BRRRR course question

[Thomas Mosely]

I read a ton of books about investing in RE and the BRRRR method. I truly still did not have the confidence to make an offer and purchase a property. I'm looking for little push and help me minimize my mistakes. I recently came across a course but they are asking 7K its 2-3 month course. I feel like I've good understanding of BRRRR but cant make the next step. Do you think it's worth to invest that much $ on course to teach you the BRRRR. Thanks

[Dee Brock]

I tried to read some of the replies, but there was a lot. My advice is find a group of people and network. I think you will learn more from talking to people in your area who aren't trying to sell you something. Think about it?....Local people you can build a relationship with who have done it before or.. is in the same boat as you. You might find someone whos thinking just like you. Don't waste money. I learned everything from research, but MOST importantly by doing my first deal. Everyone says that.. but its true. Close your eyes and jump!!

BP is free and has everything you need to learn.. Just my feedback. GL

[Dave Spooner]

I couldn't have said it better than @Will Fraser and @Jon Kelly. It's not worth it to invest 7k in a course like that. Making mistakes will always be part of the REI game. Get connected with local investors and/or post your questions on BP. There are so many people who would be happy to help without charging you 7k. Use that money for your first investment instead. Best of luck!

[Patrick Britton]

@Thomas Mosely you don't need to pay anyone to help you over the "hump."  PLEASE know that doing ANY due diligence puts you ahead of 90% of all real estate investors out there already.  Unless you make a number of massive, horrific mistakes at the same time, you'll be fine.  

It is my humble opinion that investors will (subconsciously) attempt to pay someone else to help them overcome their fear of missing out, making a mistake, losing money, being humiliated, or whatever.  Some investors believe that if they pay somebody enough money this fear will go away. This payment is dressed up as a course or a mentorship or something fancy. But it's just a way of trying to rid their fear through money.  For some it works, for others it doesn't. 

Either way, you don't need to pay anyone any amount of money to overcome something that only you can truly overcome by yourself. 

[Asif Ahmed]

hey @Thomas Mosely, I've been in your exact position since 2016! I've been reading books, listening to podcasts, talking to realtors on and off since then and got to the point where my wife was like, "if you're not going to buy a house, stop talking about it!" So, instead of blowing money on a course or guru, I decided to pull the trigger on what will basically end up being a pseudo-BRRRR deal. It's not perfect, purchase price is 113k + 5k closing, 15k rehab (purchase and rehab cash) and a likely 165k ARV. So when I go to refinance, assuming my numbers are correct, I'll only cash out ~120-125k, meaning I'll have 10-15k left in the deal. But for the price of 10-15k, I'll end up with 40k+ equity in a 160k property that cash flows and I'll have learned a lot. That's way better than putting 25% down on a 160k property and a hell of a lot better than blowing stacks on a course or guru! This isn't the perfect BRRRR deal, but it's my first one and I'm finally off the sidelines.

[Shiloh Lundahl]

@Thomas Mosely I tend to be contrarian when it comes to talking about gurus, courses, and coaching. Most investors on BiggerPockets are anti-guru and anti-paid education. But what I learned going to the paid BiggerPockets event in 2018 is that most investors on BiggerPockets own less than 5 properties. Now there is nothing wrong with that, but it is important to understand who it is that is giving you the advice. If you want to own 5 or fewer properties then listen to what the majority of the investors on BiggerPockets are saying. If you want to scale, then listen to investors who have more that 5 properties that know how to scale.

I am part of 2 mastermind groups that were mentioned by @Andrew Syrios. One of the groups has 5 individuals where most of the investors have between 20 and 50 units. The other mastermind group that I am a part of also has 5 investors but each investor owns 100 or more properties. The groups are different and we talk about different things in each group. The point is, if you want to learn how to really invest seriously or on a large scale in real estate, then surround yourself with those people who are investing on the level where you want to invest. If you are just looking to get 1 or 2 properties and you plan to leave money in the deals, then follow the advice that that you are getting on this thread.

However, If you don’t feel that you are ready to invest on your own after reading books and listening to podcasts, then maybe coaching would be a better fit for you rather than another real estate course. Sometimes people just need some support in taking that leap into investing in real estate and they want an experienced investor helping them and spotting them as they take that leap. But I have to admit that just as Steve Vaughn mentioned that people who tend to be pro guru on BiggerPockets are usually those who probably offer some sort of paid program or coaching - myself included. This year I have helped coach 5 investors on how to purchase properties well under market value where each of them walked into 20k - 30k of equity on deals after paying me my coaching fee of 3k to 5k. So where you have a bunch of people who say use your 7k as a down payment on a house (which you could totally do and there is nothing wrong with that) others choose to pay a coach who can help them maximize a deal that they may not know how to do on their own - even after reading books and listening to podcasts. There are just certain things that are learned better with one-on-one coaching.

