Questions about the EBook: "seven years to seven figure wealth"

[Moran Friedlander]

Hey everyone my name is Moran and I'm from Israel. I read the EBook "seven years to seven figure wealth" on the website and i have a few questions and thoughts i hope you could help me with:

1. In the 7 years plan, the first 3 property's Brendon bought were valued 100,000$ each and he purchased them for 80,000$ each by using 20,00$ out of his own money at the beginning with the first property, and then he used revenues from the property to purchase the other 2 property's. But in all 3 he have taken a loan of 75%. My question is if that is possible? According to your plan you barley paid 5% of your loan while taking 2 more loans at the same size....is that possible? I'm asking because in Israel, as far as I know, it's possible to receive 1 loan up to 75% from the bank and the second one can be up to 50% maximum.

2. How is it possible that his loan payments are so small? For the first property he paid of 3000$ in 3 years. That means 83.3$ a month for a 80,000$ loan. Is it actually possible to make such low payments?

3. If the answers to the first two questions is "yes", do the same conditions apply to foreigners? Can anyone direct me to a website that explain the limitations for foreign investors?

4. From the investments in Brendon's 7 years plan he is able to make 9600$ profit a year from one asset that he invested 20,000$ into. That close to 50% revenue a year from the rent alone! I don't know anything about the American real estate market, but in Israel real estate is one of the best investments as we are a small country and rent here can be pretty expensive - and still 10% return a year is considered a good return - but 50%? That's seem to me a bit too good to be true....

5. In the 7 year plan Brendon assumes that the assets value will rise 10% in the first year and from there 4% a year - what is so special about the first year and what means would you take in order to achieve that? Are there any improvemnts you will performe on the property? Also why do you assume the value will go up 4% a year?

6. If I would purchase a single home at the same price of a 4-plex will the revenue from the rent be the same? Instead of 4X200 would i be able to make 1X800?

I really hope that you would be able to help me answer these questions. I really enjoyed the EBook and the different articles and tutorials at Biggerpockets.com

Thank you for your time and help.

[Christopher Phillips]

@Moran Friedlander The year one property was purchased for $80,000. With $20,000 down payment, the loan was for only $20,000 (not $80,000). The loan was for 5% interest and 30 years, which would be $322 per month for principal and interest. All monthly expenses came to $1,600, which would include property taxes, sewer, garbage, water, insurance, reserves for maintenance/repairs and vacancy. Because of his down payment of $20,000, the house had $40,000 in equity since the market value was $100,000.

In the US, loans are limited to your ability to pay. However, some individual lenders might limit how many loans you can have with their institution (usually around 5-6), but that doesn't prevent you from borrowing from other institutions. If you can't get a loan at a large institution, you can get it from smaller local lenders, or even private or hard money lenders.

Rents vary from area to area. In an area that has a high ratio of renters vs owners, properties cash flow very easily. In a market where there are more owners vs. renters, it's hard to get rent rolls to cover expenses since the property values are higher.

The return on a your cash depends on how much you put into the property. You don't have to put down 20%. You can put down as little as 3.5% if you are owner and plan to occupy the property. So, if Brandon had purchased a 4 family home and occupied one of the units, he could have put down 3.5% and his return on his cash investment would obviously be higher. By not occupying the unit, most lenders want 20%-25% down payment. With the same rent roll, your cash return would be lower.

Yes, Brandon does typically rehab his properties. The best way to get a substantial discount is to find a property that needs work. By putting money into the property, it immediately raises the market value, which allows you to refinance down the road based on the higher appraisal. After that initial rehab, the market value would rise or fall based on the general market.

Regarding no 6. No, you can't compare a single family house to a 4 plex.