Marco, like your clean straightforward style. As you say there are many details left unsaid here that can't be addressed in 8 minutes. I do think you could have made more clear the point that the tenant's rent is paying your mortgage (would be about $550/mo in your hypothetical example) as well as covering the property tax, insurance, and a saving fund for future maintenance and repairs. That is really why this works and you do mention margin and cash flow but I think it would be in keeping with your clear style to spell out that one point.
I started this strategy in 2007 when I lost my job. It was a gamble. Almost lost my family. I'm not rich by any means but thank god it's worked out so far. I have a small level of financial freedom. I just didn't know what the name of this strategy was. For me, the biggest obstacle was the fear of losing what money I had saved and being out on the street. If I had to guess, the majority of people have that same fear - it's crippling. I still have that fear even today. Great vid and great channel. I always learn something from this channel. Thank you.
This really does crystalize just how easy real estate investing can be! When you boil it down, most things in life and wealth building are just a few math problems!
For 2019 I'm studying my butt off learning how to trade options and finally get started with Amazon. Since I was in high school real estate is what I wanted to get into but I was a moron and really messed up my credit bad and it's been downhill every since. Another great video Marko!
Love the BRRRR strategy! One of the best ways to grow your wealth quickly and effectively. Crazy to think you can get multiple rentals but only need the capital for one down payment.
Thanks for explaining this so far the best explanation on TH-cam. I am looking for someone who will really simplify this process. perhaps you should do a part 2 to simplify even more!
The part that turns me off the most is dealing with renters. I have heard so many horror stories about damage they do and even taking them to court they can't afford to pay for all damage. Is there a bright side to that I am missing? Love the channel.
This is something you can cover once you grow large enough, understand it's going to happen eventually, be ready for it and hope it doesn't happen too early
J.Kush what’s do you mean that attitude lol it’s something to think about you can’t just ignore it. Lol that’s like ignoring the risk of not using a condom
I own 2 rentals since 2009. I have been fortunate to never have drama. Only had 3 people leave across 11 yrs. This has worked for me: 1) offer the property slightly below market. This allows you to be picky about tenants and fill quick. Also encourages long term tenancy. 2) be very selective about tenants. Good credit/ background check/ jobs that encourage less drama. Military, school employees etc. Families w/ small kids are good as well as they tend to be more responsible. That is my only advice.
I was doing BRRRR back in 2004 like every one else was. Then came 2008 and the bubble burst !! So just be careful and pay attention to the market. Don't get caught over paying for your properties and stuck with all that debt.
Agreed. But keep in mind the BRRR strategy is for buy and hold investors. Nowhere in the BRRR strategy does it say to sell. So even if the market tanked, you hopefully still have tenants in there paying off your property. Now in 2019 the values should have easily recovered.
Great video Marko! However I'm a little bummed you didn't dive into great depths on the cash flow aspect of it. The strategy sounds simple from this video but it's a lot harder to actually implement and be successful. For example, you're forgetting about how drastically different your cash flow situation can be depending on the financing part of the deal. Investment Property interest rates are much higher than Primary Residence rates and there's ways around the system to make sure you cash flow as much as possible. Super important! Either way, love your content. Always gets my brain cooking for content ideas myself!
I was thinking that also, but if you have a renter who has signed a one or two year lease then you can show your rent roll to the bank which can actually add value to the property.
Great strategy, but there's a few things to consider. 1. You need the bankroll to start on the first purchase. Unless you wanna finance from the start. 2. It's so freaking hard to find cash flowing properties, especially here in California. 3. As mentioned in other posts, this market can collapse with this Corona virus crap going on. Otherwise, it's great strategy. Like anything with investing, there are risks. Thanks for the clear to understand video bro. I'm subbed!!
Thanks, Marco. Another great video! I can see the potential to do great things with this (if one is smart about leverage). Definitely going to be tool I use, soon!
