BRRR and Scaling as Quickly as Possibly

[Tony R Fox]

Hey Team!

What is the fastest way to scale my portfolio?

When I think about it, I keep coming back to private money lenders to help scale. But is there something else? Besides more capital of course. Eventually my own capital will run out before I can purchase 2 homes within one year.

Any tips for scaling? I am in contract for my 1st duplex now. Now I need to focus on my next purchase but coming up with 20% down for every home is a lot.

[Corby Goade]

This is an easy one, but almost everything you read on BP will tell you not to do it. 

You buy for appreciation in growing markets, not cash flow. 

Look at it this way- you can spend $100k in the midwest and cash flow $300 per month, it appreciates at 5% on average, let's say. In five years you've made about $21k in cash flow (minus expenses) and have about $25K in equity. 

Scenario 2- you buy a $400k property in a growing market (Austin, Pacific NW, Florida) where appreciation is 15% and you're cash flowing $300. Obviously it will cost you a lot more to get in to those markets and your CoC is the same. That's where most new investors stop looking. BUT- after 5 yeras you have made $21k in cash flow, but you have $300k to leverage. Now you can use that leverage to buy 2 more properties. 3-5 years later you can buy 5 more, etc. You haven't had to save a penny. The bonus is that in those markets, rents rise rapidly too, so you will get your cash flow over time, just not in the first year or two.

There's really no comparison- for the average persone with average means, wealth comes from appreciation, not cash flow.