Can you buy 20 houses with the same $10,000? The BRRRR strategy explained, how to pay off 20 houses

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Can you buy 20 houses with the same $10,000? The BRRRR strategy explained, how to pay off 20 houses

Can you buy 20 rental properties and pay them off by recycling the same $10,000?  Here’s a complete breakdown of the BRRRR strategy and how to pay off 10, 20, 30 rentals or more.

First of all, THANK YOU again for making this channel the number one channel for Indiana real estate on YouTube according google analytics and SocialBlade info for BigReia.com.

This is a quick video I made about  a Hero’s experiment…

So can a buy rental property and then buy and another and keep using the same money – just recycling your money over and over again?  So you take the money for ONE deal and you leverage it in such a way you would up with 5 or 10 or rental properties that are cash positive every month?  Is that possible?  Well today you’re going to learn the answer to that question and more – Azam Meo with BigReia.com –THANK YOU again for making this channel the number one channel for Indiana real estate on YouTube according google analytics and SocialBlade info for BigReia.com.

This is where we are also building the world’s largest group of special needs business owners and real estate investors.

Before we can begin you can download our free Investor Guide:

Also you can click here to download The BigReia.com Investor Guide to the BRRRR strategy.

Okay so today we will talk about a VERY old strategy and some have, more recently called it the BRRRR Strategy and is an acronym that stands for t is BUY, REHAB, RENT, REFINANCE, REPEAT.  Today I’m going to over what this is all about, the FIVE people that absolutely need on your team if you want to do these deals passively, I’m also going to go over the five biggest mistakes investors make when they do this and you’ll also see 10 different ways to make money with the BRRRR strategy, over the years we’ve done so many of these deals that my team has developed and invented a bunch of ways of making money that you really want to know about – so in today’s class I’ll be going over all of that and by the time you’re done here you are going to know more about BRRRR, about passive investing in real estate and more about how to invest wisely and smart team building than at least 90% of people in real estate – okay so let’s get started. 

The BRRRR Strategy – okay so here’s an example of a deal, let’s go through each one of these letters Buy so let’s say you buy a property for $25,000 and this is fixer upper that needs work, that’s the B now the first R is rehab – so let’s say it costs another 25k to fix it up, now remember from our closing costs class there are three main categories of costs when rehabbing there are the buying costs, the holding costs (this includes the rehab, interest payments, other monthly payments, days on market, etc.) and then the selling/listing costs, so we add all that up and it is   25k – so now we have the B and R this  let’s say a deal is going to take a total of 50k for you to buy, fix up, put on the market, etc. 50,000 is your total “All In” so we’ll say that to do that you are putting 20% down, so that means you need $10,000 to do a deal. 

So let’s say you buy it for 25k and put 25k into so your All In amount is 50k and now he next R is for RENT – so we’ll say that after putting in 50k the property is worth let’s say 80k and it rents for $800/month, so now you rent the property for $800 a month.  That’s the second R, now the next R is for refinance – we’ll say that you are able to refinance at 80% of the appraised value of the property.  So if the property appraises for let’s say $80,000 then you can refinance it for $64,000 – so you would be able to pay off the 50k that you have 14,000 you would walk away with.  Now that 64k loan comes with a payment so let’s say that payment is about $500, now remember you rented it for $800 and now your payment is $500 – so that means you are making $300 a month right?  Right?  Not exactly and we’ll talk about that in a second.  Now the last R is REPEAT –   

Now you can take that $14,000 and the exact same thing again, so you can recycle your money, more on that in a second. 

Okay so now I’ll get into the details of REAL world situations because the BRRRR method is nothing new, so now that you know how it works you should so in one sentence this is the BM: you buy a property at such a price that after the closing, fix-up and hold costs you can refinance it at roughly 80% of the value and get enough left over cash to do the next deal while also renting to a tenant that will pay for the new mortgage that you got.

Okay with that said let’s go over the top 10 things that you need know about the BRRRR strategy and real estate investing in general:

There are a LOT of things to look out for when doing these deals, let’s go over a few:

 1.)  Keep in mind that I’m using nice round numbers just for the example, refer to our other videos and examples and our books because we go over – for example Anna goes real life deals with real examples using the actual numbers.  So this video is just so you understand the concept and then elsewhere you’ll see real world applications of these concepts. 

2.)  Keep in mind that is NOT a strategy I suggest for an active investor, you can build your real estate business without EVER using any money or any credit or talking about getting a loan, so this is NOT for you if you’re an active investor.  This is just for PASSIVE investors.  3.)  You should only do this if you have a good primary income, because you will still have to come out of pocket every month for the mortgage payment. 

So here’s what I mean in general you should use the 50% Rule which means that on average in the first 3-5 years of owning a rental property you will actually get about 50% of the rent because the rest will be eaten by repairs, updates, vacancies and other standard stuff and/or something unforeseen. 

