Tag Archive for: real estate investing

Why Are DSCR Loans Good? Top 5 Reasons Why Investors Love Them

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It’s “the easy loan.” But are DSCR loans good for your investments?

DSCR loans are becoming one of the most popular investor tools out there. 

But why are they so well-loved? Let’s go over 5 reasons investors like DSCR loans. 

Are DSCR Loans Good?

Firstly, let’s go over what a DSCR loan is.

DSCR stands for “debt service coverage ratio.” They’re a loan for rental properties that are based on the debt ratio of rent income to the property’s expenses.

These loans can be flexible and hassle-free. This makes them the go-to choice for investors financing a rental property or turning a fix-and-flip project into a rental at the last minute in bad markets.

But are DSCR loans really as good as they seem? Let’s take a closer look at 5 reasons why DSCR loans are a solid choice for investors. 

#1: You can start investing now.

DSCR loans are great for new investors. Traditional loans often require you have two years of real estate investing experience.

Because there are no experience requirements, a DSCR loan is a great opportunity to get into your first investment rental property. Don’t wait to apply for your first DSCR loan.

#2: No income requirements.

With a DSCR loan, you don’t have to have a W2 job, or show any tax returns or other income documentation.

This means DSCR loans are good for minimizing your tax liability. You can write everything off, pay the IRS as little as you want, and still get a great loan.

#3: Less paperwork.

The investor’s dream: less paperwork. Applications and approvals are simple with DSCR loans. There are no income requirements, employment verification, or any other intensive qualifications.

Not only is it less hassle to skip some paperwork – it also means the entire loan process is much faster.

#4: DSCR works for short-term rentals too.

DSCR loans don’t just work for traditional rentals, but they work for all real estate investment properties. DSCR loans are flexible and work with a variety of rental options. This includes VRBO, Airbnb, or renting out a traditional long-term property.

There are a few things to take into consideration with short-term rentals and DSCR. But it’s still a simple and often profitable loan for these types of properties.

#5: Great for BRRRRs.

Many investors wonder – are DSCR loans good for BRRRR-style properties? The answer is yes.

DSCR loans are great for the long-term, refinance loan at the end of your BRRRR project. The combination of a quick and easy loan and a structure designed for rental properties makes DSCR and BRRRR the perfect pair.

Want to find out how a DSCR loan might work with your BRRRR rental? You can download our free DSCR loan calculator here. It can help you learn your ratio and get an idea of the kind of terms your property may qualify for.

Are DSCR Loans Good for Your Property?

If you’re in the market for a loan on a rental property, you can reach out to us to help with the numbers. Send us a deal or ask us a question at Info@TheCashFlowCompany.com.

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DSCR Loan Money Requirements: Don’t Be Blindsided

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Investors think of DSCR loans as the “easy loan.” But here are 3 DSCR loan money requirements you need to know.

Sure, DSCR loans have a simpler underwriting process and criteria compared to conventional mortgages.

But there are a few key expenses you’ll need to keep in mind.

When applying for a DSCR loan, it’s important to have a solid plan in place for covering the necessary down payment, closing costs, and reserves. Here’s what you need to know about DSCR loan money requirements.

Down Payment

The down payment is the upfront payment you make when purchasing a property. This is whatever isn’t covered by your DSCR loan’s LTV.

Closing Costs

Closing costs are the fees associated with obtaining a loan, including lender fees, appraisal fees, and title insurance. These costs can vary widely, but generally range from 2-5% of the loan amount. It’s important to budget for these costs and have the funds available at closing.

Reserves: An Important DSCR Loan Money Requirement

Most importantly, DSCR loans will require reserves.

Many lenders require you to have 3-6 months’ worth of mortgage payments in reserve to protect against unexpected situations, such as a tenant vacating the property.

These funds can come from your own savings or from borrowing OPM (Other People’s Money) from a business partner, friend, or family member.

