Book: Buy, Rehab, Rent, Refinance, Repeat

brrrr“Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple” By David Greene
  • “When an investor utilizes the BRRRR method, they start off by paying cash for the property, rather than financing it.”
  • “Next, the investor manages the rehab portion. More money is put into the project.”
  • “After the rehab portion, the investor puts the property up for rent and immediately starts collecting cash flow.”
  • “Once the property is bought, rehabbed, and rented out, then the investor refinances it. The amount financed is based on the value of the property after it has been fixed up (when it’s higher).”
  • ROI: “You take your yearly profit and divide it by the amount of money you’ve invested.”
  •  Distressed houses: “Tax liens, auctions, foreclosures, out-of-state landlords, trustee sales, hard-money lenders that had to foreclose on their borrowers, beaten up houses on the MLS–there were tons of ways to find real estate that was not performing for its owner, and was therefore worth much less to the owner.”
  • “Our first priority should be finding deals we can purchase under market value. This doesn’t always include a major rehab, but it often will.”
  • “Volume amplifies your results, both positive or negative. When you are losing money, volume can cause you to lose a lot more. When you are making money, you can make a lot more. Use volume as a tool when you’ve found a good thing, but only once you’ve found a good thing. Move slowly until you know the process you’re using is leading to the result you want-then you can step up your volume.”
  • “Market distress is when entire market, economy, or area is in a rough time.”
  • “Personal distress is how professional, full-time investors target deals. It’s how must wholesalers find deals. Personal distress is when the owner of a property is in some form of distress in their personal life that is affecting their finances.”
  • “Property distress is when the property itself is in such bad condition that its value is affected.”
  • “Property distress is the form of distress that involves the most work, but it is also the easiest form to target and the one you have the most control over finding.”
  • 1% rule: “To put it simply, if a property will rent for $1,000, and you paid $100,000 for it, it meets the 1 percent rule.”
  • “A $500,000 property would not need to rent for $5,000 a month in order to cash-flow positively, whereas a %50,000 property would need to be really close to $500 a month in order to make money. The 1 percent rule tends to apply more strictly to lower priced properties–which is where most investors operate.”
  • “In general, I’ve found a property can rent for around .08 percent of the purchase price and usually still be profitable.”
  • 75% of ARV: “This rule states that I want my total expenses for a property (acquisition plus rehab) to add up to 75 percent of what they property will appraise for when I’m finished.”
  • “Single-family properties (anything less than five units) are assumed to be bought for the primary purpose of having somewhere to live.”
  • “Multifamily properties are assumed by lenders to be purchased for the purpose of running a business.”
  • “multifamily properties are valued based on the amount of profit they generate, not what other nearby multifamily properties sold for.”
  • “If you want to increase the value of a multifamily home, you increase the profitability. If you want to increase the value of a single-family home, you improve its condition to compare to other, more valuable single-family home nearby.”
  • “For example, a California-based appraiser is much more likely to give more weight to the proximity and condition of a home than to the square feet of the home.”
  • “In other areas, like the South, appraisers are more likely to use the price per square foot of a home than the condition it’s in.”
  • “The more I know what my target looks like, the quicker I realize it when I see it.”
  • “If you want to overcome fear, get good at analyzing deals.”
  • “Learn to analyze properties and you’ll find yourself feeling much better about the decision to be made regarding whether or not you should buy.”
  • “The first is how much you are buying a property for under its value (how good the deal is). The second is if the property will cash-flow positively or not.”
  • “The five inputs in deals are:
    • Rent
    • Mortage
    • Tax
    • Insurance
    • Property management fees”
  • “For instance, if you’re looking at house between $100,000 and $120,000 in an area, and you look at enough of them, you’ll start to recognize patterns in the numbers behind them:
    • Rents may average $1,000 – $1,200
    • Mortgage amount may be around $450 – $550
    • Tax maybe about $100 – $125
    • Insurance costs may run about $40 – $50
    • Property management fees at 8 percent would be about $80 – $96″
  • “The best way to find a great lender is to ask top-producing real estate agents who they recommend.”