So in the example above you rented the property for $800 and your payment was $500 so it may seem like you’re getting $300 but after you apply the 50% rule that 800/month turns into $400 a month, so you are actually negative $100 a month.  Being cash negative by such a small amount may not seem like a big deal but when you have 10, 20 or 30 properties it can really add up. 

That’s your business out of shape?  Don’t let your business get out of shape.

4.)  Deal with cash negative properties by working with 2% houses.  Now one way to deal with that is to focus on high cash properties like 2%, remember a 2% property rents out for 2% of the value or purchase price so if it is $40,000 property it would rent for $800.  There are only a few places in America where you can find 2%, and the Indy market is one of those very few areas so you’re lucky on that.  Now typically these properties are at $40,000 and below because it is unlikely to find a $50 or 60k property that rents for 1k or 1,200 – so just know that for 2% properties you will normally be at 40k and sometimes lenders don’t want to be on those markets. 

5.)  You basically have two options you have use CASH or get a loan, the loan will usually be a HML or a PML because banks won’t loan on properties like this.  If you use cash you won’t be paying as much in closing costs because you don’t have to pay for the money at closing or with payments every month.  Either way whether you borrow money or use cash when you refinance you goal is to get ALL of your money back, your entire “All In” amount and then enough ‘cash out’ to do the next deal.  6.)  In many case it may make sense just to FLIP the house, so you should only do the buy/hold if these are properties and areas you want to be involved with for several years. 

I learned how to write copy from the best copywriter to ever live and he said that the single best marketing lesson EVER is in a scene from Indiana Jones where there’s people chasing him and then he comes across this giant guy with a giant sword and he starts swinging it all around.

In the script there was supposed to be a big fight but Harrison Ford was sick that day so the guys does this fancy and intimidating movement and Indiana Jones just shoots him.

The lesson is to always focus on what works and solves the problem immediately – so why go through whole BRRRR when a flip will do the trick, I’ll sit down with you and we’ll come up with a plan that will solve this  for you. 

7.)  You need a dream of ninjas, here’s what looks like these are the five people that you need to pull this off correctly – the agent, the rehab crew and contractors, the lender, the property manager – the Team Leader that is the person who is overseeing this with you, if you don’t have this it is going to screw up everything because then it is YOU that has to be on it and the income and money isn’t very passive. 

You want to pick people who operate with surgical, Terminator precision I don’t want to just Thug life and guess and pick random people, the team you have will determine everything choose wisely. 

8.)  So let’s do a quick rundown and review these are the SIX terms that you need to know like the back of your paw.  So remember when you buy and rehab a property you have three main categories of costs first is the buying, that includes the research, costs of PML/HML, closing costs, etc. then you have the Holding/Repair costs, this the cost of the money every month, the rehab costs, the DOM, etc.

Then third you have the selling costs, this includes closing costs, how far below the asking price the offer may be, seller concessions or allowances, etc.  So if you add up all those you get the “All In Cost” – now take the ARV, the After Repair Value and we take 80% of that and we get the Refinance Amount (remember that is how much the lender will loan you on the refinance) and then subtract your All In from the Refinance Amount and that is your cash. 

Again this is a loan and you do have to pay it back, so it isn’t really a profit BUT it does allow you to do the next deal and you have a tenant who is now helping to pay that mortgage off with your RENT RATE.  So those terms should be clear now: Three Flipping Costs, the All In Number, the RENT RATE, the ARV, the Refinance Amount and the CASH.

9.)  Here are 10 ways to make money doing this first you can just do the BRRRR the standard way and you’ll make money, grow your list of rental properties, have tenants paying down your mortage, etc.  Number TWO is that you do BRRRR BUT you also flip houses in the meantime, and you use that extra money to pay down your mortgages faster so that’s number two a hybrid of flipping and BRRRR. 

Number THREE you can partner with an investor/agent where you bring the money and then the profits are split or you have some sort of partnership like that. 

FOUR You can help others do this but again you have to know the market really well as I explained a passive investor is usually not going to be doing this but it is an option. 

FIVE you can take a package of your homes and sell them as a package for one big up front payment, if you do this right you can make a few times as much money as you would if you did individual flips.

SIX – You can take a group of the properties and sell on TERMS, we recently a client who did this and got about 1M up front in a down payment, SEVEN – You can take these properties and pick a group and sell them off in order to pay the rest off, so maybe you 60-70% to pay the rest off, now you could have 15, 20 properties that are totally paid off and you did in a fraction of the time that it would’ve taken had you gone the normal route – and this way you basically only used enough money to buy ONE.

EIGHT – As you do more and more of these deals you’ll have tight relationships with PML, now you can be an HML for other investors.

NINE – This is one of my favorites: TRADE take your house or group of houses and trade partial/full ownership into a target company or property, maybe an apartment complex for example.

And finally number 10.)  Right now my Homey – and your Homey – Anna is in the middle of doing deals just like this so on top of helping people do real estate flips in the Indy market and make 20-30k on each flip she is ALSO helping investors – both local and out of state – find perfect properties and the perfect team to carry out the BRRRR tactic remotely – while being totally passive. 

