Basics of Rehabbing for First-Timers

If you are reading this, it is nearly certain you have seen some of those rehab shows on TV that show the hosts turning a dump into a million dollar showplace, and you see all that "equity" they have earned.

 As a general rule, that is not how it's done in the real world. 98% of first-time rehabbers who do it that way will lose a LOT of money, and here is the reason why (and how you can do better): 

With rare exception, a renovation will never return 100% of investment, let alone more than 100%. Those rehabbers on TV have very deep pockets behind them - the sponsors and the station have to get ratings. They can only do that by using sensationalism. To them, it is advertising costs designed to bring in revenue. They do not care about the cost to create a silk purse out of a sow's ear. They don't really care if they cannot sell it for a profit (or even at a loss). But if you know the secrets of pro rehabbers that are not on late night TV, you can make a ton of money. But first, understand this important fact of renovating a house:

It is difficult to get a dollar back for a dollar invested. For example, one of the most expensive parts of a full UPSCALE rehab (as done in those shows) is the bathroom at an average cost of $57,411. But the added resale value on average is just $32,998 - a LOSS of 42.5%. For every dollar invested you get 57.5 cents back. Overall, the cost of a full rehab of a home will only add roughly 64% to the resale value - meaning you LOSE 36%. That's fine if you have a TV show backed by big bucks and you don't care if the place will sell at a huge loss. Sure, they will tell you they turned a $200K home into a $500K show piece and therefore "made" $300K. But what they do not tell you is they paid out $400K in rehab costs to make that $300K in equity, so they lost $100K - they paid $200K for the house plus $400K in rehab = $600K for a place that MIGHT sell for $500K. 

So, how DOES an investor make money on a rehab? The secret lies in choosing properties where the necessary renovations are mostly cosmetic that can be done quickly with little cost. NOT knocking out walls, adding dormers or installing stuff that only the wealthy can afford. Understand - the longer the rehab takes, the more it costs - property taxes, insurance, mortgage principle and interest, electricity... 

The first thing one must do is evaluate the property before buying it. First and foremost, ideally it should be the worst house in a nice middle-class neighborhood. Middle class buyers outnumber wealthy buyers 10-1, so it will be easier and quicker to resell. Then, keep the home in line with the neighborhood - if you build a mansion in a neighborhood of $200,000 homes, you will lose a fortune - people who live in a $200K neighborhood cannot afford a manse, and people who can afford a manse don't want to live in a $200,000 neighborhood. 

Avoid buying anything that has structural issues. The free ebook "The Simple Man's Guide to Buying An Older Home" shows what to look for, and how to evaluate the potential. This ebook is one of several books that can be downloaded free from "The Simple Man's Guide to Real Estate" website. 

The next thing one must do is get a real bargain on the property to be rehabbed. "The Simple Man's Guide to Real Estate" shows a number of ways to accomplish that, along with pitfalls to avoid. It also shows how to determine a fair purchase price based on a tried and true formula, to insure you do not overpay. 

Use salvage (salvage yards are in nearly every community) where it does not show - once painted or sanded, old salvaged boards look new. Also use salvage to create "old home charm" that adds value above the cost - a refurbished clawfoot tub as an example, or an old fireplace mantle. 

One thing that usually adds more value than it costs - a new front door, and nice landscaping. Curb appeal is important - first impressions mean a lot. Also add mirrors in the home - they create a sense of more room, and they reflect light, making it brighter. 

There are a lot of things you can do to add value to a home and make yourself a good profit. A great way to begin is to turn off those house flipping shows and pick up a copy of "The Simple Man's Guide to Real Estate". 

 

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Real Estate Investing - What Is The Cost Of An Education?

 

It is a rare individual who has not seen those late night "infomercial gurus" advertising for their "free" seminars that promise to make you a wealthy real estate investor.

