Just getting started in real estate. Bought one I’m doing brrr method on, and another I’m gonna try to do a quick flip on. Been obsessed with reading, shopping, and learning about this. Seems so simple it’s crazy.
Whats brrer method? Im interested in making bank without doing anything. U need money to start?
Using the banks money to buy, renovate, rent, and then cash out refi.
I’m got a line of credit at bank, so I’m using the banks money both to Reno and for down payment. Zero dollars out of my pocket
I usually just go for a warm blanket
Now I got bad credit and no income. Could I make this happen? I got the passion.
I am. I now own several rental properties…but here’s the catch.
Even the hard money guys want you to put down 20%-30% of your own cash. No such thing as “no money down” unless you are buying a house “For sale by owner” or a lease to own" type deal.
To preface this, I have experience in real estate and find the BRRR method a neat idea, but unrealistic.
ALL of my properties have a lot of equity, but the bank would only give me a HELOC on my main house, the rentals NEVER COUNT and can not be loaned against! This is incredibly frustrating.
You will need access to that 20% -30% down payment of cash to really get the snowball rolling, so to speak. In other words, either you have the cash or you have private investors that may want 10% of that down payment (which wouldn’t be all that bad). Finding private investors takes a lot of time and a lot of success that prove you know what you are doing. Hard money wants to see you have some skin in the game, and there is virtually no way around that.
I can guaran-damn-tee you the guy isn’t doing the BRRR method because not a single bank would loan against the equity in any of my rentals, even with a near 800 credit score and a track record of success in business.
My best advice is to establish a relationship with hard money lenders. Use an LLC to buy your houses and put the title in the LLC name. Why? Because if you do personal mortgages they’ll count toward your debt to income ratio which will royally fuck you if you try to get a loan for anything, even though you may have good credit.
Of course, once you get the hard money loan you’ll need to convert that into a conventional loan with a lower interest rate. Your credit score needs to be tops or you won’t be able to finance a 15 cent bag of popcorn with 20 cents down.
Biggerpockets is great, but there are a lot of dreamers and snake oil salesman there that like to lie about their success.
I should also note that the numbers have to work with hard money lenders.
You should have a solid trusted GC that can work up estimates for you before purchasing the house. The ARV (after repair value) numbers need to work.
In other words, if you buy a $100,000 house that is a crack house, and it will take 50k to get it remodeled/new roof/hvac etc and the ARV is $200k you will probably get a hard money lender to back you. When you go to approach them with the deal they’ll only give you the money for repairs and about 70% (on average). Which means in this scenario they want to see you have the 30k cash on hand.
I can promise you that no bank will entertain a “no money down” loan neither will a hard money lender, at least none that i’ve encountered or heard of in the real world.
hit me up with any questions you may have.
also, get an account on redbell to check the comps. Also, get on zillow and realtor.com and “save” houses to your profile in the area you want to buy so you always have your hand on the pulse of where things are headed in the way of comps.
Looking at this myself. Brother is doing it now to what seems like success.
Awesome info yougpimp! I found my first house and bought it cash (25k). My realtor says based on comps, after reno, it should be worth 120-140k. Plan on spending about 35-40 on reno. Will hopefully be able to cash out refi some 75k. Using a line of credit to do renovations. Found a 2nd home off market and paid about 40k under value. Home is 14 months old. Plan to resell as soon as we close. Feel like I’ve gotten pretty lucky with first two deals. Hopefully gets me some decent seed money moving forward. We are putting the properties into an llc. Anything you see I’m missing?
Yeah. make sure you network locally and meet up with some wholesalers. Biggerpockets usually has area meet ups. Go there and network and meet contractors, hvac, plumbers, roofers, wholesalers, and other investors. Often times people that are short on cash will get a house under contract and assign it to you for a quick $10k profit. If they like you and you do what you say you are going to do they’ll send fix n flip deals your way.
I did it back in the early 2000’s before the market crashed. Everything was perfect besides the tenants. Being a landlord sucks, I’ll never do it again.
I do something similar with a trades group here in Canada.
All of the trades put up their efforts/trades for their % of the profits.
There is 2 of us who put up the cash and if things go South then we would take the hit and the trades walk away. Holding companies or LLC to keep your personal separate from this kind of thing.
In Canada you can save a boat load of taxes if you use the house as your residence for a year before selling if a private buyer.
At a certain point, hiring a property manager makes sense to us. Passive income for the most part. Probably won’t do that until we get up to around 10 units. Depending on hassle of tenants of course.
We tried that, didn’t work. Personally I would just flip the properties with the current market.
Just use the $100k you recently invested in coke! Instant win!
I dislike anyone doing this.
I never got anything from Biggerpockets that I thought was worthwhile. A bunch of goofballs thinking that they can make a killing.
I am slowly unwinding my rental portfolio. It was never hige, but I had 4 SFHs, I have sold two and I just listed a third today. The market is on fire right now. The house I listed was posted at noon and I have over 30 showings scheduled less than 5 hours later.