By having a solid plan in place for covering these money requirements, you can increase your chances of getting approved for a DSCR loan. Keep in mind that your lender will want to see evidence of these funds in order to approve your loan.

More on DSCR Loan Money Requirements and Other Criteria

Read the full article here.

Watch the video here:

 

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3 Key Fundamentals of BRRRR

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The top 3 fundamentals to keep in mind when learning BRRRR.

“BRRRR” stands for “buy, rehab, rent, refinance, repeat.” It’s a process for capturing equity and creating cash flow on rental properties.

We’ve helped investors through this process for over 15 years.

Here are the 3 key fundamentals of BRRRR we’ve seen make these transactions successful.

Key Fundamental #1: Building a BRRRR Team

Firstly, you have to find off-market properties.

The really good under-market BRRRR properties won’t just jump into your lap. These properties require a little digging, and – more importantly – a team to help you.

You’ll need to know wholesalers, real estate agents, other investors, and anyone else who can help you locate good undermarket properties.

(It’s also an advantage to keep lenders on your team so you can close fast on these great properties once you find them.)

Key Fundamental #2: The Money Side

“It takes money to make money.”

If you can learn the basics about the costs of your BRRRR projects, then you can squeeze more money out of each project.

We always say that there’s money in the money. Do the research to learn about real estate before your first investment, and you’ll be miles ahead of other investors.

Key Fundamental #3: Using the Right Leverage

Yes, it takes money to make money, but it doesn’t have to be your money.

Plan for and understand the entire BRRRR process, and leverage can work to 10x your net worth.

For More on BRRRR

Overall, this only brushes the surface of BRRRR. Over the coming weeks, we’ll visit each of these topics in much more detail. Why do you use two loans? How can you do this with zero money down? How do you go about a refinance?

If you have a deal now you’d like us to look at for you, send us an email at Info@TheCashFlowCompany.com.

Read the full article here.

Watch the video here:

https://youtu.be/JbO2YFxuPmw

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How BRRRR Properties Create Wealth Immediately

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What properties make you money as a real estate investor? Here’s how BRRRR properties create wealth instantly.

There’s no contest: BRRRRs create wealth WAY faster than retail properties.

In fact, the right BRRRR property can create a net worth increase of 25% of the value of the property nearly instantaneously.

To show this in action, let’s break down the examples of two houses with the same numbers – but one is a BRRRR property and one is retail.

Retail vs BRRRR: The Numbers

  • Value: We’re comparing two homes with the same value – same neighborhood, same block, same size. Let’s say the value is $400k.
  • Loan: For the BRRRR, our total costs would add up to $300k ($250k purchase price + $50k closing, rehab, etc). Our leverage 100% covers this amount. For the retail home, we could get an 80% LTV, so our remaining loan is $320k. On retail, we have less cash flow because we owe more money.
  • Cash Transfer: With BRRRR, you’re moving $0 of your own money. This is why properties with the BRRRR strategy are so popular for investors. With the retail property in our example, you need to transfer $80k of your money as a down payment. 

There are two problems with the cash transfer requirement in retail properties. 1) You need the cash to get into it. And, 2) The last “R” in BRRRR is repeat, so you’d have to have $80k again for your next property and your next. On under-market BRRRR properties, the zero out-of-pocket costs free you up to repeat the process over and over.

  • Payments: BRRRR payments will be lower than retail payments by about $25-$50/month, simply because the loan amount is lower.
  • WEALTH: The BRRRR strategy property immediately creates $100k. The retail property adds $0. It only has the loan + the $80k that was yours to begin with.

How BRRRR Properties Create Wealth

The wealth in BRRRR comes from the difference between the value of the property and what you owe on it. This usually ends up being 25% of the value of the home.

If you multiply this process by 5-10 properties? You’ve suddenly got half a million to a million dollars in net worth.

Have BRRRR properties create wealth like this isn’t just wishful thinking. In 2010, we helped multiple families buy 10 properties in one year using this method. Many of their properties tripled and quadrupled in value over the last 10+ years.

