All Forum Posts by: Samuel Chua

Your question:  "By the way, does the BRRRR method work for flipping only?"
 My Answer:  The BRRRR method isn't used for flipping.  The idea is to get your cash back out of a property by NOT selling it.  Instead, you refinance it.

Your Question:  "...why must I rent the property out before I sell the property? Why cant it just be "get a loan from a private lender..."

My Answer:  You don't have to rent the property before you sell it.

Your Question: "Why cant it just be "get a loan from a private lender, flip the house and sell it out" 

My Answer:  Not sure what you're trying to say here, but "flipping" is the same thing as "selling".

Your Question:  "...or "get a loan from a private lender, flip the house, get an offical loan from the bank (Refinance) and sell it"?"

My Answer:  You can't sell the house, and then after that refinance it.  Once you sell it. you don't own it anymore.  You can't refinance a property you don't own.

 Can you restate your question

@Samuel Chua When refinancing a loan it will always need to replace your first one. You will not be able to keep your private loan and take out another first lien position mortgage. If you are trying to keep your private money then you should look into taking a HELOC out on the property, which is a second mortgage. But even that has rules that more than likely won't fit.

@Samuel Chua I would base your budget on today's numbers calculated conservatively. Over time they will adjust.

 When you say, 

"...isn't the risk of 1 property is much less than 5 properties...", 

I have three questions for you:

1 - What is at Risk?

2 - Who is at Risk

3 - Who is the Risk?

 No - when you refinance, the loan with the bank pays off the loan with your private lender. SO there's only ONE loan.

@Samuel Chua- To reply to your question about if you have a bad property you're trying to get rid of, try to sell it to another investor if you have equity in it and it can't be financed by a bank to sell to an owner occupant. Can you give more details on what makes it a "bad" property?

 Although this is 100% true, I take it a step further, and say it actually is less cash flow.  If you take the entire $100k and use it, on either 1 property or 5 (see above), you actually will get a lower CF paying 100% in cash for a property.

@Samuel Chua

Look at it this way. I pay 100K cash for a property. My cash flow after expenses is $1000 a month. That's $12,000/ year. That's a 12% return annually. It will take 8.3 years to receive all of your money back. The other option is 20% down and a bank loan on the rest. In this scenario you put $20,000 down and say your mortgage payment is $500/month. Cash flow is now $500 instead of a $1000, but your CoC return is now 30% annually. It will take 3.3 years to get your cash out and your tenant is paying for the cash flow and your return on your money. Your CoC is infinite after 3.3 years. @Joe Villeneuve is correct.  Use as little cash as necessary.

Good Luck.