So the BRRRR strategy requires you to start out with cash you can obtain it in multiple ways, Thank you! I'm finally starting to understand this method
If you’re getting the initial 70k in this scenario from a hard money lender or somewhere else wouldn’t you have to to pay them off first once you refinance? How do you get to repeat the process if so? Or are you keeping the high interest original loan and using the rent money to pay that off monthly?
Perhaps in a few years thisll be possible in Australia.. ha Ima move to the States when i get some money together, the possibilities there are numerous compared to how stratified Australian market has become. love your vids Marco, youre the man
That's what my family has been doing since the 80s and everyone is in a different trade including banking and accounting so we can do everything bin house and don't pay anyone outside the family. Kinda sounds like the mob...
Great video Marko... I've never had a rental property, but hope to someday. Great lesson! I might need to make a trip to the midwest though because it ain't happening here in the SF Bay. At least not for me.
Thanks Scott. The midwest has great cash flow but not great appreciation. Follow the jobs and population growth. Southeast and Southwest are crushing it right now with housing starts and demographics!
hey Marco! at some point can you talk more in depth about HELOC. awesome video, just discovered your channel & I already feel super empowered. getting smarter everyday 🙌🙌
This dude provides a priceless financial education for free on TH-cam. I hope he someday makes a lot of money off it -because if people pay attention and apply what he says, they can make a lot of money themselves.
Try that strategy in a state like Massachusetts. One thing he doesn't touch on - what happens when tenants become squatters... Not only can you lose the rental property, if you leverage your own home to buy it - you could lose the rental property AND your own home.
@@WhiteBoardFinance Ever look into what it takes to evict someone in some states like MA or CA? It can take YEARS. Seriously - look into it. I'm not kidding! All the while they're not paying rent. Lots of stories out there of landlords PAYING tenants to GTFO after half a year of not receiving rent. I'm being completely serious man - look into it. Thing's aren't all lollipops and roses like your vid makes it sound.
Probably every carpenter , house builder knows this. Depends on the area, if bad neighborhood, bad tenants? Had a carpenter friend, he use to buy fire damaged properties cheap, what no one wants to touch, rebuild it and sell it for profit. If the market was bad, he would rent it out for while, take money out and buy an other fixer upper house etc....
If its this easy then do you think the market is flooded with investors doing the same thing and will there be any houses available for a new guy to start doing this ?
Thanks for the video. I have a few questions. If you took out a loan from a private lender, how much are you paying back with interest? Also, how much can you make per month at the end after all expenses paid?
hi marko. thanks for sharing the video. what about accumulating the money to actually buy the property to begin with? should i go into the trades(electrican/plumber/hvac) i always hear they can make great money. or should i return to college and get a degree in accounting? being it says you are a real estate investor, have you spoken to many trades people?
It is based on the typical percentage of the value of the home that the bank will give you for a HELOC . The example in this video was 75%, he chose 0.7 to give himself a 5% fudge factor
Very good explaination. However after you refinance and have a check for $75000, how could you invest that in another property if you need to pay off the debt of $50,000 and cover your repair expenses??? You would have the $5000 to reinvest or pocket. Or would you carry two mortages??? and pay repairs out of your own pocket???
How do you get banks to cut a mortgage note that’s worth the original value plus even money or greater on your renovations? Banks here see through upgrades and fix ups and basically quote mortgages based off assessed property taxes which don’t fluctuate much, especially due to upgrades.
Sweet thanks, I’m glad I have found your TH-cam channel. Along with reading a lot of Garry Keller books, multiple investment books and financial self defense books that my dad turned me on I think I am in a good position. Keep the information coming and I will keep watching.
I must be the only confused one here. What I see is. 1. 70k used equity (70k loan from main residence). 2. Investment is bought for $50k + 20k repairs ( which is the loan from main residence. 3. Refinance the investment property and bank gives for example 75k. So there's two main points. 1. Use that 75k to pay off the 70k loan from the residence, but then you still have 70k loan for the investment. Or use the 75k to buy another property. Which means you'll still have 70k loan in main residence and 75k in investment. Anyone agree with me?