Remember there are other issues like how many of these deals a lender will let you do, making sure your All In is at the right amount so a refinance will give you more than enough to do the next one, making sure the tenant quality/demand is year round and sufficient with no lags or problems filling vacancy, these things only from an intimate knowledge – like a REAL intimate knowledge of the market.

So if that’s you want you us to walk you through this and hold your hand through getting this done by flipping Indy real estate and/or doing buy/hold – if you want to apply for a slot to be one our investors just let me know – you can call or email Anna Love (at) BigReia.com or 317-969-5619.

And finally remember this guys – the more you want out of life the earlier you need to wake up, the LC will is always tired while the Hero has tapped into endless energy, when you’re living destiny and doing what you’re built for you’re unstoppable – get there, live in that place – be who you’re supposed to be.  The more you want out of life the earlier you need to wake up.  BigReia.com – Much Love Guys

Want more (brilliantly) EPIC posts of real estate investing and bidness badasssery...?

There is a great post and class on the 38 Ways to Buy Apartment Buildings Zero Down with Pet Policies, and here are some other helpful and EPIC posts... for starters as a real estate investor if you ever want to build a business that makes you 30 grand a month then you MUST do this...

Wanna Create Generational Passive Income Buying Real Estate and Small Businesses?

Here's a class on exactly how to make $30,000 in passive income as an out of state Indy landlord.  Exactly how many Indiana rental properties do you need to make 30 grand a month.  Anna can you help me invest in Indianapolis turnkey real estate investment properties?

There's also a great class Azam did on how anybody can retire in the next 1-2 years with $30,000 a month in passive income by buying and selling businesses zero down.  What about Micro Flipping?  We have a great class on how to start micro-flipping real estate zero down from your house and make $500/day, speed wholesaling 101.

There’s also another great class on how to buy apartment buildings zero down that you can check out as well.  This relates directly to growing income on rental properties.  Speaking of which make sure to check out our epic page on 14 ways to avoid tenants from hell.  Also we have a great post on how to make build a "six figure a month" real estate wholesaling business.

Also here is a post on how I did this and I flipped a house off Zillow for 30.  Also you can check out the post on five steps to flip a house right off Zillow for 40 grand.  You can also check out our other epic post on 57 ways to make money with vacant land.

Here’s another post on how a Hero flipped a house off Zillow and made 40k in a few weeks while he was learning to read.  Also you want to check our post on the EPIC $25 million letter and the copy writing lessons for real estate investors, you'll love it.  Also you can see how ONE letter is making me $9,000 a month.  Also you can check out the post on 101 FREE places to advertise your houses.

Also check out the "SA" class and your REAL chances of create social mobility and income ascension with your real estate business.  Brilliant stuff.  Also there is a great post on the ONLY way you'll ever make 30 grand a month as a real estate investor and/or business builder.  Another brilliant class with a free downloadable Investor Guide is about 19 Ways to Make $10,000 a Month by Helping Tired Landlords.

Plus make sure you check out Azam's post on how to hire a realtor that makes you $10,000 a month... while you sit back with your shoes kicked up on your desk and fingers folded behind your head.  Also there is a great post on how to make five grand a week from putting out signs.

Also we have some great posts on 30 ways to buy real estate with no money down.  That is a two part series so make sure to watch the second part on the 30 ways to buy real estate zero down and with no loans or credit.  I also get questions about our "Epic Flipping" and how to turn $1 into over $25,000 by flipping ordinary items for exponentially high ROI.

And don’t forget our EPIC page on 100 FREE ways to find motivated sellers, we are making the number one page in the world on FREE ways of finding motivated sellers.  Also check out how I find motivated sellers from code violation properties, and also how I make over $1,500 a week giving investors access to that list. 

Speaking of lists, for a list of the "Good People" and My Indy Anna Homeys - this is a FREE list of EVERY possible contact that you'll ever need to build a real estate business in the Indianapolis or the Midwest.

You can also get a LONG list of every contract, piece of paperwork and legal document that you'll EVER need for your real estate business all FREE to download.

Also perhaps the most important class Azam has done is on the "Frequency of Thought" and how to use the laws of quantum physics to rewire your brain, attract brilliance like a lightning rod and be the best version of yourself.  Check out this epic 3-hour class on Quantum Real Estate.

When I first go started I thought wouldn't it be great if somebody put together ONE list of every possible contact that I would ever need to build a passive income with Indiana real estate - or any Midwest real estate?  Well that's exaclty what I did with our “People Page” here it is:

A totally FREE list of every possible real estate professional contact you’ll ever need to do unlimited deals, start and scale your real estate business and create generational passive income with real estate anywhere Indiana or the Midwest.

Stay here at BigReia.com and you’ll become allergic to being an LC and addicted to improving the world and creating Income Ascension and Social Mobility for you and yours… 

Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
(YES that's my actual Direct Line and I really do answer lol, so please text me first Thx!)

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100 FREE ways to find motivated sellers.