The 2023 market is shaping up to look a lot like 2010. The time to buy is coming soon.

Read the full article here.

Watch the video here:

https://youtu.be/_tMI_s4vSqA

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Unlock Better DSCR Loan Terms with These Credit Score Strategies

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What you need to know about DSCR loan credit score requirements.

DSCR lenders do have credit score requirements. Your credit score is a crucial factor lenders consider when evaluating your loan application.

Credit is a way to put a number to how safe it is to loan to you. We call this “creditworthiness,” and it’s based on your credit history and financial behavior.

A higher credit score can significantly improve your chances of getting a DSCR loan and securing favorable terms, such as a lower interest rate and a higher loan-to-value (LTV).

DSCR Loans and Credit Score’s Impact

Here’s how your credit score can impact your loan options:

  • A credit score of 740 or above can get you a higher LTV ratio and lower interest rate.
  • A credit score between 700 and 739 may still qualify you for a loan with competitive terms.
  • A credit score below 700 might make it more difficult to get approved for a loan, or could result in higher interest rates and lower LTVs.

For example, a 740 score may get you an LTV that is 5-10% higher than a 640 score, and an interest rate that is .5-2% lower.

How to Improve Your DSCR Loan Credit Score

If you’re applying for a DSCR loan, a credit score below 700 might not cut it. It’s a good idea to take steps to improve your credit. 

Here are some ways to do that:

  • Pay down credit card balances: Putting all renovation costs on credit cards can drag down your credit score. To avoid this, consider getting a private loan that won’t show up on your credit report to pay down your balances. A better credit score can also lead to better rates for long-term financing.
  • Use an authorized user: If you have a family member or friend with good, long-established credit, ask them to add you as an authorized user. This can help boost your credit score.
  • Pay your bills on time: Payment history is a key factor in your credit score. Make sure to pay all your bills, including credit cards and loans, on time. Consolidating your accounts can also help you stay organized and avoid missed payments.
  • Keep open credit accounts: Even if you stop using an account, as long as it has a good history, it will continue to add a little boost to your credit.

By following these tips, you can improve your credit score and increase your chances of getting approved for a DSCR loan with favorable terms.

You can also download this free credit score checklist to get your credit score where it needs to be for your DSCR loans.

Read the full article here.

Watch the video here:

https://youtu.be/va6u-azRkFQ

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BRRRR vs Retail: What Properties Do Real Estate Investors Buy?

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Where should you be looking for properties as an investor? Here’s the difference between BRRRR vs retail.

Sometimes beginner real estate investors buy the wrong properties.

BRRRR will never work in your favor unless you buy under-market.

Here’s a breakdown of BRRRR vs retail so you don’t make the same beginning mistake.

Buying BRRRR vs Retail

This is the basic concept behind real estate investing. There are two types of real estate properties:

  • Retail – When we think of a house as “on the market,” it’s a retail property. These houses sell at market price, a cost determined by current market conditions. In real estate, this includes supply, demand, location, interest rates, and a number of other factors.
  • Undermarket – Properties that might be considered “off-market” are sold at an under-market price. Something prevents the house from selling at market value as-is. The home is  outdated, damaged, foreclosed, or suffering from some other condition.

To break down exactly why and how BRRRR works, we need to look at the difference between buying retail and buying under-market as an investor.

Buying Retail with the BRRRR Strategy Doesn’t Work

The problem with buying retail as an investor is the house comes with no equity.

Let’s say you buy a property worth $400,000 (listed for that amount). With a conventional loan, the lender will cover up to 80% of the cost of the house. So you’ll need to put down 20%.

When you purchase the house and make the down payment, you’re transferring wealth, not creating it. You’re taking the money from your financial account and transferring it to the physical property.

So, you’ve moved $80,000 into the house, got a loan for $320,000, and created no additional wealth from the transaction.