So essentially you get one property with your own money , finance it to buy a second property , and collect rent from both? Double rent would mean paying off the loan fast and then cash flowing positive to you? IF you could find two properties successfully to do this with it would be awesome
what are some good places to look for banks that will do the refinance? We already flip homes but we just use hard money for the purchase then sell after the rehab. I am not sure where to find a bank that will give 75-80% for an investment property refinance.
So when u add the tenant and refinance and make the profit, do you keep that property and rent out to he tenants or put it on the market?(sorry im new to this but desperate to learn) ,,,
I have 2 questions... 1) How did you come up with the 70% of the ARV to calculate the purchase price? and why did you subtract the repair costs out of that? Can you explain the formula? 2) If you spent 50K purchasing the house, wouldn't you ultimately need 70k in cash because of the 20K in repair costs to make this work?
Hey! 1) We take 70% of ARV as a convention bcz we would like to only pay 70% of the total value bcz it is in bad condition. We subtracted the repair costs to ensure that even after we bear the repairs, we would still have a great deal In our hands!! 2) Yes we would need 70k cash in total including the repair costs. But it's still worth it bcz the value of the house after repairs is now 100,000$.
The number of offering .7 of ARV is just not realistic, at least where I am at (I am in Phoenix). I had a fixer-upper once. In 2015, I valued it at $205,000. after long negotiations, I paid $165,000 knowing full well that it would need $30,000 in repairs. Kitchen had to be redone. Parts of the roof. Windows. Flooring. Bathroom. The owners really did not take care of the place. I managed to "save" $10,000 or roughly 5%. However, within two years the AC went out ($6,500) and I replaced the refrigerator ($1,200). Rent on this house is currently at $1,400. However, I had to tie up nearly $40,000 of my own cash in repairs / updates. This extra $40,000 I could have used as a deposit on another house. It was a risk. Uncertain if I played it best. That said, considering how prices have been flying in the Phoenix area (and across the country), it is now worth $270,000 to $300,000 ... can you say R/E Bubble???
@@WhiteBoardFinance For now, prices have never been higher, and they're going up. The market no longer makes much sense to invest in. Numbers out of control. I am just waiting for the crash. Hopefully it'll crash ... soon.
Great video and well explained. Is there a such thing as being “mortgaged out?” Will banks lend to you even though you’re 2 or 3 mortgages deep? I thought for you to qualify for a mortgage your income to debt ratio has to be good enough to get a mortgage. Does that mean mortgage companies will look at your prior mortgages and see that you’re renting them out and therefore creating income and will indeed lend out another mortgage? Just playing devils advocate- would definitely like to get Into this.
I realize federal law under one name is a maximum of 10, but what I’m asking is if a person can get mortgaged out based on their financials on what they qualify for. I’m worried I won’t get approved for multiple mortgages based on my salary....
This system seems flawed if each mortgage you attain is only going to put you in more debt and therefore prohibiting the REPEAT process that would allow for more positive cash flow.
50k +20k= 70k... 20% down = 14k Still owe 56k... avr 100k.... refinance and get 75% that is 75k and pay off the 56k and walk out with 19k and repeat the process...
So i got a question....i bought a house nd rented it out for the past 2 years currently he still ther the house is valued at around 230 to 240 i think ...i owe 200k can i get a new loan for 230 or 240 then pay the loan that i have right now which is 200k nd then profit the rest nd if yes how can i go about it
One thing I’m confused about. Are you paying cash ($50k) or are you doing 20% (10k) of 50k? Does it work if you don’t pay cash? Also, how are you getting a house half off! Are they wanting to sell it for 100k or are they seeking 70k?
Hi great video , I followed everything but you lost me on the refinance part.. Ok this 75k which the bank gives is it cash? what about the mortgage? what about the 50K which you used originally where did it come from?
So I have a question. That first loan (part of the all in 50K) in this scenario you did not mention anything about paying them back. You said to repeat the process. So I'm little confused. Thanks!!