  • “If they don’t know of anyone, ask them who they can talk to who does? If your agent simply won’t make an effort to find you a lender, look for another agent who will.”
  • “Agents live by referrals. If you can send an agent business you will be making them money, and that is going to lead them to be very loyal to you and make them very happy.”
  • “An easy way to send referrals is by talking to your friends about real estate and sending the serious buyers to the agents.”
  • “Communicate openly with your agent. Tell them exactly what you’d like them to do, and share your thoughts. Agents want to help you, but they can only do so if you know what kind of help you want.”
  • “Give them great reviews online.”
  • “Ask them what they need in their business, and help them find it.”
  • “Give them bonuses. Yes, I know to an investor this idea seems painful, but think about it–I often buy houses for $40,000 that are completely trashed. How much is my agent making on this? Giving them a bonus to at least help them make a decent amount of money is a great way to stay in their good graces.”
  • “Lenders also want referrals. Send your friends their way.”
  • “Online reviews. This works for lenders, too.”
  • Contractors
    • “Pay them on time.”
    • “Pay them in a way that isn’t a pain in the butt for them. I’ve found wire transfer to be the easiest.”
    • “Don’t micromanage.”
    • “Don’t beat them up over little things like $10 off the paint quote.”
    • “ask them questions. Some contractors are willing to do certain jobs but don’t enjoy it–things like laying tile as opposed to laminate. If it doesn’t matter to you, have them do the laminate instead so they know you have their back.”
    • “Ask them what work they are doing and what they are contracting out. They can give you better prices on the work they do themselves. It puts them in a bad position when you wan them to reduce the price significantly for work they are subcontracting to someone else.”
    • “Send them referrals, when practical.”
  • Property managers
    • “send them referrals.”
    • “Ask them what investors do that makes their job harder, and try to stop doing it.”
    • “Read the actual management agreement and address the issues you see before signing a contract with them.”
    • “Don’t call them incessantly over unimportant things.”
    • “Ask them about properties before you buy them. Get them involved in the process and rely on their expertise early on.”
    • “Find out if they are licensed, and if they are, let them find you deals.”
  • “Good wholesalers provide great deals. They’ve already done the work to find the property, researched the numbers, and negotiated the contract. If you’re lucky, you can step right in and take the deal over.”
  • “The biggest risk you take when buying from a wholesaler is you are buying without representation. In these transactions, you don’t have an agent representing you, and neither the seller nor the wholesaler have a fiduciary duty to your interests. None of the parties in a transactions like this are licensed or supervised by a governing party.”
  • “A bad wholesaler can cost you a lot of money from what they don’t tell you.”
  • “One way to recognize a bad wholesaler is by verifying the validity of their comps.
  • “When you’re first doing business with someone, you should verify everything they tell you or provide to you with someone else.”
  • “If you’re considering buy from a wholesaler, find a trusted investor, agent, or property manager with experience in the area you are buying to look over the information you’re considering.”
  • “If yo want to make wealth in real estate, learn how to fix other people’s problems and you will find that wealth finds you.”
  • “By targeting properties that only a few can buy, you will be avoiding the crowds who are all going for the same houses and finding the deals others are scared of or don’t have the ability to act on.”
  • “Hello, my name is _________ and I wanted to know if you had a second to talk.
    I am a real estate investor and your name came up when I was asking for the best real estate agent in the area. I was very impressed with your reputation and wanted to know if you were currently looking to take on new clients.
    Great! A little about me and what I’m looking for–I’m a buy-and-hold, cash flow investor who lives in ____. I’m looking for all-cash offers on properties that need significant work—the more the better. I target properties that need new roof, have water damage, renovations that were started but not completed, etc.
    I’m looking to buy them, fix them up, and rent them out when I’m finished. My ideal house would rent for somewhere around and be worth around when finished. I can offer a 10-14 day close, seven-day inspection period, and strong earnest money deposit.