There are three main disadvantages to retail properties:

  • The property may create cash flow or wealth in the future as a rental property, but no wealth is created from the purchase.
  • You’ll require money up-front (in this case, $80,000 plus closing costs).
  • You can only repeat BRRRR retail properties as long as you have the money to fund them.

Buying Under-Market for BRRRR

True BRRRR properties, however, solve all three of those problems retail properties have. A BRRRR property:

  • Creates equity & cash flow immediately (and over time).
  • Can be done with zero money down.
  • Is a repeatable process.

BRRRR is all about buying under-market properties – the houses that are unwanted and unloved. In this market going into 2023, a lot of these types of homes will pop up, resulting in some great deals.

BRRRR Purchase

There are certainly some nuances to BRRRR, but let’s look at the bare basics. Let’s take the same example used for the retail property.

You, again, buy a property with a value of $400,000. However, since it’s under-market, you can purchase it for only $250,000.

The catch is that the house isn’t necessarily worth the $400k as-is. The potential is there, but you’ll have to update and rehab it. Between those fix-up costs and the closing costs, you’ll have to put $50,000 more into the property.

So the total cost of the property ends up being $300,000, or just 75% of the value of the home.

Cost of the BRRRR Strategy

That 75% number is not only realistic but recommended for BRRRR properties. In down markets, it’s not entirely uncommon to see houses at 65% or below.

In this example, our all-in price (purchase + closing + rehab) is $300k, and the property is worth $400k.

Right away, we’ve created $100,000 in net worth.

Read the full article here.

Watch the video here:

https://youtu.be/_tMI_s4vSqA

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5 Steps to Get a DSCR Loan for Investors

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This loan type is an investor’s secret weapon… Here’s how to get a DSCR loan in 5 steps.

You need money to make money. But it doesn’t have to be your money.

Real estate investing is a highly leveraged game. 

DSCR loans are different from conventional loans like Fannie Mae and Freddie Mac because they have more lenient guidelines. DSCR loans can have anywhere from 30 to 100 different funding sources, and each one has their own underwriting rules. 

Every lender will have different prices, terms, and underwriting criteria. But here are 5 things you’ll definitely need to know to get a DSCR loan approval.

1. Credit Score: Understanding Your Credit

Your credit score is the main factor that lenders consider when evaluating your loan application. 

A higher credit score can get you a better loan-to-value (LTV) ratio and a lower interest rate. For example, a 740 score will get you an LTV 5-10% more than a 640 score. Your interest rate with a 740 score will be .5-2% lower than the interest rate with a 640 score.

If your credit score is below 700, you should take steps to improve it – such as paying down credit card debt and making sure all your payments are on time. 

This article offers some ideas for raising your credit score quickly. You can also download this free credit score checklist to get you where you need to be.

2. Money: Down Payments, Closing Costs, and Reserves

In addition to the down payment, you’ll need to have enough money for closing costs and reserves.

For reserves on a DSCR loan, lenders often require you to have 3-6 months’ worth of mortgage payments. This extra cash protects the lender in case your tenant unexpectedly vacates or some other unexpected situation arises.

The money doesn’t necessarily have to be yours – you can borrow OPM from a business partner, friend, or family member. To get a DSCR loan, though, your lender will want to see the funds for a down payment and reserves to approve you.

3. Know Your Numbers: Property Income and Expenses

DSCR loans are based on the property’s ability to generate income and pay for itself. So your in-flow and out-flow numbers are a major factor in whether or not you get a DSCR loan.

The minimum requirement is that the rents cover all expenses, including:

  • The mortgage payment
  • Taxes
  • Insurance
  • Any HOA fees

Expenses not considered by your lender include:

  • Property management fees
  • Utilities
  • Maintenance

If the property generates more income than expenses, you’ll get a better rate. However, if it doesn’t break even, you’ll likely end up paying a higher rate.

