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Financing Rental Properties The Right Way

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Financing rental properties the right way is a video about the two most commonly used ways to finance rental properties for real estate investors. The first way to finance a rental property is Investor A who purchases a $100,000 property and leaves $20,000 in the deal. He starts with $100,000 capital to invest. After 5 houses leaving in $20,000 this investor will run out of money. Investor B finances his rental properties using the BRRRR method which stands for Buy Rehab Rent Refinance Repeat. You are buying a house at a discounted rate and then forcing the appreciation upwards and value up to where the house is appraised at $100,000. So say you bought it for $50,000 then had $20,000 in repairs and then $10,000 in carrying, financing, and closing costs your total liability is now $80,000. The bank will lend you $80,000 or 80% of the $100,000 appraised value loan to value. Now you have a financed house and your original capital to reinvest. You can do as many rent houses as you want now. financing rental properties I buying rentals I rental properties I landlords I financing houses I cash flow I rent houses I Connor Steinbrook I Investor Army I calculating rental numbers. Learn More About Our Home Study Program: Flip Army - How To Flip Houses The Investor Army Way https://info-investorarmy.clickfunnel... Contact us at: [email protected] For More Resources And Opportunities To Take Your Business To The Next Level Go To…… http://www.investorarmy.com/ Visit Our Other Youtube Channel “Investor Army Podcast” For More Videos By Connor Himself https://www.youtube.com/channel/UCmay... Follow Us On….. Facebook: https://www.facebook.com/InvestorArmy/ Twitter: https://twitter.com/Investorarmy Linkedin: https://www.linkedin.com/in/connor-steinbrook-58b2b9a1/ Google+: https://plus.google.com/u/0/108318927307224577838 iTunes: https://itunes.apple.com/us/podcast/investor-army-podcast/id1234085118 Blubrry: https://www.blubrry.com/investorarmypodcast/ Instagram: https://www.instagram.com/investor_army/?hl=en
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Text Comments (228)
JASON M (1 day ago)
Can this be done starting off with 50 thousand.
Investor Army (1 day ago)
yes it can be done starting out if you do not have hardly any money if you find money partners go watch my videos on raising private capital
Grey Beard (3 days ago)
Subtle little switch you pulled there. I should be amazed that the twenty thousand down guy runs out of money before the guy who can find houses at half that hundred thousand dollar price? If you are doing this, good on you, but why are you comparing apples (100k houses) to oranges (50k houses)?
London Rouse (7 days ago)
straight to the point. awesome video!
Greg Hilinski (10 days ago)
Try that in Las Vagas and see what you returns are. I have a few properties which i make some money on and expect to sell at a profit over time. Your scheme build s cash fast as long as you can get into an appreciating market and greedy banks. Las Vegas all over again.
Investor Army (9 days ago)
every market is different
Jason Hendrickson (19 days ago)
It looks easy when you use ridiculous numbers in your calculations. A $100k house that rents for $1,200/mo? Lol. Finding a house for half that amount to BRRR? Lol. Ignoring the difference in interest rates between scenario 1 and scenario 2? Lol.
Jason Hendrickson (18 days ago)
+Investor Army Prove it. Show me $100k homes that rent for $1,200. Not unicorn off-market deals that only come along once in a blue moon, but an actual area where $100k homes exist where the average rents are $1,200/mo.
Investor Army (19 days ago)
Jason what is unrealistic is that you are so arrogant you cannot slow down to think outside yourself to be openminded enough to realize there are other markets $1200 rent is 1.2% of 100K value houses are you going to also tell me that in some markets you cannot rent a 40K house for 2% or $800??? maybe instead of telling me I am wrong bc numbers in your market or world don't exists but not be so close minded....
Jason Hendrickson (19 days ago)
+Investor Army Once was enough. I can write numbers on a whiteboard too. That doesn't mean they're realistic. You don't even run the same scenarios for both examples ffs. Why not put $20k down on a $50k property, spent $10k to rehab, carry a lower interest rate FIXED loan amortized over 30 years for the $30k balance and then rent for $1,200 (assuming those numbers actually work somewhere on planet Earth)? You'll be further ahead with less risk than leveraging a mini empire on adjustable rate, cash-out HELOC loans, not to mention saving a small fortune on not duplicating closing costs for each property. Now run these calculations with actual real world numbers - i.e. where a $100k home doesn't rent for $1,200/mo and where cash-out HELOCs on investment properties have a >6% interest rate and you'll see this is pure delusion.