    I’d like to know if you could look for properties that meet these criteria and send them, and only them, to me when you find them. Is that something that sounds like it falls within the scope of what you do?
    Great! Another way you could help me would be if you knew any reliable and experienced contractors, lenders, or property managers I could use to help me with this process. That would help me a ton and allow me to buy more deals faster. Is that something you have experience with?
    Awesome! I’m very excited from this conversation. Let me know what more you need to know about me and what I should know about you. If everything looks good, I’ll be excited to start working with you!”
  • “If you realize the rents are going to be lower than you thought, it may make sense to reanalyze the deal as a flip and see if it’s better to sell it for profit rather than keep it.”
  • “search Zillow.com for top agents with teams, email the team leader, ask for agents to interview, then come up with a list of questions for the agent, etc.”
  • “The reason I prefer an agent with a team is because I am much more likely to find that the things I need are already in place.”
  • Calling brokers at a brokerage:
    • “Step 1: Google the names and numbers of real estate offices in the area I want to invest in.
      Step 2: Call and ask for the team leader, owner, or office manager.
      Step 3: Explain my goals to the person I talk to, and ask who from the office they would recommend I work with.
      Step 4: Write down the names and numbers of the recommendations.
      Step 5: Start calling these agents (likely top producers with experience working with investors, sine that’s what I said my goals were) and interviewing them to find out who I like the most.
      Step 6: Start working with the agents who seem like a good fit.”
  • “If you want to find agents through other investors, your best bet is to learn to bring value to them first.”
  • “If you feel like the investor has really good resources you’d like to benefit from, consider paying them for any deal you buy from one of their contacts. If you know up front you’ll be paying the other investor $2,500 when you close, you just need to underwrite that amount into the offer you make and ensure the deal still works.”
  • “If you find a lender who can work with you, there’s a good chance they can put you in touch with an agent who can help you find the deals and walk you through the process.”
  • “Property managers sometimes do invest themselves, but their main goal is to find houses to manage. If they can put you in touch with someone who can find properties for you to buy, they can generate income for themselves by managing that property. This creates an incredible and powerful incentive for them to put you in touch with these people, and if they don’t know any, to go find some.”
  • “Agents are more likely to find ‘property distress,’ meaning a big rehab. Wholesalers are more likely to target ‘personal distress,’ meaning a deal with less rehab.”
  • “Although wholesalers can get you incredible deals, there’s  no guarantee that they know what they are doing or that the information they are providing you with is accurate.”
  • Auctions where banks are trying to sell properties before they become REO: “Foreclosure auctions like this can provide great deals, but also can be incredibly risky. Most of the properties are sold with no contingencies, cash only, and very little opportunity, if any, to conduct any due diligence.”
  • “Looking for online auctions to buy investment properties can be a good way to find deals, especially if you have a solid contractor you can depend on.”
  • “When I bid on houses like this, I have an agent do all the work for me. They look up the comps, get me an ARV, bud for me, and watch the other bidder to see if we’ve been outbid. If the agent isn’t compensated by the auction site, I pay them directly. If they are compensated by the site, I will pay the difference between what the auction site is compensating them and 3 percent of the purchase price.”
  • “A bird dog is a great resource to use if you know you don’t have the time, patience, or skills to find deals yourself.”
  • “If your team member invests, they are much, much more likely to understand your needs.”
  • “If the handyman doesn’t do the job right, you may have no choice but to send them back. This isn’t your fault. What you want to avoid is not being clear about what you wanted in the beginning, so you’re forced to send them back to finish what you never detailed you needed done in the first place.”
  • “If you’re going to use a handyman, you need to do so much with the understanding that you are taking on the role of general contractor, and you are hiring them as a subcontractor. You can’t hire a handyman to do a job and expect them to also be able to manage the logistics of that job.”
  • Investor-friendly contractors: “These type of contractors are used to working with investors and re experienced in finding ways to do jobs under budget and safe you money.”