For example, if you show a lender your property can bring in $1,250 and your payments are only $1,000, you can get a better rate.

Know your numbers to get your DSCR loan approved.

4. Be Prepared: Gather Your Info to Get a DSCR Loan

If you want to not only get approved for a DSCR loan, but have it happen quickly, make sure you have all your documents and information ready to go.

Treat your real estate investing like a business – and like you’re a professional. If you come to a lender prepared, you get:

  • First dibs
  • Fast service
  • Better rates

Lenders want to do business with people who prove they can stay on top of their finances and paperwork. Just as you want to rent to “easy” tenants, lenders want to help investors who cause the least amount of friction.

It also benefits you to be competent and prepared so you can read the lender better. Unfortunately, not all financial institutions have your best interest in mind, so being prepared helps ensure you find the best deal.

5. Shop Around: Compare Offers from Multiple Lenders

There are many different funding sources for DSCR loans, and they all have different terms and rates. To get the best deal, it’s important to shop around and compare offers from multiple lenders.

It may benefit you to stay away from jack-of-all-trades lenders. Look for lenders who specialize in DSCR loans and have a track record of working with real estate investors. They will have the most options for you to get the DSCR loan product that best fits your specific property.

Have the money, understand where your credit is, and know the numbers for the property. Taking 20 minutes per week to stay on top of this means all the difference for your approval on a DSCR loan (and for your real estate investment career!).

How to Get the BEST DSCR Loan

These 5 steps will get you well on your way to approval for a DSCR investor loan.

Remember to focus on:

  • Improving your credit score
  • Having money for down payments and reserves
  • Knowing your numbers
  • Being prepared
  • Shopping around for the best deal. 

Leverage is king in real estate. With a little bit of effort, you can secure the financing you need to grow your real estate investment portfolio.

Send us an email at Info@TheCashFlowCompany.com. Show us a deal you’re looking at or ask any questions you still need answered.

Let’s make you the most successful investor we can.

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How Income Impacts Your Real Estate Loan Options

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How income impacts your real estate loan options (and other requirements you need to know in this market).

The mortgage industry is constantly changing, and not to the advantage of borrowers.

If you’re in a situation with a property that isn’t cash-flowing, you want to get locked in somehow – whether with a 30-year product or a 3-year one.

Loan options are changing just about daily – to the detriment of buyers. Credit score requirements are going up, loan-to-values are going down, and rates are steadily rising.

Here’s what you need to know (especially to refinance a property that has negative cash flow).

Credit Requirements for Loans

Just as you care about the financial health and responsibility of your tenants, the bank cares about the same for you. The expectations from banks become stricter when money is as tightened like it is now.

Credit requirements specifically have increased. You’ll have a hard time finding any loan at all in this market if your score is below a 680. To get better terms and rates, you’ll have to have a score in the mid-700s.

Income Impacts Your Real Estate Loan Options

Income is an important part of the underwriting process for any loan, but especially so on a property that isn’t cash flowing. Different types of loans will have different income requirements.

How Income Impacts Traditional Loans

Your income matters most if you’re attempting to get a traditional loan or other bank loan. Even if a property is negatively cash flowing, you can still get a traditional loan based on your income. If you make enough money (from a W2 job, other investment properties, etc.), banks will gladly offer you a loan.

As long as your income can cover the property’s costs, then the rent income doesn’t matter so much for a traditional loan.

Income for Bridge and DSCR Loans

Let’s say the property has no or negative cash flow and you don’t have a strong enough income for the banks’ requirements. In that case, a bridge or DSCR loan is a better option for your property that isn’t cash flowing.

Neither a bridge loan nor a DSCR loan rely on your personal (or business) income at all. A DSCR loan typically works based on the ratio of your rent and your expenses, but there are also no-ratio or negative DSCR loans available.

Terms and LTVs: Your Real Estate Loan Options

The length of time, or term, of your loan is important to consider when you have a property that isn’t cash flowing.