Investor Army (19 days ago)
Jason re watch the video
NoPainNoGamexd (1 month ago)
wow, very informative. So maybe I misunderstood this concept. Do the banks refinance a home based off the value of the property or the money that has been put into the property only?
Investor Army (1 month ago)
you are welcome I am grateful for you watching the channel
NoPainNoGamexd (1 month ago)
+Investor Army Thank you so much for all you do, really appreciate it
Investor Army (1 month ago)
off the value of the home when you get a LTV or loan to value loan
Matt Quaile (1 month ago)
Show me a bank that’s going to give you 5 different mortgages
Investor Army (1 month ago)
Matt you have probably not even sat down at 5 banks face to face...go to community banks and credit unions that keep the loans in house...many people have way more then 5 or even 10 loans somehow they got them right?
Sean Z (1 month ago)
2 family in my town costs over 400k :(
Investor Army (1 month ago)
need to look in cash flow markets I hvave video talking about where these are
Politicalboxers (1 month ago)
So me the bank that loans at 4.25% on investment property. My experience is more like 7.25%.
Diego Lopez (1 month ago)
I've been searching the web for a video that explains cash out refis and this one is it! Already knew the general picture but now i've got the minor details down pat. Thanks!
saul santana (2 months ago)
Great video bro! what if you dont use other lenders what do you mean you will run out of time?
Steve Huddleston (2 months ago)
Property taxes only $1800 per year? Maybe in the backwoods.
Investor Army (2 months ago)
mainly in midwest and fly over country but on the coats and in NE not likely
clarkewi (2 months ago)
Where do you get a property for $50K?
JASON M (1 day ago)
Midwest
Investor Army (2 months ago)
we raise money from private investors successful people with extra cash they do not want to put in the stock market
Kevin Blackman (2 months ago)
Where do you get 50k for property and 30k for repairs ? And downpayment. This has holes in it
JASON M (1 day ago)
Business credit. watch a guy name jaun Pablo.
Zach B (3 months ago)
after studying real estste for 20 years i think the key is making sure the area is good esp if your flipping houses, rentals can be in middle class areas but better in upper middle class areas
Investor Army (3 months ago)
I agree thanks for input Zach
The Owner (3 months ago)
What should I do if I have the 100K to start with, but there are no properties in my market for 50K?
Investor Army (3 months ago)
the best place to look is in fly over country in the middle of the country areas like BriminghamAL or Jackson MS or Ohio or Indiana when you get to the coasts or up NE it is tougher to find cash flow houses bc price points
loa mone (3 months ago)
Sorry the was money talks...we think it's the best way to do ...A BIG Noh.....after a year you can't paid the right time...the bank sequestered all...nothing left in your hand too
Jon D (3 months ago)
I guess I just don't understand why a bank would hand out a loan for the 80k when you already own the property free and clear. Are you selling the house back to yourself?
Matthew Angelette (3 months ago)
So the goal it to get property in your name and not pay shit for it and bank on making cash flow off of it.if you have two many vacancies your fucked.big risk big reward I guess
Investor Army (3 months ago)
the investor has no risk they don't have the loan in their name....the benefit to the seller is they avoid foreclosure and sometimes get some equity they would not have been able to get any other way....
Dejayyy (4 months ago)
Who’s gonna just hand out 100k with nothing to back it. Then if you do finance the 100k how are you going to have 100k after spending 80k of that? 100 minus 80 is 20.
Josh Kerner (3 months ago)
Hard money lenders specialize in this kind of loan. They are also referred to as private money lenders
Investor Army (4 months ago)
Dejayy nobody is lending money without anything backing it they are loaning to you with a note and deed of trust against a safe asset protected by a leveraged position of 20-30% in equity in the house if you cannot make payments they foreclose....
AMI-IR (4 months ago)
Not sure about the infinite number of loans...I understand there is a max of 10 loans BUT the criteria are more strict after 4 loans.
