It’s no surprise that this is my favorite way to invest in real estate, and also one of the fastest ways you can grow your wealth….and this is called the BRRRR strategy of real estate investing. Enjoy! Add me on Snapchat/Instagram: GPStephan
Learn my exact strategies to help grow your career as a real estate agent to a six-figure income, how to best build your network of clients, expand into luxury markets, and exactly what you can do to begin taking your career to the next level…these strategies took me to $120,000,000 in sales volume: https://goo.gl/UFpi4c
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
The BRRRR Method: This basically uses the equity and profit from one property to fund the next property through strategic leverage. And then the next property can fund the next one…and so on, until after a few years you’ve amassed an army of homes that just throw cash at your every month.
1. The first step is to buy a property, obviously. But the difference here is that you can’t just buy anything - the property not only needs to cash flow, but there needs to be some opportunity for equity. Your equity is basically just the amount of “worth” tied up in the property, minus your loan balance. So you either need to buy into equity by buying something BELOW what its market value is, or buying something where you can add equity with strategic renovations. Most deals won’t work - you need to be better than the average here and really become an expert in your area to spot the best deals, and the patience to wait around until that happens.
2. Renovate. Once you buy something, you’ll fix it up. Generally this is the best and easiest way to add value to a property. Most places that need work price themselves accordingly. Doing the work yourself saves you from paying someone else’s profit in managing a renovation, and often times you can renovate a property much cheaper than someone else will charge for doing the same thing.
3. The third step is rent…in that you now rent out the property. You should have had an idea of what price you’d get from the beginning when you bought the property, so it shouldn’t be a surprise what you can rent the property for. The property should rent high enough to pay off all of your expenses AND cash flow on top of it. Like I said, not every property will do this - you will need to find the 1/30 where it makes sense to buy, at the right price, that’ll rent for high enough, with enough equity to add to the deal.
4. NOW WE REFINANCE! This is where the bank pays off your previous loan, and gives you a NEW loan based off the new, higher value of the property. This means that you’ll have some “Cash at closing,” as it’s called. Now you pretty much got some money back, you have a cash flowing house, and you can do this entire process over again.
5. And then…you repeat the process and start over again with the next one! The advantage here is that every time you buy something under market value, you increase your net worth. By fixing it up, you increase your net worth and cash flow at the same time. The higher your net worth and the more equity in a property, the more banks are willing to lend you to do it again and continue to increase your cashflow. This is by far my favorite strategy, and you’ll finish this up with a trail of cash flowing properties behind you. Yes, it takes some work to identify and fix up a property - but it’s worth it.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
Learn my exact strategies to help grow your career as a real estate agent to a six-figure income, how to best build your network of clients, expand into luxury markets, and exactly what you can do to begin taking your career to the next level…these strategies took me to $120,000,000 in sales volume: https://goo.gl/UFpi4c
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
The BRRRR Method: This basically uses the equity and profit from one property to fund the next property through strategic leverage. And then the next property can fund the next one…and so on, until after a few years you’ve amassed an army of homes that just throw cash at your every month.
1. The first step is to buy a property, obviously. But the difference here is that you can’t just buy anything - the property not only needs to cash flow, but there needs to be some opportunity for equity. Your equity is basically just the amount of “worth” tied up in the property, minus your loan balance. So you either need to buy into equity by buying something BELOW what its market value is, or buying something where you can add equity with strategic renovations. Most deals won’t work - you need to be better than the average here and really become an expert in your area to spot the best deals, and the patience to wait around until that happens.
2. Renovate. Once you buy something, you’ll fix it up. Generally this is the best and easiest way to add value to a property. Most places that need work price themselves accordingly. Doing the work yourself saves you from paying someone else’s profit in managing a renovation, and often times you can renovate a property much cheaper than someone else will charge for doing the same thing.
3. The third step is rent…in that you now rent out the property. You should have had an idea of what price you’d get from the beginning when you bought the property, so it shouldn’t be a surprise what you can rent the property for. The property should rent high enough to pay off all of your expenses AND cash flow on top of it. Like I said, not every property will do this - you will need to find the 1/30 where it makes sense to buy, at the right price, that’ll rent for high enough, with enough equity to add to the deal.
