All Forum Posts by: David Kohli

Hi there,

I am fairly new to the business of investing in real estate and live in Germany. 
Many of you probably know the „german“ way of doing things...

The stereotype would be the punctuality and precision of the people and the public authorities.

The reality is the following: a lot of barriers and long approval processes as well as legal restrictions when it comes to owning and handling capital. It seems to me that in Germany, being wealthy is a disgrace (seeing that from a tax and legal perspective).

Now I don‘t want to post here about how „difficult“ it is living in Germany, but instead I am looking for people that think the same way. 

Are there any invesotrs from Germany on this forum that would like to discuss this topic (investing in real estate outside of Germany, especially USA)?

Cheers, 

David

@Michael Balcom

@Jaron Walling

Every time you you answer it seems to me that the method becomes clearer and clearer. Thank you so much! 

@Michael Balcom 

Thank you very much for your detailed answer. So if I got that correctly the purpose of the BRRRR Method is to solely build up equity (net worth), that then opens up other opportunities for you?

Sounds great, but where‘s the cash flow? In order to become ‚financially free‘ one needs cash flow not equity right? 

Looking forward to your answer! 

Best Regards,

David

Hey Guys, 

I came across the BRRRR Strategy. It seemed very easy and clear at first but when I looked deeper into this concept, it appeared to me that it has some hidden problems. As long as I understood this method clearly, I think that the point where you make your money is with refinancing your deal. Let´s say you invested 245.000$ (200.000 for the property and 45.000 for the rehab) and the ARV of the property is 350.000$.You´ll get a refinancing loan of 262.500$ (0,75% of the ARV that was estimated by the appraiser).

Subtracting 245k from 262.5k, that´ll leave you with 17.500$ of "profit". 

My problem with that: It does not seem to be real profit as you have to pay it back to the bank. In the long term, you wont have those 17.500$ because you paid them back because after all, there still is a mortgage on that house. Even worse: You´ll probably have to pay interest of the loan (let us assume the interest rate is 2%, then you have to pay back 267.750€). So in the end, you lost 22.750?! (the presumed profit of 17.500$ plus the interest of the refinancing loan = 5.250$ -> 22.750$.)

The reason I left the rent out is because anyone calculating this is leaving it out too, even Brandon in his podcast. Did I get the strategy fundamentally wrong? Or is there something that I did not take into consideration? I would love to discuss this with someone that fully understood this. 

Thank You very much.

Best regards, 

David