Let's begin with a few facts:

• Nothing has made millionaires out of more ordinary folks than real estate
• Investing in real estate does not require any college degree, or even a high school diploma. A complete education should not cost more than a few hundred dollars.
• "Infomercial gurus" spend millions each month on radio advertising, infomercials and free seminars
• Real Estate investing seminars are not for teaching - they are for UPSELLING. And making the gurus rich

With that in mind, consider the top seminar being touted these days - Than Merrill's FortuneBuilders. if you make the mistake of believing you can become an expert by attending one of Than Merrill's weekend seminars, or even his second step (boot camp) costing up to $1500 you will be disappointed. To get a comprehensive education in real estate investment from Than Merrill, his FortuneBuilders Mastery program is what you will need to sign up for. But that will cost you - big time! Upwards of $35,000. Same thing with Armando Montelongo and most others.

KNOW THIS: There is not any real estate investing program that is worth what those gurus charge. They charge that much because they have to cover all the expenses of getting you to show up and sign up, and because of greed!

So, what alternatives are there?

There are three:

1. The first is to be self-taught, by trial and error, and pray your lack of experience doesn't put you in the poor house
2. The second is a low cost program by an experienced investor with credentials, who will include mentoring as needed
3. The third is to just give up your dream

That third option is not conducive for success in anything - giving up is never the right choice. The first option is risky, but could work out if you are lucky. But the best choice is the second one, and there is only one program that is not only very inexpensive (under $100) but also includes everything you need, including free, unlimited mentoring.

Why so cheap? "The Simple Man's Guide to Real Estate" is offered on a non-profit basis by actual investors who desire to help others as required by their faith.  All of their mentors are also professional investors who volunteer their services to that end.

If you ever thought about investing in real  estate and becoming financially secure in a career where you can never be fired, laid off or passed over for promotion, it is worth looking into - after all, it costs nothing to look. But think about what it could cost you if you do not. If Homero had not grabbed the opportunity, he would not have taken home this certified check for $10,000 in just two weeks. So you should at least think about it. Anyone can do this. No cash, credit or experience required.

 

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The Simple Man's Guide to Real Estate - Debunking Bogus "Complaints"

 

Social media has become a minefield for nearly every business, religion, color, sex and political bent. And unless everyone actively fights back against the dishonesty and smears by those who wish them harm, it will spell doom for our entire society. Look around - then tell me I am wrong.

Every business, no matter how good they are, will get complaints, simply because some people cannot be pleased no matter how hard a business might try. And there are those who have a different agenda - they may be a competitor, out to smear their competition. And now, in today's "cancel culture" world, there are those malcontents whose only joy in life comes from finding things to be offended by, and then smear anyone who does not believe the same things they believe.

Until now, we have been remiss in dealing with fraudulent complaints directed at IntelliBiz and "The Simple Man's Guide to Real Estate". But now the time has come to take on the smear merchants, and that is what this post will do. We are not perfect, but all the "complaints" - every last one - on the "gripe" sites like Rip-off Report and many others are either inaccurate, "sour grapes" or just plain bogus. Some were even posted by people who never even purchased our materials. We will list some here as examples of the dishonesty, and provide our response.

One complaint states that our materials are "basic and out of date." Upon checking, the person who posted that complaint never even ordered our program. The fact remains that our materials are updated constantly, and he would know that if he had ever seen our materials.

One person claimed the info in our program can be found free on the internet. While many methods are widely published in condensed form, the bulk of our material is original (and copyrighted) material, and goes into detail, and our contract software is patented and trademarked.

One person who posted on several gripe sites claim we charge a "hidden fee" of $9.95/month. When we checked out that person, it was discovered that he purchased our materials on our E-Z payment plan of $9.95/month. It was not a "hidden fee" - it was the cost of the program materials in a monthly payment plan, which, by the way, he refused to pay. He literally stole our materials. When we sent him a bill, he filed those bogus complaints. And that is the reason we no longer offer any payment plan.