Sergio Luna (4 months ago)
Can you mentioned which lenders can do more then 10 loans?
Investor Army (4 months ago)
there are different types of lenders that will let you go over 10
mushue11 (4 months ago)
Excellent walkthrough! .. My wife and I understand the BRRRR method better now. As always great job on the video.
grahambj (4 months ago)
But what about dti because eventually the banks are gonna say no right? What do I do then. Partner up, get more creative?
Todd Taylor (4 months ago)
Thanks, glad I watch this vid.
Investor Army (4 months ago)
thanks Todd for watching the channel
hakim eggleston (4 months ago)
Is there a similar strategy for flipping property?
DK Bullock (5 months ago)
Landlording is a part-time thing for me. My career pays pretty well and I live way below my means. This allows me to save %20 down payments each year to buy more properties. I'd like to own a few properties free and clear first. That way those investments pay for themselves and finance others. Having spent my life avoiding any form of debt, this makes sense to me. I get the whole good and bad debt mentality, but "no debt" beats it every time. Owing money to no one is freedom to me. Getting comfortable with using debt as leverage is something I still have to get used to. Just a product of a middle-class upbringing....
Brian Malone (5 months ago)
Outstanding work! We all appreciate this!
Daily news (5 months ago)
Can I do that with the same bank?
Investor Army (5 months ago)
no bc the first loan will not be a traditional amortized loan but a short term high interest loan interest only
Tuba76 (5 months ago)
why don't you use more realistic price like 320K duplex properties
italiandeliano (1 month ago)
Lol be even more realistic like in Toronto with 500k+ min for just a condo
Josh Kerner (3 months ago)
If you take, for example a $320k duplex, you could look at it two ways. Either its selling at $320k, in which case you would want to force enough appreciation into it to be able to refinance out to cover the loan, or find a duplex in an emerging market that is less than $320k, but could be rehabbed and then appraised at a value of 320K. The logic goes...How can i take out what I put in? If you put in $250, for example (maybe $230 + $20k in cosmetic work after purchase) and it rents for a price that would deem it worth $320k using an income appraoch, then a lender would finance this property at 80%. 80% of 320 is 256. So you have recouped your initial $250k plus $6,000
Investor Army (5 months ago)
bc I dont live in your market and prices vary across markets
Buster Hymen (5 months ago)
How do you recommend to minimize your risk in a bubble or decreasing market which I believe is coming very soon.
Josh Kerner (3 months ago)
Get a property that has great cash flow. You will reduce your risk by allowing yourself the elasticity of rent price. IF a property cashflows $800, but your market takes a dip, then rental prices drop. You can afford to drop your rent by $400, and still cashflow $400. This allows you the ability to hold on to your asset and ride the wave of a recession.
Investor Army (5 months ago)
over rehab a little more and only buy houses with solid curb appeal and floor plans no more risky houses that could sit
André Mariano (5 months ago)
funny how everyone makes videos on "then you increase the value of the house from 50 to 100k" how? what could you do to a house to increase the price like that?
Josh Kerner (3 months ago)
+André Mariano Improving a kitchen, bathroom, bedroom can be one way to increase desirability, which increases rental income. Adding a bedroom or two can be another way to increase your rental income. When rental income is increased, the value of a property is increase. Rental properties are bought and sold based on their income stream, not their "comparable market value". When income streams are increased, appraisers will decifer the homes value based on your markets average capitalization rate. If you increase your rental income, your income producing asset increases in value.
André Mariano (5 months ago)
+Investor Army "renovating" can you please tell me what sorts of renovations will increase the value more than what they cost?
Investor Army (5 months ago)
watch the video again Andre bc you are buying it with equity already and adding the extra equity through renovating the property and making updated and new again
Mark Salinger (5 months ago)
All your assumptions are based on a perfect scenario, never works out that way! Ist month your a/c needs replacing....hope you have that extra 6k under your mattress. Good luck.
Fernando Labarthe (5 months ago)
It's an ok comparison, the problem is that you changed the numbers, since the first dude bought property at 100k, and the other guy bought it at 50k, there is a huge difference. The dude that has 100k in the first place could have bought 50k properties as well, and done the whole deal as wel.
