All Forum Posts by: Samuel Chua

@Rahul Handa he was referring to all the equity built into the property, its just sitting there not doing anything, if you sell and take that inert cash and put it down on say two or three new rental houses each one of them can be generating cash flow and building equity. Vs just the one.. 30+% is > than 10% ROI

Its one way to exponentially increase the growth of your net worth... I like the strategy; if done correctly it can also spread your risk out some across multiple tennant's. As always keep a healthy reserve as multiple vacancies can quickly drain your folding money.

@Samuel Chua

As stated above, it depends what your goals are. But in my opinion the payoff is huge simply by splitting your monthly payment into two bi-weekly payments. Here’s some math:

Loan Amount: $250,000

Interest rate: 5.0%

Term: 30 years

If a homeowner in the above scenario made bi-weekly payments of $671.46 ($1454.82/month) the difference comes out to:

Paying off the loan in 25 Yrs 3 Mts (4 Yrs 9Mts faster)

A total monthly payment of $1,454.82 rather than $1,342.05 ($112.77 more per month)

$189,453.43 in interest paid rather than $233,139.46 (a savings of $43,686.43)

That’s a savings of $43,686.43 and almost 5 years of your life for an additional $112.77 a month.

Again it depends on your goals. If you need the cash now more than later, don’t worry about it. That’s the purpose of a loan. But if you’re into the long term, loan pay down/interest savings. It’s definitely a viable option.

When you do a BRRRR, you refinance the property...you're not selling it. It doesn't matter who the loan comes from.

5-7 years. That's when the CAPEX starts to kick in for all the items you didn't replace when you first got the property. Replace them when you buy, and you can bury the cost in the mortgage and have the tenants pay them off in small amounts over time. The cost will be spread out over the length of the mortgage (30 years), so in reality, you're not even going to pay full price for the use of it.

Pay for it after you buy the property, and it's a lump sum out of your pocket...and all that cash flow you made up to that point goes "bye-bye" in what seems like an instant.

"what contributes to ROI dropping in 7-10 years?"

Increased dead equity through principal pay down and/or appreciation.

Equity kills your returns meaning you must pull it out, assuming you can still generate positive cash flow on the property, or if not you must sell.

When ROI drops below what can be earned in a basic income fund (10%) it is no longer a worth while investment. This type of individual that ignores or sit on dead equity is no longer a investor, they are cash hoarders. Their money is no longer working efficiently for them and they are simply ignoring their investments, preparing to sell to retire or waiting to die.

Usually around 7-10 years the ROI will drop significantly. You can sell the home, split the equity, and buy new investments to keep the ROI maximized.

But it depends on your goals. If you want safe money and fewer headaches, sell the properties now and invest in something safe and accessible that requires less involvement.

@Samuel Chua BRRRR is not a strategy for "flipping" homes. It is meant for you to buy and ultimately hold the home as a rental. Then you take your money out from the refinancing and go purchase another home.

@Samuel Chua BRRRR is for rentals, not flipping. You can certainly buy with a private loan, fix, and sell.

There would be no reason to refinance and then sell, it would just cost you money