Why you need a loan in this circumstance comes down to two reasons:

  1. You need to lock in a loan before the market gets worse.
  2. You need that loan to carry you until the market improves.

LTVs are also important, and will dictate whether or not you can afford this new loan.

Traditional Loans

There are a lot of options for a traditional loan on a property that’s not cash flowing. Some will work better for your property than others.

Many bank terms are between 3- to 7-years fixed, amortized over 20 or 30 years. These loans are useful for non-cash-flowing properties because that three, five, or seven years can bridge you into the next season where rates will come down.

If you can qualify for one of these traditional loans, your maximum potential loan-to-value in this market is 75%. Bank loans will offer the highest LTVs out of all of your real estate loan options in this situation.

Bridge Loans

The term of a bridge loan is typically one or two years. If you know you’ll have an exit after that year or two, bridge loans are a great option.

Bridge loans are easy and fast. However, it’s possible interest rates won’t go down within that 1- to 2-year term, so you may be stuck refinancing into a second bridge loan, or other loan.

Additionally, the LTVs on bridge loans average 60-70% maximum.

DSCR Loans

There are many different types of DSCR loans available, with varying terms.

They traditionally go for 30 years. However, there are other options, including interest-only 40-year or 3- to 7-year fixed loans.

LTVs also take a hit with DSCR loans, averaging around 65-70%. 

How Income Impacts Real Estate Loan Options

If you need a loan for a non-cash-flowing property, see if you can qualify for a traditional loan first. Their high LTVs make them the best, but their income requirements may be tough to meet.

Read the full article here.

Watch the video here:

https://youtu.be/AQ-zcRBQB9c

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How to Calculate the Uncertainty of Real Estate Investing

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If you keep your house on the market until it sells, just how much are you paying for the uncertainty of real estate investing?

If you’re deciding whether to sell at a loss or keep fighting a declining market, the question comes down to whether you want a certain loss or an uncertain loss.

Let’s dig through the numbers to see how much a client of ours was paying every month to keep a property on the market with no in-flow.

How Much Are Carry Costs?

Our client with a $600,000 loan could only sell at $570,000 in the current market.

This is a $30,000 loss. But the number is certain.

Remember their alternative is covering the costs while holding the property for an indefinite period of time. In a market that’s not seeing higher property values for potentially a long time.

The list of costs adding up month after month gets long fast:

  • Mortgage
  • Interest
  • Insurance
  • Taxes
  • Staging
  • Utilities
  • An extension fee if you go too long with your short-term loan
  • And more.

On a $600,000 house, these costs add up rapidly. The market could take 2+ years to get to a point where they can sell for more than $600,000… This client would be losing much more than $30,000. And still, even that is not a promise.

What Does Uncertainty in Real Estate Investing Cost?

Here’s the breakdown for this client’s property’s costs:

  • Mortgage (in this case, interest-only payments): $4,900
  • Taxes: $300
  • Insurance: $200 (Paid up-front for the period of time they thought they’d sell by. That period has passed, so this became a monthly charge.)
  • Staging & Utilities: $325 (Since it was a larger, higher-quality house, they added some furniture and decor to help it sell. Utilities also stayed on while the house was on the market.)

That’s a grand total of $5,725 per month to keep this house on the market. 

This is money that adds no true value to the property. It’s cash flying out of their pockets and getting them nowhere fast.

These costs are a necessary evil in normal real estate investing. The kicker here is that there’s truly no end in sight.

The market is not expected to get better (especially for higher-end properties) for quite some time. In fact, interest rates are actually anticipated to go up.

Interest rates rising just one more point could impact buying power so much that the house’s market value could go down another $50,000.

Read the full article here.

Watch the video here:

https://youtu.be/NaWRQXoD8ZM

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What Is BRRRR? 3 Simple Fundamentals to Maximize Cash Flow

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What is BRRRR? Here’s an intro to the most basic concepts.