Mark Magaña (5 months ago)
Actual real estate investor here.... and laughing my ass off at all this nonsense.
Investor Army (5 months ago)
Mark then you need to gain some more experience you should watch more videos...
Each time I buy a property my lender requires 6 month cash reserve on each mortgage I have on top of the %20 down, not saying this method is unreasonable but it's a stretch you have to have more than 100 to make this work, especially if we consider vacancies, evictions, property tax increase etc. No hate just facts.
Investor Army (5 months ago)
you need a different and better lender...
Bill Randall (6 months ago)
You can buy them for 50k in OK, and rent it out to one guy who manages it and has a big family, 6 kids, and rent out 6 small rooms at $100 a week each. :-) That's the way to make money. He has to have a non-working wife and manage the place for you, but then he gets his half of the house for $200 a month. Renting out to single families is a losing proposition, especially when you have to pay 30k to get the place, on 20%. If you know a trustworthy vet, you can skip that 20% down payment bs.
Mopardude (6 months ago)
How do you get the banks to give you such a short seasoned period? Around here all the banks want at least a year so the income shows up on a 1099.
Daryl Davis (6 months ago)
Median price for a 3BR home in my area is $1.1 million, so $100K doesn't even qualify as a down payment. Median rent is $3,500/month, so BRRRR numbers are negative in any realistic scenario.
Investor Army (6 months ago)
ya tough to make those numbers work gotta go outside market into the midwest
Justin C (6 months ago)
Great video! Question though. How could we manipulate those numbers if we could get a VA loan would that change anything?
l dean Minneman (6 months ago)
Great info I like it. One word....powerpoint.
lewisHelps (7 months ago)
Great strategy, i made a similar video on my channel. Keep sharing these nice tips for all real estate investors.
Thanks for this 👌🏾
Gary Host (5 months ago)
Dont thank him too soon. This model leverages you to the eyeballs. If any unforseen circumstances arise it would be very stressful and risking bankrupcy and anything leveraged on the initial loan (like your house). It would look a less risky model if the properties were sold as you went as to stay less leveraged and keep risks down. Good luck to him but im not so much a gambler
Steven Wong (7 months ago)
For the audience out there, this is all feasible on paper in theory and may have been done many times over with very experienced property investors with the right contacts, however it is very difficult if not impossible nowadays to find properties at 50% discount no matter how much work it needs, especially for the beginner or aspiring investor. In reality you may only get 10-25% discounted at best which means that you'll end up leaving some money in so its not an infinite ROI and as such you're going to have to put and leave some of your cash in. What the author should address is how to get these "magic" 50% off deals which enable these "no money down" deals to work or beginners will be misled in thinking that this is easy and anyone can do it!
Michael Johnson (3 months ago)
You also have to consider the time and hassle of managing a 20k rehab. Doesn't sound like much at 1st but there's always unforeseen cost that will come up. Besides trusting and finding good affordable consistent contractors isn't easy either. Not to mention if you hired a contractor to do a 20k rehab than you really only added 7k -10k in home value because most of that 20k was labor cost. Therefore, your appraiser will know that the house last sold for 50k , and if they don't see anything near 50k in updates and added value then there most likely not going to appraise the home for 100k. At least not a good appraiser. Lastly, you've placed your new tenant in the home and your probably going to need to walk three or four bank appraisers thur before getting the number you want. You may also need to make additional updates if your initial appraisal comes back much lower than the expected 100k. Now what? Do you try to schedule contractors to do the updates around the new tenants schedule? These kinds of things better be in the lease. All these things will be a hassle and a scheduling conflict in the real world but it's solid on paper.
Investor Army (7 months ago)
yes it is not easy...nothing is...but you only have to build it once
MrSimoMlt (7 months ago)
I use this app to help me analyze deals I find. It helps me take control and eliminate the guess woork. You can download it for free here: Google Play Store link: https://ipcfreeapp.page.link/ipcfreeapp Apple Store link: https://ipcfreeapp.page.link/IPCiOS
Ruben VV (7 months ago)
realy good video. finally found the best way to do it!