  • Primary residence contractors: “Contractors like this are used to picky clients, and put a lot more time and effort into getting a very good feel for exactly what you want. They make you feel incredible, their work is great, and they usually get done on time. All for a price.”
  • Question to ask a contractor: “Do you often work with investors?”
  • “If the answer is ‘yes,’ you should follow up with more questions to determine just what they mean by ‘investor.'”
  • “You need to clarify if they have worked with landlords who own rental property who are looking to make it rent-ready as economically as possible.”
  • “Whatever hoops you may have to jump through, if you can find a way to spend $5,000 – $10,000 to add additional square feet, you can often improve your property’s ARV an additional $10,000 – $40,000.”
  • “An easy way to do this is look for a two-bedroom home with over 1,000 square feet. If you find a home this size with only two bedrooms, there is a very good chance it has a space inside that could be converted to an additional bedroom without spending money to add on to the property.”
  • “For example, you can save on remodeling your kitchen by painting kitchen cabinets rather than replacing them.”
  • “Though you can save money on–and add value to–bathroom remodels by tiling a shower, don’t put in a glass shower door. The reason is pretty simple–glass shower doors are extremely expansive, easy to break, and easy to get moldy. They need to be cleaned frequently and your tenants often won’t do this.”
  • “Another bathroom remodel strategy is to consider replacing your standard toilets with low-flow toilet and sink options in your rentals.”
  • “Tile in bathrooms and kitchens
    Laminate everywhere else
    Carpet in bedrooms if it’s already in good shape”
  • “When a property needs a new roof, it usually leas to several results:
    • The property will no longer qualify for a loan, meaning the majority of investors cannot buy it.
    • The roof cannot be financed, meaning the majority of investors need to have enough cash on hand to buy the house, do the rehab, and replace the roof.
    • The investor cannot use their typical skilled handyman to do the work, as installing a new roof is skilled work.
    • The property will not be collecting rent for a longer period of time than normal since you can’t rent out a house without a roof.
    • The work done will need permits, which complicates the process.”
  • “There are several reasons why the property manager would take an interest in checking on the rehab of your property, the most important being they want to make sure the work is done right so they don’t have to worry about redoing it when the future tenants complain!”
  • “If your relationship with your PM isn’t established yet, consider paying them to check on the work your contractor is doing and making sure it’s done right.”
  • “To check up on the work, have the PM take pictures and video of the work on their smartphone.”
  • “If you choose the right area to invest in, and rents continue to increase every year, you’re virtually guaranteed to make money in real estate investing. If you choose the wrong area, and things go badly, it can be incredibly difficult to avoid losing money.”
  • “At this point, I want the average rent to be at or near 1 percent of the sales price of the property, and I want to see the average rent is close to the median rent.”
  • Questions to ask property manager about rent:
    • “What rent can I expect for this property?
    • What do you think a rough idea of this property’s ARV is?
    • Is this a neighborhood you want to manage in or not?”
  • “Many investors don’t know they can ask real estate agents to search the MLS for rental comparables.”
  • “Housing is tied directly to jobs in a way that can’t be erased until technology reaches a point where we can all work from home.”
  • “First, ask a Realtor for the average DOM (days on market) it takes houses to sell there.”
  • “In a normal market, an average DOM is somewhere between 30 and 60 days.”
  • “Another technique is to ask a property manager for the average vacancy period between tenants for their other landlords–often called a ‘turn.'”
  • “A good rule of thumb is: more than 30 days isn’t a great market to buy a rental.”
  • “If I found properties were being rented out in seven to ten days from the time they were advertised, I would know it’s not important I fix them up substantially.”
  • “Then, it’s a great idea to get on Craigslist.org and email a landlord with a unit for rent. Ask them how many applications they’ve received for their rental unit/property. Ask them how long they have had the unit advertised for, and how long they expect it will be before it rents. As a general rule, if the landlord is dismissive of you and doesn’t seem too engaged, they are probably getting lots of attention for the vacant unit. If they are extremely responsive and excited to hear fro you, it might mean you are the first or one of the first people to inquire and they don’t feel optimistic about getting many more inquiries.”