BRRRR is one of the most powerful forms of real estate investing.

It’s not uncommon for people to retire, 10x their net worth, or become full-time investors with BRRRR.

Done wrong, though, BRRRR is a giant waste of time and money.

We want to help you have a positive experience with BRRRR. Getting BRRRR right is a matter of basic education. So let’s go over the 3 key fundamentals that explain: What is BRRRR?

What Is BRRRR?

“BRRRR” stands for “buy, rehab, rent, refinance, repeat.” It’s a process for capturing equity and creating cash flow on rental properties.

What Is BRRRR Step 1: Buy

BRRRR is not a retail-buy strategy. The properties you get for a BRRRR need to be off-market and under-market.

There are several considerations that go into a “good” BRRRR property:

  • The rent you can charge has to create cash flow.
  • The appraisal during the refinance will need to create a profit.
  • The property needs to be desirable enough to attract great tenants.

BRRRRs are bought with “sweat equity.” This doesn’t just refer to the physical work you put into a home once you have it… It also applies to the work you have to put in before purchasing the property to ensure it’ll make you money.

What Is BRRRR Step 2: Rehab

For the rehab of a BRRRR, there’s a balancing act to make the project “rental grade.” On the one hand, you have to stay within budget. Rental properties take some wear and tear, so your updates should account for that.

On the other hand, you still want quality. Why? Firstly, because better properties attract better tenants. And secondly, because your refinance depends on the appraisal. To get a good appraisal value, the property must show quality work.

What Is BRRRR Step 3: Rent

A BRRRR property’s cash flow is largely dependent on the amount of rent you can charge. Be aware of the rent range you can realistically charge in your property’s location.

Knowing the rent will help tell you what updates you should make to the property. For example, if adding an extra bedroom would get you an extra $500 per month, it may be worth the construction costs.

You can estimate an area’s rents by going to Zillow, Rentals.com, or talking to local property managers.

What Is BRRRR Step 4: Refinance

Part of the BRRRR strategy is to use two loans. You buy with a short-term hard money loan, then refinance into a long-term loan after all the rehab.

To make the most money, you’ll want to set yourself up for a rate and term refinance rather than cash out.

What Is BRRRR Step 5: Repeat

The true secret to how BRRRR can create so much wealth is the repeat-ability of the process.

We recommend people getting into real estate investing to buy 10 BRRRR properties in 3 years, or 5 in 2 years.

How can you possibly afford to buy so much real estate in such a short amount of time? The right BRRRR properties require zero money down. If you were pulling from your savings for every down payment, you wouldn’t be able to get as far.

So, what is BRRRR? It’s a method for building an investment rental property portfolio that requires no money out of your pocket.

3 Factors that Ensure a BRRRR Success

After helping investors through the BRRRR process for over 15 years, we’ve seen 3 key factors that make these transactions successful.

1. Building a Team

The really good under-market BRRRR properties won’t just jump into your lap. These properties require a little digging, and – more importantly – a team to help you.

You’ll need to know wholesalers, real estate agents, other investors, and anyone else who can help you locate good undermarket properties.

(It’s also an advantage to keep lenders on your team so you can close fast on these great properties once you find them.)

2. The Money Side

“It takes money to make money.”

If you can learn the basics about the costs of your BRRRR projects, you can squeeze more money out of each project.

We always say that there’s money in the money. Do the research to learn about real estate before your first investment, and you’ll be miles ahead of other investors.

3. Using the Right Leverage

Yes, it takes money to make money, but it doesn’t have to be your money.

Plan for and understand the entire BRRRR process, and leverage can work to 10x your net worth.

Where To Go From Here

This only brushes the surface of BRRRR. Over the coming weeks, we’ll visit each of these topics in much more detail. Why do you use two loans? How can you do this with zero money down? How do you go about a refinance?

If you have a deal now you’d like us to look at for you, send us an email at Info@TheCashFlowCompany.com.

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