One lady posted she did not get everything she was supposed to receive, but did not bother to retract her complaint even after she discovered she did get everything - she had not read the directions, so she had not located the 24 Bonus Ebooks on one of the CD's, or the contract software on another.

One customer complained she was unable to connect with her free, lifetime mentor. Upon checking, it was discovered that she sent 3 "requests" - empty emails without any actual request. We responded to each, stating she had to at least tell the mentor what she needed help with. She did not respond to any of our emails. We have no idea what she expected, but our mentors are not psychic.

A social media "influencer", or so she thinks because she had over 100K followers on Twitter, demanded a free copy of our materials, claiming she would give us a "good review", and if we refused, she would post a bad review. We advised her that we do not want nor need phony reviews and do not cave to extortion. She then proceeded to trash us with bogus complaints on the gripe sites. We were successful in getting her Twitter account shut down for her illegal activity.

One person even posted a complaint because we did not have any customers from Falls Church, VA, as if that was even under our control. We are relatively certain that there are other communities we do not have clients in, as well - but not many, as we have served over 316,000 customers to date in 19 countries.

Here's the point: anyone can post anything on the gripe sites, even anonymously. The gripe sites do not vet them to find out if there may be any grain of truth. For that reason, alone, only foolish people would give any credibility to anything posted thereon. If you want to check on a company to see if they are legitimate, and see if there are any vetted complaints, check with the Better Business Bureau or other credible consumer advocacy sites that require a poster to at least identify themselves and accept responsibility for what they post. If a person has a valid complaint, they will post to the BBB. If they only post on a smear site, it is likely because they could not authenticate their complaint with the BBB.

To make it easy to check up on us, you can view our BBB report here...

 As you can see, we have been in business since 1989 and maintain a rating of A+ at the Better Business Bureau. You might also notice we are not "BBB Accredited", which only means we are NOT a dues paying member, so you can rest assured we have not "purchased" that rating with payments to the BBB.

 We are not perfect by any means, but our program works, it works well, and thousands have profited from it.

'Nuff said.

 

 

 

 

COVID-19 Driven Real Estate Trends for 2021 & Beyond

(Courtesy of SAFEGUARD ADVISORS)

As we begin a new year, we can hopefully look in the rear-view mirror at the bleak reality that the coronavirus pandemic made of 2020. For real estate investors, an awareness of market trends can be a valuable tool to making the right types of investments in the right locations - especially  with their self-directed IRA or Solo 401(k).

Here are some of the high-level changes that experts are talking about.

Work from Home is Here to Stay

The ability of many workers to telecommute at least a few days a week has been happening for some time.  The COVID-19 pandemic accelerated the trend and facilitated a more robust infrastructure to support remote workers.  Zoom meetings are now common and more companies are comfortable with the technology, as an example.

While about 24% of workers telecommuted in 2019 according to the Bureau of Labor Statistics, that number is clearly a lot higher today and will likely remain well above that number in years to come even once the need to social distance is in the rear-view mirror.

Downtown office cores will be less of a draw, as will needing to live close to work for a short commute.

The Home Office as a Must-Have Feature

Work from home is not great when the kitchen table is doubling as an office and perhaps a schoolroom too.  Telecommuters are looking for more room so they can have a dedicated workspace and some privacy.  Whether this means an extra bedroom or just well-designed nook spaces depends on age and family makeup.  For investors renting or selling properties, a focus on creating private workspaces can pay dividends and attract quality tenants and buyers.

If there is room for a home gym too, that is even better.

Big City Exodus

Another existing trend that was greatly accelerated due to COVID is the migration of tech and information workers away from expensive cities to more affordable suburbs and smaller metros.  While rent rates are dropping in the most expensive cities like New York, San Francisco, and Los Angeles, they are rising in smaller “Zoom Towns” such as Spokane, Bakersfield, and Des Moines.