*QOTD: How are you building wealth in 2019?*
Marco, like your clean straightforward style. As you say there are many details left unsaid here that can't be addressed in 8 minutes. I do think you could have made more clear the point that the tenant's rent is paying your mortgage (would be about $550/mo in your hypothetical example) as well as covering the property tax, insurance, and a saving fund for future maintenance and repairs. That is really why this works and you do mention margin and cash flow but I think it would be in keeping with your clear style to spell out that one point.
What is the .7?
Preparing for the upcoming March 2020 crash and market opportunity. (Ugh, I wish)
I started this strategy in 2007 when I lost my job. It was a gamble. Almost lost my family. I'm not rich by any means but thank god it's worked out so far. I have a small level of financial freedom. I just didn't know what the name of this strategy was.
For me, the biggest obstacle was the fear of losing what money I had saved and being out on the street. If I had to guess, the majority of people have that same fear - it's crippling. I still have that fear even today. Great vid and great channel. I always learn something from this channel. Thank you.
My pleasure thanks for watching!
i thought it meant not using the heater all winter and using the money to invest instead
lmao!
LMFAO
This really does crystalize just how easy real estate investing can be! When you boil it down, most things in life and wealth building are just a few math problems!
It's not rocket science. The hard part is building the deals and rehab
"Easy" LMFAO!!?? No.. it's not "Just that easy".
This guy is a good communicator. !!
In my day we called this a fixer upper. Its great fun.
For 2019 I'm studying my butt off learning how to trade options and finally get started with Amazon. Since I was in high school real estate is what I wanted to get into but I was a moron and really messed up my credit bad and it's been downhill every since. Another great video Marko!
Thank you Jerry, keep up the hard work!!
Love the BRRRR strategy! One of the best ways to grow your wealth quickly and effectively. Crazy to think you can get multiple rentals but only need the capital for one down payment.
That's right. Just be careful bc leverage is a double edged sword
And money for renovation. Money to fix up the property
No bank will lend you money for a home that isn't your primary residence.
Of course they will
Marco have u heard of Reedy&Company there a turn key company out in Memphis Tennessee if so any option
This is awesome, well explained with simple terms easy to understand. Thank you for laying the ground work, this right here is gold.
Share with your friends!
Thanks for explaining this so far the best explanation on TH-cam. I am looking for someone who will really simplify this process. perhaps you should do a part 2 to simplify even more!
This was the best video I’ve seen on BRRRRR. Very informative and detailed as to the how it works.Thank you for putting this out there
you made this sound soooo simple.. i appreciate you.
my pleasure please share :)
I wanted to clear my doubts on the refinancing and this really helped. Thanks man great video nice and simple.
Best break down and explaination of BRRR I've seen yet!
It has finally clicked for me. Thank you.
The part that turns me off the most is dealing with renters. I have heard so many horror stories about damage they do and even taking them to court they can't afford to pay for all damage. Is there a bright side to that I am missing? Love the channel.
This is something you can cover once you grow large enough, understand it's going to happen eventually, be ready for it and hope it doesn't happen too early
With that attitude you can guarantee you will have just those very problems. Prob best you don't jump in to REI.
J.Kush what’s do you mean that attitude lol it’s something to think about you can’t just ignore it. Lol that’s like ignoring the risk of not using a condom
Have a good tenant screening process and a strong lease
I own 2 rentals since 2009. I have been fortunate to never have drama. Only had 3 people leave across 11 yrs. This has worked for me:
1) offer the property slightly below market. This allows you to be picky about tenants and fill quick. Also encourages long term tenancy. 2) be very selective about tenants. Good credit/ background check/ jobs that encourage less drama. Military, school employees etc. Families w/ small kids are good as well as they tend to be more responsible.
That is my only advice.
I was doing BRRRR back in 2004 like every one else was. Then came 2008 and the bubble burst !! So just be careful and pay attention to the market. Don't get caught over paying for your properties and stuck with all that debt.