Lastly, I just want to say to @Steve Vaughan I understand why he would include seasoning in the BRRRR strategy. However, the majority of the time I am able to properties in a way to where I don't need to wait the seasoning period before I do a cash out refinance. And I am not talking about the delayed financing approach.

[Megan Brooks]

@Shiloh Lundahl would you mind sharing what mastermind groups were mentioned by @Andrew Syrios? Thanks!

[Jay Hinrichs]

Originally posted by @Shiloh Lundahl:

@Thomas Mosely I tend to be contrarian when it comes to talking about gurus, courses, and coaching. Most investors on BiggerPockets are anti-guru and anti-paid education. But what I learned going to the paid BiggerPockets event in 2018 is that most investors on BiggerPockets own less than 5 properties. Now there is nothing wrong with that, but it is important to understand who it is that is giving you the advice. If you want to own 5 or fewer properties then listen to what the majority of the investors on BiggerPockets are saying. If you want to scale, then listen to investors who have more that 5 properties that know how to scale.

I am part of 2 mastermind groups that were mentioned by @Andrew Syrios. One of the groups has 5 individuals where most of the investors have between 20 and 50 units. The other mastermind group that I am a part of also has 5 investors but each investor owns 100 or more properties. The groups are different and we talk about different things in each group. The point is, if you want to learn how to really invest seriously or on a large scale in real estate, then surround yourself with those people who are investing on the level where you want to invest. If you are just looking to get 1 or 2 properties and you plan to leave money in the deals, then follow the advice that that you are getting on this thread.

However, If you don’t feel that you are ready to invest on your own after reading books and listening to podcasts, then maybe coaching would be a better fit for you rather than another real estate course. Sometimes people just need some support in taking that leap into investing in real estate and they want an experienced investor helping them and spotting them as they take that leap. But I have to admit that just as Steve Vaughn mentioned that people who tend to be pro guru on BiggerPockets are usually those who probably offer some sort of paid program or coaching - myself included. This year I have helped coach 5 investors on how to purchase properties well under market value where each of them walked into 20k - 30k of equity on deals after paying me my coaching fee of 3k to 5k. So where you have a bunch of people who say use your 7k as a down payment on a house (which you could totally do and there is nothing wrong with that) others choose to pay a coach who can help them maximize a deal that they may not know how to do on their own - even after reading books and listening to podcasts. There are just certain things that are learned better with one-on-one coaching.

Lastly, I just want to say to @Steve Vaughan I understand why he would include seasoning in the BRRRR strategy. However, the majority of the time I am able to properties in a way to where I don't need to wait the seasoning period before I do a cash out refinance. And I am not talking about the delayed financing approach.

from my point of view.. paid for training is fine if your not going into debt to do it.. your not using up capital that you need to actually buy real estate.. if you have plenty of dry powder then sure we all have to learn somewhere and somehow.. Although the BRRR is nothing new its a very very old concept and has been done for generations.. its just a coined term on BP to sell books nothing magic about it.. I have been the HML on the BRRRs back in the early 2000s we did over 2500 of them as a HML.. its how turnkey was bought prior to the 08 melt down and the credit freeze when the Refinance of the BRRR froze. There are all sorts of hybrid ways to do real estate deals.. And no one knows them all or can do them all.. you kind of want to pick a lane and go for it.. on the risk level remote rehab is the most riskiest of all. Can it work sure can you lose your @$$ absolutely.. But its nothing more than value add investing then doing a refinance that's all it is..

Having been a vendor at multiple Guru events  from Montalongo to Rich Dad etc.. I have had a front row seat at the events.. I got business from the events  Helping students fund their deals.. And have had a chance to talk to many of the students.. Go on the bus rides with them sit through the class's  have a glass of wine after class..  The bottom line is no matter what class or training you do not everyone is going to implement the strategies.. For all sorts of reasons..  And I agree with Shiloh on this one point.. you have to be careful on BP many of the folks that post just regurgitate what they read or hear..  For instance  Cash flow is the ONLY thing appreciation is gambling.. that's crazy talk its not that cut and dry.. appreciation either organic or forced is how the millions are made in real estate its not made at 100 to 200 a month.. its made by the values going up..   Shiloh is a perfect example of that  he has cash flow while he waits to sell his lease options for a big profit.  If the people did not execute on the lease option he has some cash flow but not the big dollars..  If you follow Steve you will see him repositioning his portfolio and making some very nice hits on appreciation..  that type of thing..  And i suspect Andrew who got in early in KC has a stunning amount of appreciation  while the cash flow allows them to hold and add..  I know I get yellow letters or telemarketed from his company looking to buy my stuff  LOL.. 

