Tag Archive for: real estate investing 2024

How to Finance a BRRRR Investment

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How to Finance a BRRRR Investment

Today we are going to discuss how to finance a BRRRR investment!  Just to clarify, BRRRR stands for buy, rehab, rent, refinance, and repeat. Financing is often the biggest roadblock that investors face when using the BRRRR method. However, by using it correctly, you can put little to no money in and win the real estate investing game.

Financing is the biggest roadblock.

How can you build your portfolio quickly and easily while using little to none of your own money? The answer is by finding the right loan. The right loan is one that allows you to buy an undermarket property, will cover the purchase, and cover the rehab. Since the success of BRRRR is reliant on buying properties that are under market, it is imperative that you have the right loan. To get on the fast track to success you need to use a  bridge loan, hard money loan, or a private loan when considering BRRRR.

Example:

Traditional loans:

Buy a rental property for $300K.

Traditional Lender requires 20% down, which totals $60K

Your $60K is gone.

This would be for only one property.

BRRRR

Buy a rental property for $300K

Closing costs are $6K.

If you were to  buy 10 properties it would total of $60K

After refinance the property would have $54K in equity.

If you bought 10 properties and refinanced them all, the equity would be $540K 

This is money that you have just created by using little to none of your own money. 

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as too when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

Finance a BRRRR investment today by making sure that you find under market value properties and can qualify for a long term loan. In doing so you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video to learn more about How to Finance a BRRRR Investment.

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Why the BRRRR Method Works in 2024

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Why the BRRRR Method Works in 2024

Today we are going to look at why the BRRRR method works in 2024! Just to clarify BRRRR stands for buy, rehab, rent, refinance, and repeat. This method has returned strong in 2024, and is the perfect way to build your portfolio of rentals. By using BRRRR and using it correctly, you can put little to no money in and win the real estate investing game. Would you like to learn more about building $500K in only 3 years? Let’s take a closer look!

How do you get started?

First and foremost, the success of BRRRR is dependent on buying properties that are under market value. These properties are often ones that the owner didn’t want to clean or fix up prior to selling. Once you bring the property up to market value, you will create wealth by creating equity. Unlike other  methods that take your money, BRRRR takes a little more work in order to be successful. There are a lot of great deals out there. It’s just a matter of finding them. Those who look at more properties will find better deals, as opposed to others who only look at one property a week. 

Example:

Homes in the area are $500K.

You buy a property under market value at $300K. 

By putting in $100K, you can then see what the real value is for the property.

The property is now worth market value.

Creating equity by putting in sweat equity

Real estate investors who use the BRRRR strategy create both equity and a margin by putting in sweat equity. What is sweat equity? It is the time you spend finding the property and the time you spend fixing it up. In doing so, you’ve created the equity that can be used when you go to refinance without needing any money out of pocket.  Those who put in the effort will be successful in a matter of years.

Example:

Buy a property for $200K

Put in $30K 

When it’s all fixed up, it will be $300K

You have now built equity by taking something that needs work and putting work into it. Just to clarify, equity is the difference between the appraisal and what you owe.This is the amount that you can contribute to the refinance.

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as too when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

You can create life changing money today by understanding why the BRRRR method works in 2024. By finding under market value properties and qualifying for a long term loan, you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video to find out more about Why the BRRRR Method Works in 2024.

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The BRRRR Method Returns Strong in 2024

Categories:

The BRRRR Method Returns Strong in 2024

What is hot today in real estate investing? The answer is BRRRR! It stands for buy, rehab, rent, refinance, and repeat. This BRRRR method returns strong in 2024, and is the perfect way to build your portfolio of rentals. By using it correctly, you can put little to no money in and win the real estate investing game.

How do you get started?

First and foremost, the success of BRRRR is dependent on buying properties that are under market value. These properties are often ones that the owner didn’t want to clean or fix up prior to selling. Once you bring the property up to market value, you will create wealth by creating equity. Unlike other  methods that take your money, BRRRR takes a little more work in order to be successful. There are a lot of great deals out there. It’s just a matter of finding them. Those who look at more properties will find better deals, as opposed to others who only look at one property a week. 

Example:

Homes in the area are $500K.

You buy a property under market value at $300K. 

By putting in $100K, you can then see what the real value is for the property.

The property is now worth market value.

Financing is the biggest roadblock.

How can you build your portfolio quickly and easily while using little to none of your own money? The answer is by finding the right loan. The right loan is one that allows you to buy an undermarket property, will cover the purchase, and cover the rehab. Since the success of BRRRR is reliant on buying properties that are under market, it is imperative that you have the right loan. To get on the fast track to success you need to use a  bridge loan, hard money loan, or a private loan when considering BRRRR.

Example:

Traditional loans:

Buy a rental property for $300K.

Traditional Lender requires 20% down, which totals $60K

Your $60K is gone.

This would be for only one property.

BRRRR

Buy a rental property for $300K

Closing costs are $6K.

If you were to  buy 10 properties it would total of $60K

After refinance the property would have $54K in equity.

If you bought 10 properties and refinanced them all, the equity would be $540K 

This is money that you have just created by using little to none of your own money. 

Creating equity by putting in sweat equity

Real estate investors who use the BRRRR strategy create both equity and a margin by putting in sweat equity. What is sweat equity? It is the time you spend finding the property and the time you spend fixing it up. In doing so, you’ve created the equity that can be used when you go to refinance without needing any money out of pocket.  Those who put in the effort will be successful in a matter of years.

Example:

Buy a property for $200K

Put in $30K 

When it’s all fixed up, it will be $300K

You have now built equity by taking something that needs work and putting work into it. Just to clarify, equity is the difference between the appraisal and what you owe.This is the amount that you can contribute to the refinance.

It’s all about the numbers!