Agreed. But keep in mind the BRRR strategy is for buy and hold investors. Nowhere in the BRRR strategy does it say to sell. So even if the market tanked, you hopefully still have tenants in there paying off your property. Now in 2019 the values should have easily recovered.
Exactly
How did that end for you? What are you doing now?
i have a doubt in brrrr strategy we used finance two times right,
first in starting while buying the property and then again while refinance it?
You can use a bank lender for purchase and refi.
Thanks for explaining the refinance part. I kept getting confused.
Great video Marko! However I'm a little bummed you didn't dive into great depths on the cash flow aspect of it. The strategy sounds simple from this video but it's a lot harder to actually implement and be successful. For example, you're forgetting about how drastically different your cash flow situation can be depending on the financing part of the deal. Investment Property interest rates are much higher than Primary Residence rates and there's ways around the system to make sure you cash flow as much as possible. Super important! Either way, love your content. Always gets my brain cooking for content ideas myself!
I was thinking that also, but if you have a renter who has signed a one or two year lease then you can show your rent roll to the bank which can actually add value to the property.
What suggestions are out there to mitigate this?
Love your videos
Simple and straightforward explanation, thanks
Great strategy, but there's a few things to consider.
1. You need the bankroll to start on the first purchase. Unless you wanna finance from the start.
2. It's so freaking hard to find cash flowing properties, especially here in California.
3. As mentioned in other posts, this market can collapse with this Corona virus crap going on.
Otherwise, it's great strategy.
Like anything with investing, there are risks. Thanks for the clear to understand video bro. I'm subbed!!
Thanks, Marco. Another great video! I can see the potential to do great things with this (if one is smart about leverage). Definitely going to be tool I use, soon!
Thank you
Mindbuildingsolutions approved!
Excellent video and content.
I used the brrrrr strategy when I went to college in Canada.
Lmao
So the BRRRR strategy requires you to start out with cash you can obtain it in multiple ways, Thank you! I'm finally starting to understand this method
Excellent session.
Congratulations on 14,000 subs! I just started my channel on personal finance and I hope it's as successful as yours.
Thanks Chris, I appreciate the kind words. Just be persistent and you will succeed.
Thanks I hope so!
Very clear and well explained. Thank you!
My pleasure
If you’re getting the initial 70k in this scenario from a hard money lender or somewhere else wouldn’t you have to to pay them off first once you refinance? How do you get to repeat the process if so? Or are you keeping the high interest original loan and using the rent money to pay that off monthly?
Can u do a video about buying and flipping foreclosures?
This was a great explanation. Simple and clear. Thanks a ton!
Another awesome video Marco!!!
Great information bro thanks
WOW!. This is the same idea I had without all the details you give a few years ago.
Good work! :)
Perhaps in a few years thisll be possible in Australia.. ha
Ima move to the States when i get some money together, the possibilities there are numerous compared to how stratified Australian market has become.
love your vids Marco, youre the man
Lol I heard your real estate prices are insane down under
Thanks Jacky I really appreciate the kind words!!
My boss recently did a mini doco on housing here if ya keen bud
th-cam.com/video/h71cHHBAnMQ/w-d-xo.html
one thing i wonder Marco is re ya interest rates on the refinance?
That's what my family has been doing since the 80s and everyone is in a different trade including banking and accounting so we can do everything bin house and don't pay anyone outside the family. Kinda sounds like the mob...
Omerta
@@WhiteBoardFinance
That's right, unless you wanna go dancing in the river with your new cement shoes!
@@Corpse1984 lmao
Flossin the Ferrari hoodie and Mercedes hat...I see you Marko!
What up
My real estate friend told me to look up the BRRRR method and I immediately came to find my boy Marko
Great video Marko... I've never had a rental property, but hope to someday. Great lesson! I might need to make a trip to the midwest though because it ain't happening here in the SF Bay. At least not for me.