[Shiloh Lundahl]

@Megan Brooks, this is the direct quote from @Andrew Syrios,

“Sounds like guru stuff to me honestly. That's a really high price. I think all you need to learn is here and at your local REIA or, in a Mastermind group if you can get in one.”

He didn’t mention a specific group, just the concept of being in a mastermind group.

[Megan Brooks]

@Shiloh Lundahl  thank you, I thought you were referring to specific ones.

[Shiloh Lundahl]

@Jay Hinrichs thanks for your input and compliment Jay. In October and November we were able to help 3 people exercise their lease options and all of them were very happy to walk into equity. We were also able to sell 2 properties (one was just a rental and the other was a lease option that was not exercised). And you are correct, the windfall of money that comes in from the sale of a property is much, much, more lucrative than the monthly cash flow. That windfall allow us to reposition that money into another deal or restructure debt to maximize cash flow.

For instance, the rental that I just mentioned was purchased last year and was just a 1 bedroom and 1 bathroom 1000 square foot home. A little big for just a 1 bedroom, 1 bathroom home (at lease that is what we thought). So we found a way to add a second bedroom by closing off one of the extra dining rooms. We purchased the property for 57k from a wholesaler and we put about 15k into the rehab. We were then able to get a loan on the property for around 80k. So your basic BRRRR strategy. We rented it out for a year, then the market exploded with appreciation. The tenant moved out so we just sold that property this week for 138k netting us 41k in profits after all closing costs, etc. The day we were going to receive the wire for our proceeds, I saw a small 6-unit mobile home/RV park with a 3 bedroom, 2 bathroom house and another 1 bedroom, 1 bathroom house come to my email from a wholesaler. This park is a stone's throw from my other park in Apache Junction, Arizona. So I texted the wholesaler and told him I would buy it and I called the title company to let them know that I wanted to do a 1031 exchange. Then I did what any reasonably sane investor would do and I texted @Dave Foster to set up my 1031 exchange. He was able to act quickly and we are going to purchase the property with the exchange money on Monday (the seller is carrying the 225k 1st note at 4.25% on a 10 year am). My total working time to set everything up was about 30 minutes. The title company and Dave obviously had to do a lot more work than I had to do to get everything set up.

So when everything is finalized and stabilized with the new park, we will be able to turn that first BRRRR that we were making about $200 - $300 a month in cash flow into a new mobile home park BRRRR earning about $1600 a month in cash flow with none of our own money left into the deal (270k first loan at 60% of the value and a second at 50k earning 10% APR leveraging the property to just over 70%). We will have none of our own money in this deal. Just money that we created through buying well, forcing appreciation, and trading up.

These are more advanced concepts that are more difficult to do than just buying a single family rental and holding on to it forever. This is where individual coaching to put these types of deal together can really increase someone's ROI.

[Jay Hinrichs]

Originally posted by @Megan Brooks:

@Shiloh Lundahl  thank you, I thought you were referring to specific ones.

Most high level masterminds will cost 10 to 20k a year to join just fyi and you have to be invited normally.

[Kenneth Garrett]

@Thomas Mosely

Real Estate Programs can excel your knowledge and speed up your career. They serve a purpose, but keep in mind there is a small percentage of people that actually pull the trigger and actually invest. Attend a local REIA meeting, the percentage of participants who are actual investors will be somewhere between 5%-10%. That first investment property takes; guts, education, knowledge and funds. An education program can only take you so far. I spent my first year analyzing, studying, asking the infinite question of whether or not something was a good deal. Connect with a mentor who is willing to help. No charge just someone who wants to give back. Those of us who succeeded in investing whether you have a 100 units or 5 should be prepared to help others. We all can remember when we started someone helped us when we needed it, we should give back.

If you need help reach out to me or other experienced investors.  Save your money and use it for investing.

[Moncy Samuel]

@Kenneth Garrett

Take the first step is the first practical lesson. Invest in a property that got potential in cash flowing. Not a huge rehab.

[Steve Vaughan]

Originally posted by @Shiloh Lundahl:

Lastly, I just want to say to@Steve Vaughan I understand why he would include seasoning in the BRRRR strategy. However, the majority of the time I am able to properties in a way to where I don’t need to wait the seasoning period before I do a cash out refinance. And I am not talking about the delayed financing approach.

Most will need to wait a seasoning period to refi conventionally with the best terms.  Even if the lender says they won't require it, the appraiser will include your low purchase price in their comps if too soon. This tends to skew the appraisal to a lower value estimate.

