All Forum Posts by: Kenneth Anderson

@Jim D.

@Jared McCullough

Thanks everyone. I’m going to try and pull all this information together and summarize. Chime in if you disagree.

The beauty of the BRRRR method is that it's a repeatable process where you would never (in theory) need more cash than the initial cash needed to buy/rehab the first property. The backbone of the BRRRR method is the rehab part where you force appreciation on the property, and the refinance part which makes it possible to pull out all (or most, or sometimes even more) of the equity you had invested. You now have a cash flowing property and none of your original cash invested in the property.

To simplify that even more, I’d say the most important part is that the value of the property is greater than the cost (ideally by at least 20-25%). This will make refinancing a feasible investment strategy. Then, it’s just the method you choose to create that cost vs. value difference. The main ways I see at doing that are: buying at a deep discount, rehabbing, or holding the property long enough for it to appreciate in value.

Does that sound right?

@Jared McCullough thanks

I guess my confusion is how do you pull your equity out by refinancing if you haven’t increased the value of the house through rehab?

There seem to be some cash flowing rental properties in my area that could be bought as is and start renting out for profit without much if any rehab. Maybe I need to learn more, but this seems to conflict with the BRRRR method. I want to eventually have 10+ properties but how do I get there without the "rehab" and "refinance" part of the BRRRR?

My largest nearby city is Baltimore. After researching, there doesn't seem to be many multi-family properties. I moved here from Boston a few years ago and Boston was majority multi-families. It's odd to me there are so few here. I want to stay in good areas here too which also limits my search. What I am able to find however are row homes with 5, or 6 bedrooms. Specifically, there are some of these around a university in a good area. Rent for these is in the $4,000/month range and sale price ranges from $330-$380k. To me, this doesn't seem much different than a 3 unit house of 2+2s. Possibly even better? Quick math shows cash on cash returns over 10%.  I feel like I'm missing something. Does anyone have experience buying and renting out SFHs with a lot of bedrooms when there is a lack of multi-unit properties?

Thanks

Hi,

My wife and I are in our mid 30s and have been interested in real estate for a long time. I've been lurking on here for a few years and been following the market pretty closely as well. We're at kind of an impasse and don't know where we should or could get started in real estate investing. We have approximately $330k in cash/non-retirement investments, and approximately $150k of equity in our current house we live in. We've been pretty lucky financially. I feel like there's a few different options to explore in real estate but not 100% sure where to start. If you were in our situation, what would you do? Any other suggestions?  Thanks!

Hello BP!

My wife and I live in a suburb of Baltimore, Maryland and are considering getting into real estate investing, most likely by starting with a flip. We are in our early 30s, with full time jobs, a 1 year old daughter, and have a decent amount of liquid cash we could invest. I have a finance background and I held my real estate license in Massachusetts in my early 20s (although all of that knowledge has pretty much been lost).

I am in the early stages of educating myself about real estate investing, and flipping. So far I've only listened to about 10 of the BP podcasts but plan on listening to as many of them as possible, reading the Ultimate Beginners Guide, and some of those books by J Scott, and anything else really.

However, I have a question and would love some advice on something I'm considering. I thought it would be a good idea if we could find a mentor of sorts in our area who has proven themselves as a successful flipper.I would like to invest in them, lend them some cash to help their next flip, get some sort of return on my investment, but more importantly learn as much as I can from them about the entire flipping process (tag along, meet with contractors, the buying process, the selling process, etc.). Is this something people do? If so, how would I go about finding this person?Obviously they would need to prove to me they’re a successful flipper before I provide funds for their next flip.

Thanks for the help and let me know if I am missing any necessary information!