Thanks Scott. The midwest has great cash flow but not great appreciation. Follow the jobs and population growth. Southeast and Southwest are crushing it right now with housing starts and demographics!
@@WhiteBoardFinance - Or get ahead of the next population growth area. Hmmm... I like the Southwest idea.
That gear though.. Looking like a true slav! 😁 Can u do a video in an Adidas track suit? 😉
My whole family wears Adidas track suits. I'm contrarian so I stick with Nike :)
Haha...squatting Slavs. In Romania, it's a trening.
hey Marco! at some point can you talk more in depth about HELOC. awesome video, just discovered your channel & I already feel super empowered. getting smarter everyday 🙌🙌
This dude provides a priceless financial education for free on TH-cam. I hope he someday makes a lot of money off it -because if people pay attention and apply what he says, they can make a lot of money themselves.
Thanks Ryan! Im a believer in karma
I heard the drug lord strategy works quite well.
@@darius2640 Then you collect that worker's compensation bro.
Lmao
Lol
Shh... first rule of drug lord strategy is you don’t talk about drug lord strategy!
Try that strategy in a state like Massachusetts. One thing he doesn't touch on - what happens when tenants become squatters... Not only can you lose the rental property, if you leverage your own home to buy it - you could lose the rental property AND your own home.
Squatters? It's called having a proper lease agreement and evicting them if it gets to that point.
@@WhiteBoardFinance Ever look into what it takes to evict someone in some states like MA or CA? It can take YEARS. Seriously - look into it. I'm not kidding! All the while they're not paying rent. Lots of stories out there of landlords PAYING tenants to GTFO after half a year of not receiving rent. I'm being completely serious man - look into it. Thing's aren't all lollipops and roses like your vid makes it sound.
Cash for keys. Uncle Vito. Etc. Million ways to get a bust out tenant out of your property.
Question so why deal with renters just rehab, refi and sell? Sorry new to this
Thank You for sharing
It's still based on what the houses sold for in the area though right? Great video easy to follow
Probably every carpenter , house builder knows this.
Depends on the area, if bad neighborhood, bad tenants?
Had a carpenter friend, he use to buy fire damaged properties cheap, what no one wants to touch, rebuild it and sell it for profit.
If the market was bad, he would rent it out for while, take money out and buy an other fixer upper house etc....
Thanks for the info. Subscribed and shared!
If its this easy then do you think the market is flooded with investors doing the same thing and will there be any houses available for a new guy to start doing this ?
Good info. Thank you.
Dude, I use the word "bajillion" all the time! You just became my best friend haha
lol thanks
Thanks for the video. I have a few questions. If you took out a loan from a private lender, how much are you paying back with interest? Also, how much can you make per month at the end after all expenses paid?
Great video! You a mercedes guy? I absolutely am haha
Also what part of midwest are you in? I'm in southeast michigan
Anything German. I've owned them all lol. BMW is a car you date on the weekend, Mercedes is a car you marry for life ;)
Sunny & Warm Cleveland, Ohio :D
Marko Zlatic - WhiteBoard Finance great analogy
Love the scuderia jacket 🔥
Great video man! Never heard of this strategy before. Learning something new
My pleasure, thanks for watching and commenting :)
Dope video!!
Thanks Jay
Nice Vid - Thumbs Up
Thanks for watching and commenting! :)
I feel like Birdman is going to be making a cameo at any moment....Brrrr!
Hahaha put some respek on my name
Saw this pop up on April Fools Day and thought it was a pun on the FIRE movement. 🤣
Thank you very informative, the math was extremely helpful.
Thanks for watching
good video to buy a house for the first time how much money should I have with a credit of 700 I hope you answer me thank you very much
Thanks bro
Good stuff bro.
Hi Marko
Thank you for great content. I'm a newbie & still learning real estate. Can you please explain the PP formula
hi marko. thanks for sharing the video. what about accumulating the money to actually buy the property to begin with? should i go into the trades(electrican/plumber/hvac) i always hear they can make great money. or should i return to college and get a degree in accounting? being it says you are a real estate investor, have you spoken to many trades people?