You and I may not need to season having alternate lending sources, but we are on a thread of a new person and in general seasoning requirememts apply to most.  Seasoning isn't discussed enough on BP, so thank you for bringing it up👍

[Shiloh Lundahl]

@Steve Vaughan I found a way to get around seasoning with getting a conventional loan. I Buy the property for what I believe it will appraise by including a rehab credit on both sides of the settlement statement. The property then gets recorded at the higher price and it usually appraises for that amount or higher.  Then I refinance it for 75% of the price that got recorded.  For instance I bought a property from a wholesaler for 165k with rehab credit to bring the price up to 215k.  We put 15k into the rehab and it actually appraised higher at 230k.  We got a 75% loan on the 215k in around 3 months and then we got a second on the property for 20k.  So our total in (after all holding costs, hard money costs, and closing fees) is around 8k.  The property is leveraged at 79%  Our monthly cashflow on this particular property is about $600 split with my friend who manages renting out the rooms.  When he moves out and rents out the room that he was living in as a house hack,  the cash flow should be around $1200 a month.

Here is the link to the listing.  https://www.zillow.com/homes/2...

[Steve Vaughan]

Originally posted by @Shiloh Lundahl:

@Steve Vaughan I found a way to get around seasoning with getting a conventional loan. I Buy the property for what I believe it will appraise by including a rehab credit on both sides of the settlement statement. The property then gets recorded at the higher price and it usually appraises for that amount or higher.  Then I refinance it for 75% of the price that got recorded.  For instance I bought a property from a wholesaler for 165k with rehab credit to bring the price up to 215k.  We put 15k into the rehab and it actually appraised higher at 230k.  We got a 75% loan on the 215k in around 3 months and then we got a second on the property for 20k.  So our total in (after all holding costs, hard money costs, and closing fees) is around 8k.  The property is leveraged at 79%  Our monthly cashflow on this particular property is about $600 split with my friend who manages renting out the rooms.  When he moves out and rents out the room that he was living in as a house hack,  the cash flow should be around $1200 a month.

Here is the link to the listing.  https://www.zillow.com/homes/2...

Ok, gotcha.  The method @Alexander Felice discussed when he was a guest on the BP podcast.  

Legitimately available to everyone once learned.  Your method is much more scaleable and available than mine, which is giving a private lender a call.  

[Shiloh Lundahl]

@Steve Vaughan listening to @Alexander Felice’s podcast gave me the idea and then I talked with one of my hard money lenders/bankers to see if it would be a viable option and to make sure I was not doing anything illegal by doing it this way. I have also ran it by a lawyer to make sure it was legal and both said that it was. So now I close pretty much all of my deals this way.

[Andrew Syrios]

Originally posted by @Megan Brooks:

@Shiloh Lundahl would you mind sharing what mastermind groups were mentioned by @Andrew Syrios? Thanks!

Yeah, there are a lot of them around. Many you have to pay to be in or are invite only. I would start with your local REIA and Meetup groups, especially if there is a BP Meetup Group in your area.

[Bonnie Low]

Why are you not ready to do a BRRRR? Is it the BRRRR method specifically, or are you afraid to buy a home, period? I understand it can be frightening to try to figure out what your repair costs are going to be for a BRRRR. But, really, that's the only thing that makes it different than just buying a house and eventually doing a refi to pull out some of your equity. Use the calculator tools here on BP to do your analysis. Read J Scott's book on estimating rehab costs. Find another investor who will let you tag along when they do walk throughs and find out how they estimate costs. Spend some time at your local builder's supply pricing materials. Meet some contractors and the trades you're like to need: roofing, drywall, HVAC, electrical, plumbers, tile. Go to Home Depot and price out kitchen cabinets and counter tops even if you don't have a house under contract - they offer free design service. It gives you the chance to get a feel for the process you'll go through on a rehab. Find another investors who is doing BRRRS and see if they'll let you do a through walk throughs with them to see how they run their numbers in exchange for doing something for them. I would gladly let someone do a walk through with us if they would enter all my receipts into Quickbooks, lol!

 But absolutely do NOT throw your savings away on a course. It's just not that complicated. That's a good chunk of money that could go a long way either towards your down payment or your repair costs and, frankly, you're probably not going to feel any more confident after taking a course than you do now. You'll just have less money to work with. You CAN do this!

[Seth Hochberg]

Wouldn't you rather lose 7k (or even more) on a deal and get the experience than lose 7k to a crash course and learn what you've already learned? Either the course will reinforce what you know - in which case you just needed a push (which you can get other ways, for free). Or the course will be drastically different than what you already know - wouldn't that just cause more analysis paralysis and hesitation? Seems like a lose-lose.

[Joel Scarboro]

The key in all this is hard work, community and education. But 7k or 10k isn't a guarantee of the quality of education you'll get much less guaranteed success.I'm in the process of starting my fourth BRRR deal and in the end the true education is what you receive in the actual process. But even within that variables will always change. Find a mentor and climb into their pocket so to speak.
Good Luck