Investor Army (7 months ago)
awesome thanks Ruben for watching the channel
ETL Guy (7 months ago)
Like many other videos on YT this one also conveniently skips the financial procedure for 2nd option, trust me bank won't lend you but you will realize that after investing 80k in the first home. You will have no other option but to sell it. Don't take me wrong but been there done that.
wayne booker (8 months ago)
I think your purchase price to rent ratio is a bit off, at least for my area. A house is almost uninhabitable under $150k.
Mike Garcia (5 months ago)
Investor Army how do you know where a good cash flow market is? Wouldn’t it be hard to do if u live in a different state?
Investor Army (8 months ago)
Wayne you will need to look into better cash flow markets outside your market
Investor Army (8 months ago)
Most lenders will take btw 8-14% depending on what part of the country and what price point market you have....if you can get 10-12% money this not bad
Luxury Details LLC (8 months ago)
What does the private lender usually want for lending the money. Thanks
Josh Kerner (3 months ago)
Usually a private lender would like a return greater than 7%. Conservatively, you could expect that lender to require a 10-11% return
Jordan Christopher (8 months ago)
Goofy bastard
somebody important (8 months ago)
Hi Thanks for the info Do you have a video on how to get this 100grand in the first place? I was thinking to open a buisness account and build credit for a couple years is that a good way. Or if you find the right person this money can be borrowed right away?
Today's Takeoff (8 months ago)
With closing and other costs, you’ll be very lucky to purchase even four $100k properties with 20% down each. And you’ll never get $1200 a month from $100k place without substantially uping it’s value, which costs a lot more. Banks lend on sure things, not pipe dreaming. Property rental is a great investment, but no one should ever expect these results.
Nonya NoNya (5 days ago)
Agreed
Paulo Justiniano (8 months ago)
How do you came up with raising the price of the property by 25k that fast with a rehab of only 25k? . So you bought it at 50k spent 25k =75k and now is worth 100k?? Most of the deals you are making an small profits comepare to the 25k/25% you are talking about. I know 25k is a good amount but in my area I have not find a deal where I could make that much return. I am asuming you are finding properties under market value witch is very hard to do.
Investor Army (8 months ago)
we are already buying the house at a discount and then forcing even more appreciation into the property by putting repairs into....
TheBeardedNerd (8 months ago)
Can you utilize this method with your personal credit and name, or is it preferred to have an entity i.e. LLC, Corp, etc.
Investor Army (8 months ago)
Not giving you legal advice but always good to protect yourself with an LLC or entity
Surreal Estate Deals (8 months ago)
Even at 80% of market value, don't the banks still want SOME skin in the game??
Jesse Zornes (5 months ago)
Once you own the home. The bank is basically giving you a loan for 80% value of the home. Then holding the home as collateral
Surreal Estate Deals (8 months ago)
I must have missed that, how do you refinance if you bought it cash? Thanks for all your videos by the way, I learn a LOT!
Investor Army (8 months ago)
not if you are refinancing if you are only into the house 50,000 and its worth 100,000 and you finance out 80,000 you will get a check in your pocket
Nate A (8 months ago)
Thanks for sharing! It's all in the deal structure
Teacher Does Homeschool (9 months ago)
Wow! We are on mission in Thailand this year and next year we will be looking to use the equity in our home to release our family into the field God calls us to. Will definitely watch more of your videos man! So well explained!
Roxas 023 (9 months ago)
Thank you so much, this really opens my eyes to a great Rental Property Investment Stategy. Excellent video, I will be checking out your others you have as well. Please keep producing more content!
Investor Army (9 months ago)
ill take it
Barack Trump (9 months ago)
You look like the coach from that cartoon "Home Movies". Used to come on adult swim
Element Zero (1 month ago)
Lmao, he so does!!!
Tracy Flex (9 months ago)
Hi so if I borrow the initial money(private lender, hard money, my savings,etc.) to get the cash to buy, rehab, rent out then go to the bank and refi and pull cash out, I really don’t have the whole 100k to use because I have to pay 80 back to where ever I got the monies to start the process. I’m left with only 20 after paying everyone back.. right?