Trades make a lot of money without incurring massive student loans. That's your own personal choice though
Nice strategy!
Thank you sir!
Awesome video but more importantly that zip up! Where'd you get the Ferrari gear?
Top secret
The other thing that I am not sure about is if I can also request a loan for the initial payment of the house.
Great video ! Can you please explain the "x.7"? otherwise the video is super simple explained!
It is based on the typical percentage of the value of the home that the bank will give you for a HELOC . The example in this video was 75%, he chose 0.7 to give himself a 5% fudge factor
Very good explaination. However after you refinance and have a check for $75000, how could you invest that in another property if you need to pay off the debt of $50,000 and cover your repair expenses??? You would have the $5000 to reinvest or pocket. Or would you carry two mortages??? and pay repairs out of your own pocket???
How do you get banks to cut a mortgage note that’s worth the original value plus even money or greater on your renovations? Banks here see through upgrades and fix ups and basically quote mortgages based off assessed property taxes which don’t fluctuate much, especially due to upgrades.
Hey, can you make a video about the different types of options for loans and lenders.
Sure!
Sweet thanks, I’m glad I have found your TH-cam channel. Along with reading a lot of Garry Keller books, multiple investment books and financial self defense books that my dad turned me on I think I am in a good position. Keep the information coming and I will keep watching.
My pleasure thanks for watching
Hi Marko, Any tips to accurately forecast ARV?
Hi good knowledge. But I would like to ask if the loan cost 1.1k another additional 100bucks won’t it be lost of money n cash flow ?
I must be the only confused one here. What I see is. 1. 70k used equity (70k loan from main residence). 2. Investment is bought for $50k + 20k repairs ( which is the loan from main residence. 3. Refinance the investment property and bank gives for example 75k.
So there's two main points. 1. Use that 75k to pay off the 70k loan from the residence, but then you still have 70k loan for the investment.
Or use the 75k to buy another property. Which means you'll still have 70k loan in main residence and 75k in investment.
Anyone agree with me?
How do you make sure the rent payment you get monthly covers the mortgage payment you now owe after the refinancing step?
Market research before you buy. You should know what market rents are. And you should know what your mortgage payment will be after the refi
So essentially you get one property with your own money , finance it to buy a second property , and collect rent from both? Double rent would mean paying off the loan fast and then cash flowing positive to you? IF you could find two properties successfully to do this with it would be awesome
Umm no.
@@tomjones5208 care to elaborate?
@@bowlingbeeco.8021 hi Cody not particularly.
what are some good places to look for banks that will do the refinance? We already flip homes but we just use hard money for the purchase then sell after the rehab. I am not sure where to find a bank that will give 75-80% for an investment property refinance.
So when u add the tenant and refinance and make the profit, do you keep that property and rent out to he tenants or put it on the market?(sorry im new to this but desperate to learn) ,,,
I really like your videos. You are very good. But do you think if in Los Angeles California. Is better or in the east coast?
Midwest is the best
That's such a dope hat, where did you get it?
So u have to pay mortgage on the house and the loan???
I have 2 questions...
1) How did you come up with the 70% of the ARV to calculate the purchase price? and why did you subtract the repair costs out of that? Can you explain the formula?
2) If you spent 50K purchasing the house, wouldn't you ultimately need 70k in cash because of the 20K in repair costs to make this work?
Hey! 1) We take 70% of ARV as a convention bcz we would like to only pay 70% of the total value bcz it is in bad condition. We subtracted the repair costs to ensure that even after we bear the repairs, we would still have a great deal In our hands!!
2) Yes we would need 70k cash in total including the repair costs. But it's still worth it bcz the value of the house after repairs is now 100,000$.
hey marko you live in northeast Ohio right, what bank or leander do you use to refinance for your brrrr's.
Soo all I want to know is what's better, Ferrari or Mercedes? Thanks for the video.