The data shows that most such moves are more than 2 hours away, so this is not the typical flight to the suburbs.  A more significant migration is taking place.

While lowering cost of living is a priority for many movers, other factors such as access to nature or outdoor recreation are big draws when it comes to relocating.

Understanding this generational shift can put investors ahead of the curve.   Buying properties in the right smaller cities that will appeal to families looking for more space and access to the outdoors will be a good move.

Real Estate Transactions are now Digital

Real estate data giant Zillow reported a surge in traffic of for sale listings of more than 50% in May of 2020.  The numbers have remained well above historical levels for the platform.

More and more listings now include 3D virtual tours.  Likewise, digital mortgage applications and title closings are becoming more common.

Shoppers can now compare more homes, more quickly, from the comfort of wherever they happen to have a good wi-fi connection.  This will definitely change the way properties are marketed to buyers and tenants alike.

In addition to picking the right colors for a remodel, investors will need to become skilled at using the right search terms for online advertisement.  Home office will certainly be near the top of the list, as will biking or hiking trails nearby.

Marketing efforts will also need to focus more on screen-friendly visuals.  Virtual tours, quality photos, and even staging that highlights separate workspaces will all produce good results.

Low Mortgage Rates

Let’s not forget that home mortgage rates are at historical lows and likely to stay low for some time.  This increases home affordability and will open the possibility of home ownership to a broader group.

Many younger households that have been trapped in high rent big cities can now think about purchasing an in-city condo or stretching out a bit in the suburbs.

Any time there is an increase in entry level home buyers, that means opportunity for smart investors.  Home flippers can focus on renovating older homes to make them more appealing to a younger crowd.  As inner-city rents continue to decline, the opportunity to purchase condos and townhouses at discount and resell or hold as rentals will increase.

The Delivery Economy

The impact of COVID on various economic groups has been very uneven.  Professional workers and especially participants in the digital economy have been doing quite well and have the freedom to relocate to suit their needs.  Other sectors like retail, dining, entertainment, and travel that typically provide a wide base of employment have been hammered.  A lot of those jobs will not be coming back, either.

The flip side is that the delivery economy is booming.  Warehousing and distribution services are seeing immense new investment as click-to-buy replaces a trip to the store.  This has produced strong employment and corresponding renter demand in hub cities like Memphis, TN, Fort Worth, TX, and Ontario, CA that serve air freight and distribution facilities.

A Coming Construction Boom?

Some indicators are pointing to a big increase in new home building.  The demand for housing is far outstripping supply as it has for many years.  Capital to build is relatively inexpensive.  Questions remain around material supply chains and labor for builders, but it is clear that the building industry will be a real driver of economic recovery.  Expect a lot of energy and capital to be dedicated to getting the building industry moving forward, perhaps including some relaxation of regulatory constraints in some areas.

On the flip side, due to the lack of availability of building materials, prices are going through the roof and will likely stifle a lot of new building. Plywood, especially, as so many metro areas are forced to board everything up in the face of riots and looting. And if building starts do stall, the price of existing real estate will rise quickly, resulting in bigger profits for investors.

In either scenario, for investors this can mean opportunity by providing capital to smaller builders in the form of construction loans, acquiring land in the path of growth, or just following the money to invest in rentals near where growth is happening.

The Only Certainty is Change

This list only touches the surface of the kinds of once in a generation shifts occurring in the real estate space.  There will surely be many more changes in the ways that Americans choose to live, work, and play in the coming years.  All of this will create movement of people and capital on a considerably larger scale than we have seen in a long time.  All that movement means opportunity for those who can place their capital ahead of the demand curve.

 Presented by 

 "The Simple Man's Guide to Real Estate Investing

The BRRRR Method of Real Estate Investing

 

brought to you by IntelliBiz

What is BRRRR

BRRRR is not a weather forecast - it is an acronym for Buy, Rehab, Rent, Refinance, Repeat. The BRRRR method of real estate investing is a great and powerful way to accelerate the buildup of equity in a rental property portfolio and provide financial independence by way of leveraging one property to obtain the next. By building equity in a property through renovations, investors can leverage the after repair value to improve the property's cash flow and invest in additional real estate by refinancing.