4. NOW WE REFINANCE! This is where the bank pays off your previous loan, and gives you a NEW loan based off the new, higher value of the property. This means that you’ll have some “Cash at closing,” as it’s called. Now you pretty much got some money back, you have a cash flowing house, and you can do this entire process over again.
5. And then…you repeat the process and start over again with the next one! The advantage here is that every time you buy something under market value, you increase your net worth. By fixing it up, you increase your net worth and cash flow at the same time. The higher your net worth and the more equity in a property, the more banks are willing to lend you to do it again and continue to increase your cashflow. This is by far my favorite strategy, and you’ll finish this up with a trail of cash flowing properties behind you. Yes, it takes some work to identify and fix up a property - but it’s worth it.
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
Building wealth involves developing good habits like regularly putting money away in intervals for solid investments. Financial management is a crucial topic that most tend to shy away from, and ends up haunting them in the near future. Putting our time and effort in activities and investments that will yield a profitable return in the future is what we should be aiming for. Success depends on the actions or steps you take to achieve it. "You're not going to remember those expensive shoes you bought ten years ago, but you will remember every single morning when you look at your bank account that extra 0 in there. I promise, that's going to be way more fun to look at everyday", I pray that anyone who reads this will be successful in life..
But what if its a hardmoney loan with hi carrying costs, u gotta hold that type of loan even if u get a renter untill the seasoning is over? Thats ridiculous. Isnt the seasoning period only a thing if ur refi into a fanne and or freddie mac backed loan? What if its a dscr loan/investor loan?
Only creator that I've ever seen mention a seasoning period. Subscriber for life now ✅️
What if I majored in FTX?
Can Indian immigrants do in h1b or will 8t voilate rule
clicked just for the BRRRR
What about the 30k you invested in renovation
Only thing I'll say is to be careful to not over leverage yourself. Its not easy to keep all rented all the time. The pandemic is something that would have killed most landlords if not for the socialist government allowing the mortgages to go months without payment or providing "assistance".
Is this how the BRRRR method works ? I am a newbie so can someone help?
Amount you buy it for is $100,000
ARV is $180,000
Closing Cost and Rehab is 30,000
Appraisal $135,00
Now you rent the property ( I don’t know after how long do we refinance ) and then you refinance it and get $135,000 ( going to the bank and the appraisal thing ). Now the $135,000 covers the amount you bought the property for, Closing Cost and Rehab and then you will have $5000 left. Is that how you use the BRRRR method? If I am wrong can you explain it in simple terms to me?
The voice changeeee
thanks
you explained that really well. thanks!
No Seasoning period with a private money lender!! I'm scaling quick!!
Money go brrrr
Can someone explain the refinance part I’m confused on how the new loan pays off the old one
How do you know when you’re over leveraged. Can you keep buying houses as long as the bank loans you money? Where is the line on this while you’re in your late 20s and early 30s?
Hey Graham, quick question I know this video is a bit older but when you get to the refinance part of BRRRR won’t that raise your mortgage payments potentially affecting your cash flow on that rental property? Is this something you need to calculate before purchasing the home Just seems a bit hard to have to calculate what your exact arv would be and also how much more your mortgage would be in the future ? Thanks for ur content im just a newbie trying to get familiar with the REI GAME 🚀 🚀 🚀
Graham's voice used to be so much deeper damn
Amazing stuff Graham. Could've explained the refinance part a bit more clearly though, in terms of the renovation costs being seen as an investment as equity in the home.
How can you buy the house first if you don’t have $200k, but you only have $70k for down payment + renovation.
Graham, does the knowledge you provide in your vids come from not only personal experience but the Millionaire Real Estate Agent? I retain info better when reading it so I’m just curious
Haha Grant spoke in a lower voice two years ago. I have a higher voice like Grant too, so I understand why he did this early on. Hearing your high voice in a recording makes you feel self conscious. 🙃
We still havent talked about how the monthly mortgage payment goes up after refinancing
Wouldnt refinance raise the loan payments?
Graham Stephan: renovate by yourself, you will have fun!
Also Graham: shows 2 (latino?) contractors doing all the hard work LOL
If you do this does your monthly payment go up? It’s that just taking out a bigger loan to pay off a different loan and have left over money from the second loan, not really earning money right isn’t that just taking out more loan money essentially?
Is there a seasoning period if you bought and renovated the house with cash you had on hand? No loans.