Depends on the use case
how much is the new mortgage that you have to pay now that you refinanced it?
Its for 75% of the properties value. The interest rate is usually between 3 and 6%.
How long are you waiting before refinancing?
How likely are the banks willing to give you another loan when trying to repeat the process to buy another property??
What if you are using a private money lender? How do you pay them back after the appraised value comes back & the bank cuts you the check?
The number of offering .7 of ARV is just not realistic, at least where I am at (I am in Phoenix). I had a fixer-upper once. In 2015, I valued it at $205,000. after long negotiations, I paid $165,000 knowing full well that it would need $30,000 in repairs. Kitchen had to be redone. Parts of the roof. Windows. Flooring. Bathroom. The owners really did not take care of the place. I managed to "save" $10,000 or roughly 5%.
However, within two years the AC went out ($6,500) and I replaced the refrigerator ($1,200).
Rent on this house is currently at $1,400. However, I had to tie up nearly $40,000 of my own cash in repairs / updates. This extra $40,000 I could have used as a deposit on another house. It was a risk. Uncertain if I played it best. That said, considering how prices have been flying in the Phoenix area (and across the country), it is now worth $270,000 to $300,000
... can you say R/E Bubble???
Phoenix is hot. You can get that Cleveland although rare in this market cycle
So did you sell it at the higher valuation?
@@bperez8656 I am in it for the long term.
@@WhiteBoardFinance For now, prices have never been higher, and they're going up.
The market no longer makes much sense to invest in. Numbers out of control. I am just waiting for the crash. Hopefully it'll crash ... soon.
@@tokyojon4344 agreed
Great video and well explained. Is there a such thing as being “mortgaged out?” Will banks lend to you even though you’re 2 or 3 mortgages deep? I thought for you to qualify for a mortgage your income to debt ratio has to be good enough to get a mortgage. Does that mean mortgage companies will look at your prior mortgages and see that you’re renting them out and therefore creating income and will indeed lend out another mortgage? Just playing devils advocate- would definitely like to get Into this.
Up to 10
I realize federal law under one name is a maximum of 10, but what I’m asking is if a person can get mortgaged out based on their financials on what they qualify for. I’m worried I won’t get approved for multiple mortgages based on my salary....
debt to income ratio
This system seems flawed if each mortgage you attain is only going to put you in more debt and therefore prohibiting the REPEAT process that would allow for more positive cash flow.
@@jamesrusso9114 No. Each property covers itself. That's the point.
So what if you can’t find a property that cheap. Can you do a video showing how it would work paying 20% down instead of paying it all in cash?
50k +20k= 70k...
20% down = 14k
Still owe 56k...
avr 100k....
refinance and get 75% that is 75k and pay off the 56k and walk out with 19k and repeat the process...
So i got a question....i bought a house nd rented it out for the past 2 years currently he still ther the house is valued at around 230 to 240 i think ...i owe 200k can i get a new loan for 230 or 240 then pay the loan that i have right now which is 200k nd then profit the rest nd if yes how can i go about it
One thing I’m confused about. Are you paying cash ($50k) or are you doing 20% (10k) of 50k? Does it work if you don’t pay cash?
Also, how are you getting a house half off! Are they wanting to sell it for 100k or are they seeking 70k?
There are a lot of situations where people get rid of houses for significantly below market value
Hi new here. Im confused on how to pay back the bank w increased interest?
Hi great video , I followed everything but you lost me on the refinance part.. Ok this 75k which the bank gives is it cash? what about the mortgage? what about the 50K which you used originally where did it come from?
So I have a question. That first loan (part of the all in 50K) in this scenario you did not mention anything about paying them back. You said to repeat the process. So I'm little confused. Thanks!!
Great Video Marko! Keep it up. I am a licensed agent in Philadelphia. I own investment properties in North Philadelphia. Temple Health Science Campus!
What kind of rate/fee are you paying your private money lender?
whatever you negotiate