Both hard money lenders and private lenders look at properties to determine what the after repair value will be. In order to be successful using the BRRRR method, the ARV should be between 75% to 80%. Traditional lenders on the other hand will look at loan to value when looking at a property. It is important that real estate investors know what the loan side looks like for a property before jumping into a deal. Remember, the lower the ARV, the lower the loan, and the less you owe. By working with investor friendly loans, knowing your pieces, and knowing your numbers, you will be successful.

One method, 2 loans.

Just to clarify, BRRRR is not a type of loan. Instead, it is a strategy that uses 2 different loans. One loan is to purchase and fix up the property. The second loan is a long term loan that you can put the property into after it is fixed up. Many lenders are able to cover 100% of the purchase as well as 100% of the refinance depending on the property. One thing to keep in mind is that some lenders have restrictions as to when you can refinance the property. It is important that you understand the system so that you know what’s coming!

BRRRR timeline:

30-45 days – get in and rehab

30-60 days – rent out the property

60-90 days – refinance into a long term loan

While there might be some carry costs, the rent is going to cover it.

Create life changing money today!

You can create life changing money today by using the BRRRR method. By making sure that you find under market value properties and can qualify for a long term loan, you can create a great life! While many real estate investors expect to find the perfect property in a matter of months, the reality is that it could take a few years. Take the time to learn the process and be patient. Once you go through one or two of them, it will become easy! Would you like to learn more about building $500K in only 3 years? Contact us today!

Watch our most recent video about The BRRRR Method Returns Strong in 2024.

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How to Compete in Today’s Real Estate Market (2024)

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How to Compete in Today’s Real Estate Market (2024)

In the past few days we have had 4 clients who lost properties that would have been really good flips. The reason that they lost the deal was because they didn’t secure financing beforehand. While getting into this business requires a lot of planning, it is imperative that investors set up their money correctly from the very beginning.  Those who do will be able to compete in today’s market and have more opportunities for the best deals! 

New investors prepare!

Those who are new to real estate investing should focus on setting up the proper financing immediately! The last thing that you want to do is to put a property under contract and not close . This could burn the relationship that you created with the realtor or wholesaler. Instead of being at the top of their list for good properties, you will instead move to the bottom of the pile.  Here at The Cash Flow Company we want to give you the competitive advantage. Part of that is making sure that you do everything correctly. It is a business! As a business it is important that you get pre-approved for the loans you need. 

Don’t miss out on deals!

Oftentimes real estate investors miss out on amazing deals because they are not prepared. Whether you are new or just into a new adventure, it is important to set yourself up for success from the beginning. If you are going to get into the real estate game, make sure that you are not only looking for properties, but that you are also keeping the money flowing. What do we mean by keeping the money flowing? Maybe you need 100% financing, need a second, or you’re new to flips and need to know what to do. By talking to lenders as you find properties and getting pre-approved, it will help you to move forward quickly on deals. 

Choose the right lender for the deal.

One of the most important things that you need to do as a real estate investor is to create a good relationship with lenders. Those who have a good relationship with their lender will be able to consult with them prior to purchasing in order to see what financing options are available. One thing to keep in mind is that your lending needs will not only change over time, but they will change depending on the property. For example, financing on a fix and flip will be different from the financing on a rental property. It is important to look around and evaluate your lending options annually in order to find the best options for you. 

How do you get pre-approved?

Before seeking out a pre-approval, it is imperative that you know what type of property you are looking for. Are you going to focus on flips, rentals, 1 to 4 units, or multi units. Those who do can then make sure that the lender lines up with what they are trying to do. By getting pre-approved can help you go into a deal with reassurance. How can you find the right lenders? The answer is by talking to those in the real estate community. They can guide you to the lenders who are closing, those who work with new investors, and also tell you about requirements that the lenders might have. 

Get the competitive advantage.

As you talk to lenders it is important to consider what their requirements are, and areas that you need to focus on. While one lender might require more money down, another may require a higher credit score. Find out all of the steps that you need to complete in order to guarantee pre-approval. Just to clarify, these steps can be done in conjunction with looking at properties. For example, you can work on improving your credit score or look for private money options while searching for properties. By taking your time to work through the process, you will have a competitive advantage.

What is gap funding?

Gap funding is borrowing money from someone for the down payment, carry, or any money that you have to put into the deal. When you are buying a property, the first lender requires something in order to approve the loan. This could be a down payment, reserves for payments, or they may require you to do the fix up. Many investors don’t have the additional funds that are needed in order to meet the lenders requirements. Real estate investors might go out and find a family member, friend, or someone in the real estate community who can lend them that money to bridge the gap. It is important to make sure that your primary lender allows gap funding before purchasing a property. If the lender doesn’t allow gap funding, it could jeopardize the deal. 

How do you find gap funding?

There are a lot of people out there who have anywhere between $10K to $50K that they are looking to invest. By working with you, they have a chance to receive a better return on their investment. So how do you find gap funding? There are real estate groups throughout the community that provide opportunities for investors to meet. While peer investors are not often interested in diving into real estate themselves, they are interested in getting a better return on their money. While you can start by asking family and friends, many fear that it will create an awkward situation. By finding peer investors in the community who have $100K or $200K set aside, you will be able to compete in today’s market!

Ready, set, GO!

One of the biggest hurdles in real estate investing is finding the funding you need to purchase properties! Thankfully there are a lot of options out there to help investors. These include HELOCs, credit cards, and peer lending, just to name a few. Here at The Cash Flow Company we have seen people use multiple ways to get the gap covered. Those who take the time to gather pre-approvals, will be ready to go when the next deal comes!

Contact us today to find out more about gap funding and what you need to do to get pre-approved.

Watch our most recent video to learn How to Compete in Today’s Real Estate Market (2024).

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