The success of a BRRRR investing strategy hinges on rehabbing properties to add value, then tap the equity you have gained as capital to acquire additional properties. You parlay one property into another until you build up a portfolio of profitable rental units. This can be accomplished with single family homes, multi-familiy apartment buildings and even commercial properties.

There is a degree of risk involved in using the BRRRR strategy, but risk can be minimized by careful research and due diligence. What the investor should look for is a rehab project that is within a solid rental market. The project should be one that can be rehabbed with a minimal amount of cost to bring the property up to the standard of the surrounding neighborhood. No one wants to live in the worst house on the block. A nice property in a good neighborhood will be more likely to attract good tenants who are likely to take good care of the property.

Advantages of the BRRRR Strategy

There are pros and cons with any real estate investing method, and BRRRR is no different. A primary advantage of the BRRRR method is the potential to build an extensive portfolio of rental units for passive income, while increasing net worth. By owning a number of rental properties, it is possible to reduce the overall costs by "expense sharing". For example, if you act as your own groundskeeper, the cost of a good riding mower can be spread out among all the properties.

Another main benefit is the possibility of a high ROI (return on investment). A distressed property can usually be obtained with a relatively small investment. If the fix-up costs are kept to a reasonable amount, the equity can be substantially raised (for refinancing later) and the property can be rented out for a positive cash flow. In short, there are two main objectives: building equity, and positive cash flow.

Disadvantages of the BRRRR Method

As mentioned earlier there is always risk associated with any investing strategy. Pay close attention to the following caveats and you should not have any need to be concerned.

Mortgages/Loans: If possible, it is usually best if you can purchase and rehab with cash, as that lowers your overall costs. Other choices can involve banks, other investors or even hard money lenders. Hard money is the most expensive and not recommended if there are other options available. Local banks are often more flexible than the larger banks. Do your due diligence investigating and lining up your financing options - higher costs mean less equity and lower cash flow.

Rehabbing: This part of the method, itself, can incur risk. More often than not, the problems visible to the naked eye are not as they seem. Always plan on cost over-runs for issues that crop up during repairs - you never know what you will find until you open a wall. There is also the time that rehab takes - contractors are nortorious for running behind schedule, which costs you rental income while still having to meet mortgage payments. So it is a good idea to have contractors & suppliers in place and the time budgeted before tackling a rehab.

Another potential risk lies in the eventual appraisal. If the finished property has a lower than expected appraisal, it can result in having to wait to draw out the equity necessary for the next property, or force you to come up with the extra cash necessary (usually from the positive cash flow). 

 

Now let's take a look at how you can use the BRRRR strategy to grow your portfolio - and your wealth.

B -- Buy

When pursuing the BRRRR strategy, the old adage that "you make money when you buy" is absolutely true. And for the most part, so is the "location, location, location" mantra. Still, location is not always the "be all" in real estate these days as it was decades ago. Advances in transportation and other factors now allow an investor to "scrimp" a bit on location - we have become a very mobile society, and many now work from home. But for multi-family units and commercial properties, location is still important.

In the buying stage, the goal is to acquire a property that can benefit a good deal from remodeling (rehab) at a reasonable cost to increase the investor's equity enough to be able to pull out as much of that equity as possible to finance the next property. This may sound like a daunting task for the novice, but it need not be so, as outlined below. Finding a property with the potential to effectively add value is key. There are several good sources for learning how to locate a bargain and determine its potential such as "The Simple Man's Guide to Real Estate" by investor/author Bill Vaughn, recommended because it offers many strategies to help accomplish the goal. In addition, it is the only resource found that includes free mentoring for those who need to be walked through their first few transactions. For the "newbie", mentoring can be critical.