Send A Raven (9 months ago)
20k is better than zero
Investor Army (9 months ago)
Cris...this can be done in any market....the fastest way to be successful in real estate is using leverage and leveraging other peoples capital or money not your own...if you wait until you have enough money to do one deal then you will spend years again saving up until you can do another you need to start looking for lending sources and using private lenders or credit lines to start investing now bc how long it takes to save money it will take forever if you are only using your own money and not using what we call OPM other peoples money
cris florez (9 months ago)
cant do this in NJ. i finally saved 30k and i need about 50 more to do fix and flips. i might stick to living in a single family and renting out part of it
Send A Raven (9 months ago)
Invest in other markets.
Ulrich Ellison (9 months ago)
What about real estate taxes? No repairs? I get the idea but you have to admit that the numbers won't pan out that beautifully in real life! A little bit more honesty....
Investor Army (9 months ago)
Watch other videos we have...this is an overhead view of what is possible I don't think anyone would believe that there are no other costs associated but if I have to go through every video and talk about fees to mow grass or logistical costs like mileage on car and gas it would not be possible...so a little bit more honesty is a little bit ridiculous to say some how I am misleading people Ulrich...
Gedenir Fiorese (9 months ago)
I have never seen a 100k property with rent at 1200 a month! It’s 1k in best cases
Edwin vonborstel (2 days ago)
+Jeff Roberson that's projection verses reality?
Jason Hendrickson (19 days ago)
+Invest Remotely Bullshit. Show me proof.
Invest Remotely (1 month ago)
You really need to look at different markets. I'm in PA and if you invest 60k you will definitely get a thousand and better out here sometimes you can invest less. I have a house I bought for 37k and I'm getting 1450 a month. It's just the market I live in and invest for my clients
INVESTMENTS (2 months ago)
Then your not looking hard enough bud
Juan Blackwell (2 months ago)
Nope I own quite a few
Omicron Long (9 months ago)
is it best to REFI with the same lender/ bank, different lender or simply shop for the best deal/rate?
Investor Army (9 months ago)
Omicron....the best way is to shop for the lowest rates
Jose Rivers (10 months ago)
This is great info. I've heard of the BRRR method before through BiggerPockets. I recently bought a multifamily rental property the traditional way (25% down, conventional loan). I have some extra cash left but not enough to buy another rental property. I'm hoping I can use this method with the little cash I have left since I have a network of contractors, plumbers, electricians, etc.
Investor Army (10 months ago)
You will need to raise the 1ooK from credit lines, private lender, hard money lender, bank, your own money etc....it is getting tougher to find houses under 100k that rent for $1200 but we want to be under 80% of market value all in so when we refinance out we pull out all our money to do again and again
Joel Cotton (2 months ago)
Investor Army randomly found your channel. That 50X your rent rule just changed my life. I’m evaluating my first rental property, and it happens to be a book of 6 properties that the seller wants 250k for, the actual monthly is $4625, which puts me at $231k.
INVESTMENTS (3 months ago)
What state do you buy your properties at
james ferguson (6 months ago)
+Investor Army hey is it possible to but an investment house with no deposit just borrow it all
cayetanohawaii (7 months ago)
Investor Army I have a Chapter 7 Bankruptcy on my credit report from 3 years ago. Do you have any tips or advice on how I can get financing besides seller financing? I live in the Denver metro and am looking to purchase some properties about 6 hours away in Amarillo, TX. I have equity in my current home and am looking at getting a HELOC, but it might not be enough. Any other suggestions at all?
computerfastrepair (10 months ago)
Investor Army i just subscribed and shared ur awesome video!! Question...what if u own houses free and clear that are appraised at 40k... no lender will loan anything for a house that appraises for 40 k. no banks. What do you do then?? please let me know as im stuck.
Joseph Smith (10 months ago)
2 questions were are you finding 50k homes that rent out for 1200$ a month. And where are you getting the 100k from?
wannawatchu66 (8 months ago)
Joseph: I believe the situations he's describing are hypothetical for purposes of explanation. The 100k is already in the hypothetical investor's pocket, and the numbers are made simple to make it easier to understand as opposed to using real numbers from real deals.
Send A Raven (9 months ago)
He meant where is he getting the initial 100k to start buying homes for 50k.
Paul Andre (9 months ago)
He put 30k for rehab.. and bank allowed new value house for 100k
Justin Edwards (11 months ago)
No one ever mentions in these videos that in order to get started you need to finance for initial house and the bank wants you to have a debt to income ratio of like 45 percent. Not easy if you already have a mortgage on your primary residence and a car payment.
