggerPockets over on all the social networks that you normally would @BiggerPockets and follow David over @DavidGreenee24 on Instagram.

Let’s blow up his Instagram today. With that, I’m going to take off. Thank you so much for David author man Greene. My name is Brandon, signing off.

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