When implementing a BRRRR investing strategy many investors use a 70% rule as a guide, meaning that the cost to acquire the property plus rehab costs represent 70% or less of the after-rehab value (ARV) of the property. That is the simple formula. Reality, however, can throw a wrench into it if the investor is not prepared for the additional costs that often come into play. For example, if the property is vacant during the rehab, there are costs of service debt - the mortgage, property taxes and insurance. For that reason it is imperative that the investor be able to effect all remodeling in as short a time span as possible. Know in advance who the contractors and suppliers will be, and what their availability is. The investor might work out an agreement with them that his projects will receive high priority in exchange for all the work that future projects will provide to those contractors and suppliers. Loyalty begets loyalty.

Most rehab projects go over budget, so a conservative number like 70% is wise. That way, if you end up in a situation where acquisition and rehab costs represent 75-80% of ARV, you have still created a reasonable amount of equity to allow you to invest in your next BRRRR property.

The BRRRR strategy works best if you can purchase a property and pay for rehab costs using all cash, to maximize profitability, but that is not necessary. It's also possible to joint venture with other investors or use hard money loans, but those options will increase the cost and complexity.

NOTE: self-employed individuals and couples can take advantage of a relatively new type of 401K called a Self-Directed Solo 401(k). This type of 401(k) is special - it allows the individual to contribute a huge amount of self-employment income (for 2021, the contribution limit increased to $58,000 or $64,500 if age 50 or over) and allows you total "checkbook" control to make investments. When you find a property, simply write out a check. It's that simple, and all profits are tax deferred. This adds a lot of power to your portfolio.

R -- Rehab

The focus of the rehab stage of the BRRRR method is to add value, cost effectively. Avoid high end finishes and expensive upgrades like you see in those TV shows like "Flip This House" - such rehabs often cost more than the value they add to the property and almost always result in a net loss to the investor. Those shows go high-end for television ratings value. You, on the other hand, need to make the greatest profit possible while providing yourself with a rental property that is clean, functional, safe, and reasonably appealing. Focus on the repairs and updates that achieve that goal. A good rule of thumb: judge the neighborhood, and do only enough rehab to be able to compete favorably with other properties on the block. A mansion among a trove of blue collar homes will never sell for its appraised value, nor will it be rentable at a profit.

It is strongly advised that the investor avoid rehabbing properties in need of major structural repairs such as a cracked foundation or sagging roof. They are seldom worth the time and money it takes to rehab them. For more on what to look for in an older home, see the FREE ebook  "The Simple Man's Guide to Buying an Older Home" by IntelliBiz . Be sure to put a little curb appeal on the front of the house to make a great first impression for a loan appraisal. A clean front, clean yard, a few flowers and shrubs and fresh paint. Maybe a new door, if necessary. Remember - appraisers are people, too. If the first impression of your property is appealing to the eye, it could well increase the appraisal, allowing the maximum equity ceiling the lender will use in determining how much they will loan on that equity.

If you have the know-how and the inclination, you can increase profits by doing some or all of the work yourself UNLESS your 401(k) owns the property. The IRS does not permit the owner of a 401(k) to provide much more than a minor amount of the work on the property - your participation must be passive.

For intensive rehab projects, you might consider hiring a project manager or at least a lead contractor to manage the many day-to-day variables and decisions.

R -- Rent

Once the property has been rehabbed and is ready for tenants, place your ads, or have a local Realtor advertise it for you. The sooner you can get the property producing positive cash flow, the better. As with any rental property, there are some tricks to marketing and screening that will help you find the best possible tenants. There are a number of businesses online that provide screening services. You positively MUST screen potential tenants. You want tenants who will take good care of the property and pay the rent regularly and on-time. Realize it may be some time before you can refinance, and you still want the property looking sharp when the bank sends an appraiser.