Fattie2BaddieTv (20 days ago)
Juan Blackwell How long did it take you to get 150 rentals ? That’s amazing!
Jaharri Asten (2 months ago)
+Juan Blackwell how? In the beginning how did you start?
Some Scorpio (2 months ago)
+Juan Blackwell pls explain exactly how you've accomplished this.
Juan Blackwell (2 months ago)
Nope I own over 150 rentals.i have never used a dime of my own money. Never....
Jonah Lamb (3 months ago)
Baki Kaz true it can vary based off of down payment. House hacking is definitely a great way to get into real estate because it turns your house payment into cash flow. And you reduce your cost of living by a lot. That number would probably be closer to zero if you have a good amount of your house paid off and you make some down payment money on selling.
Jaroslav Tupý (11 months ago)
I am a complete real estate investor n00bie but I have a problem with the following: Is it really possible to raise a 50k property up to a 100k appraisal with a 20k rehab investment?
Nahom Petros (5 months ago)
Even then, a lot of foreclosures aren’t good deals so when *experienced* investors find one on listings they hop on them quick
Jaroslav Tupý (7 months ago)
Hi Santi, I believe you that with foreclosures, this is probably possible. However, I don't take the foreclosed properties as properties being sold for their fair value (at least here in the Czech republic where the Russian mafia has a monopoly on foreclosures). I believe they tried to say in this video that you can buy a house from the market for its *fair value*, fix it and thus increase its fair value by that much. That I still have a problem with.
Santi H (7 months ago)
Jaroslav Tupý , it is possible , by buying multi family foreclosure houses . You get them cheap and then after fixing them up it increases appreciation a lot . As a contractor I’ve seen this actually work .
Jaroslav Tupý (9 months ago)
I mean it would be great if it were really possible. Have you actually managed to pull something like this off yourself?
Send A Raven (9 months ago)
It's definitely possible, even more so with multi-family property.
Investor Army (11 months ago)
Yes you can but most of the time if you are buying a house cash with motivated sellers they are calling you so they don’t have to wait for a traditional closing process that takes 30+ usually so most of the time to get the deal you have to make quick close cash offer otherwise they would just an agent and Get top dollar but if they let you and you get time to close it then you can
john smith (11 months ago)
Do you have to buy the initial property w/ cash? Can't you just take out a traditional mortgage and then refi after rehabbing?
Roger l (11 months ago)
Where I leave your lucky just to make 100 bucks above everything paid...
Roger l (11 months ago)
So its called finance out rite?
Roger l (11 months ago)
Love this method u pay off one then u finance another so as u go you have rentals paid in full at 100%
Luis Enrique Lopez (11 months ago)
Thanks for the video. the question is how many loans can you take for investment properties? The interest rate might not be right for the type of loan, we could be on the 7-8%, right? Cash on cash did not take into consideration CapExpense, PM, Repairs, vacancy. How can we create a more robust analysis, Thanks again!
Investor Army (11 months ago)
You can email [email protected]
Hydrogen Peroxide (11 months ago)
What I want to know is where this 100k coming from everyone around me broke that's my only problem getting the money too get the first house
Send A Raven (9 months ago)
OPM.
Rob Cheeks (11 months ago)
I'm a little later; however, this is great. thank you, sir!
Investor Army (11 months ago)
Yes when you go to get a refi Loan they will be looking at your credit score and this will affect the rate you will be able to finance out at
Do credit matter when it's time to refi out to new loan?
Investor Army (11 months ago)
Here to help thanks Ronald
ronald williams (11 months ago)
I greatly appreciate you all for the response it’s very rare these days lol 👍👍 subbing
Investor Army (11 months ago)
Ronald...the goal is to leverage the small amount of capital you do have and there is a difference between consumer and bad debt and good debt that is safely leveraged and produces income
carmen B (4 months ago)
Yes, me too can I email u. I have a question
King Lamar (11 months ago)
Investor Army is there any way I can email you?
ronald williams (11 months ago)
With the brrrrr method u would be 500k in debt by the time u get to the 5th house lol what am I over looking
fobiozor19 (4 months ago)
+Appliedx Just search YouTube for brrrr investing if you're still confused. There's plenty of videos on it.
fobiozor19 (4 months ago)
+Appliedx No, you find another house for 60k that needs a lot of repairs and put 20k in repairs to force the value up to 100k. You've put in a total of 80k but it's worth 100k. Then refi the property at 80% of 100k. So you get 80k back again. Just keep repeating that over and over.