R - Refinance

The goal at this stage of the process is to pull as much cash out of the property as possible to provide the necessary funds to acquire additional properties. The objective is two-fold: you want yo draw out enough for your next property without creating an "alligator" that will eat you out of house and home. At this point you do not need much positive cash flow because you are building a portfolio, but you do not want to lose money, either. Even after drawing on your equity, the rents should still cover mortgage, taxes, insurance, maintenance and any other costs involved in the ownership.

You can obtain relatively high loan-to-value financing in a reasonably short period of time after putting the property in service provided the rents still cover everything. As an individual investor, it's possible with the right properties and good financing to pull 100% of your initially invested capital out of a property and move onto the next deal, perhaps within 3-6 months. If not, before refinancing simply collect rents for the period necessary to provide the additional funds required. If you use your IRA or 401k to purchase, expect to leave some capital tied up in the initial property and a longer period between refinance transactions.

If you purchase through your IRA, once a property has mortgage financing in place it will be generating UDFI - Unrelated Debt-Financed Income, which is subject to taxation. The tax impact is generally nominal, but you will want to work with your CPA to understand the process and prepare the necessary tax return for your IRA. However, investors with a Solo 401(k) plan mentioned earlier will benefit at this stage, as a Solo 401(k) is exempted from taxation on UDFI generated via real estate debt.

R -- Repeat

If you've purchased and re-financed effectively, you (or your IRA) should now own a performing property with only a small amount of capital locked up into the deal. The IRA can then move that capital forward and repeat the process with additional properties over time.

Example of a typical BRRRR Method

 

Bear in mind, these figures are for example only - they will vary considerably from one area to another. In this example the investor has located an out-dated home in a nice neighborhood, and the price is $150,000. A $30,000 down payment (20%) would be required by most lenders, leaving $120,000 to be financed. Assuming $10,000 will cover rehab costs, the investor must invest a total of $40,000 plus service debt (mortgage, tax/insurance costs during the rehab period).

You have already determined the the ARV (after repair value) should be around $190,000 with rental income of $2,000 per month. When feasible, usually about a year later the investor would refinance at 75% of value - $142,500. If financed for 15 years, in one year you would refinance, pay off the loan balance of about $113,000 leaving you $29,500. Your mortgage had been roughly 1200/month including taxes & insurance, leaving you $800/month positive cash flow for those 12 months, or $9,600. Adding that to the amount from the refi, you have roughly $39-40,000 with which to repeat. the process. If you need more, hold for an extra couple of months for an extra $2,000.

You now own a $190,000 property with (after your new mortgage) roughly $700/month positive cash flow, and you have all your money back, ready to buy another. (cash flow will be higher if you refi for 30 years). Imagine doing one a year for just 10 years - your positive cash flow (allowing for raising rents periodically) would be close to $8-10,000/month ($100,000-120,000/year) and you would own 10 homes with a total equity of over a half million dollars. Considering you always get your original investment back, none of that profit cost you a dime.

NOTE: It gets better - and faster - if you use the BRRRR Method in conjunction with other strategies in "The Simple Man's Guide to Real Estate". For example, if you purchase a foreclosure from a bank, or at auction, at a discount. Or if you use discounted notes for part of the purchase price. There are several strategies that can be incorporated to reduce your cost and boost the profit margin.

Is The BRRRR Method right For You?

If you have access to the necessary funds, you are not intimidated by the rehab portion of the BRRRR Strategy and you have the time to invest in building a portfolio, you would do well to consider this strategy. If you are touch and go on financing or credit, or easily discouraged, it would be a better recommendation to follow any one of the remaining 24 methods in "The Simple Man's Guide to Real Estate".

Bear in mind that, while this method may seem daunting at first, "The Simple Man's Guide to Real Estate" fills in a lot of the details that helps make it all come together. And free, unlimited access to one of their mentors practically insures success in any of their methods.
Good luck, fellow investors!

© IntelliBiz