Appliedx (4 months ago)
+fobiozor19 only part im confused about is, so i refinance it and they give me loan of 80k because it is now worth 100k then i use the 80k and the 20k = 100k towards another house to do the same things buy a 50k house and fix it up. so i keep the first house on top of all this and rent it out? i guess im confused on how you refinance and use the money towards another house if you are selling it for 80k.
camgere (5 months ago)
With the brrrrr method you would be 400K in debt at 80K apiece times 5 houses. You magically created 20K each in equity by doing the fix up yourself. I hope you have 20 years experience as a general contractor and know tradesman who work real cheap. You need to hit five home runs in a row without a strikeout. In my area most banks will only loan 80% on owner occupied property. Non-owner occupied property is 67% LTV. Banks are very suspicious of created equity, good luck getting that appraisal for full market value on a rental. No repairs and no vacancies is kind of a fantasy as well. Most banks will only allow 10 loans. So getting the 11th to 20th house is very difficult. Deciding where to invest, that has the best CAP and ROI, is probably the most important decision you make. It may not be where you live. The poster will probably say "it is difficult, but possible". I would certainly agree with that.
Mike Garcia (5 months ago)
fobiozor19 So how do you get the initial 100k of cash? That would be awesome if you could do it the way you explained, but I live in Denver. The average house is around 320k to 400k. That’s a house that probably needs a little to a lot of work. Can this method work if the house is more than 200k to purchase?
Michael Lukas (1 year ago)
Finally a video that doesn't beat around the bush. Thanks! Great content👍
adrian peirson (1 year ago)
Great idea, how much will it cost me / us to get you to shut up and stop telling everyone on youtube :)
computerfastrepair (8 months ago)
mbrady000 sarcasm my asss. i dont find sarcasm in hungry motivated people..its tough but it can be done.
mbrady000 (8 months ago)
computerfastrepair apparently he needs to hit you over the head with a sarcasm sign...
computerfastrepair (10 months ago)
adrian peirson stfu assshole. this aint for whites only. this is for every hungry motivated person! INFORMATION is out there there is no secret here pal. just to jump over that hurdle called fear.
Investor Army (1 year ago)
Haniry you are very welcome I hope it helps....
Love (1 year ago)
Ty so much for this video
Kevin Vincent (1 year ago)
I have a hard money lender that does a traditional Hard Money loan that they will refi into a 20 year loan for rentals after rehab is completed. They are nationwide I believe. HMU if you want info on this
Elvin De leon (3 months ago)
Elvin De leon (3 months ago)
Please info,
Namiah Jeffrey (3 months ago)
I'm interested. Email me at [email protected]
Janet Vasquez (8 months ago)
Kevin Vincent. I work with investors that buy and i want to do the same thing
LASVEGAS GEORGE (1 year ago)
Plz, Tell me more!
Mark Anderson (1 year ago)
This is the best explanation of the power of the BRRRR method vs Traditional financing Ive ever seen.
Investor Army (1 year ago)
Thanks Mark....I appreciate the compliment
Wealth Creation (2 years ago)
This is by far the best way to create Financial Freedom thru real estate investing with residential properties
computerfastrepair (10 months ago)
Investor Army i just subscribed and shared ur awesome video!! Question...what if u own houses free and clear that are appraised at 40k... no lender will loan anything for a house that appraises for 40 k. no banks. What do you do then?? please let me know as im stuck.
Investor Army (2 years ago)
I know a lot of people who raised just a small amount of money but build a large portfolio and retired themselves early and created generational wealth using this exact strategy so Reggie is right when it comes to Financial Freedom....this is a strategy that can help a lot of you reach your goals quickly.....
Omar S (2 years ago)
Great explanation. You have a great way of simplifying things that others over complicate. Thank you.

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