  • “If yo call the city and find out that they issues a limited number of permits that isn’t keeping pace with supply, this is an indication you are more likely to see home values, and with them rent values, continue to increase year over year.”
  • “If rents are increasing by a healthy amount (5 – 10 percent or higher in most areas), this is a very good sign. In fact, if rents are increasing by this much, it’s almost guaranteed there is a lack of supply.”
  • “Buying near a hospital is one of the single most critically important things you can do to ensure you always have a steady stream of reliable, well employed professional tenants willing to rent your property.”
  • “One technique I like is to have my real estate agent set up a search for an area that is geographically half a mile around each hospital in town. I then have the agent add my other criteria into the equation such as numbr of bed rooms, bathrooms, and price.  Whenever a property hits the market that meets these criteria in this area, I get an email notification alerting me so I can consider making an offer.”
  • Buy in areas where pride of ownership is apparent: “The idea to this technique is to look to buy properties in area where the other tenants/owners are taking good care of their property because your tenants will be more likely to do the same.”
  • “If you want your tenants to pay on time, you must reward them for doing so, and punish them for not doing so, and then be consistent about that.”
  • “When you notice the tenant is keeping great care of the lawn, reward them! One easy way is to wait for the lease renewal, and if the property is kept in good condition, tell the property manager to talk with the tenant and only raise their rent by %50 a month instead of the usual $100.”
  • “This is why we start by advertising a unit at a cheaper price, get some one in right away, then make up for that lost rent in year one over the next 30, 40, or 50 years we own that property.”
  • “If you have a tenant move in during the winter, don’t assume need a 12-month lease that will also expire during the winter. Consider a 15-16 month lease for the first run , and time it to expire in the spring when other people are all looking to buy or sell.”
  • Property managers: “Odds are, no matter who you use, they won’t care as much as you do, and that’s something you need to accept right away. If yo can’t accept it, self-management may be the only option that will keep you sane.””
  • Preferred way to find property manager: “You interview strangers, found through trusted sources, and trust a combination of your gut and the information provided to you by people you trust.”
  • “One way to verify if your PM has a good reputation is to ask them what other BiggerPockets members they are managing property for. Once they give you the names, simply send a colleague request to that member and start a dialogue asking them what they like and don’t like about this particular property manager.”
  • To determine if a property manager is a good fit:
    • “Determining if the PM is a good fit for your needs and expectations.”
    • “Determining if you are a good fit for your property manager’s needs and expectations.”
  • Tasks to complete when interviewing a property manager:
    • “Find out about them as a person.”
    • “Find out about their experience and skill as a property manager.”
    • “Find out if they invest in real estate themselves.”
    • “Gather a list of resources for me to verify them with.”
  • Property manager interview questions:
    • “What got you started in the business?”
    • “What do you find to be the most challenging part of this business, and why?”
    • “What do you find to be the most rewarding part of the business, and why?”
    • “What are some attributes of your favorite clients?”
    • “Which type of properties do you like to manage, and why?”
    • “Which areas in town are you familiar with and manage?”
    • “What are your plans for the future?”
    • “What do you do for fun?”
    • “If you were immediately gifted with five insanely talented employees, what are the parts of the job you would never want to give away because you enjoy it so much, and why?”
  • “If I find the PM is extremely unskilled at carrying on a conversation and establishing rapport, I would ask who does the communicating with the tenants. If they give me someone else’s name, I would end the interview by asking for that person’s contact info. If they tell me it’s them who communicates with the tenants (and they are not great at conversing) I wouldn’t consider hiring them sine a strong ability to communicate is too important an element of doing a project manager’s job.”
  • Qualities to look for in a property manager:
    • “Blunt honesty”
    • “Pickiness with who they take on as clients”
    • “Specificity regarding how they handle problems or which of their employees handle problems”
    • “Details regarding the systems they have in place”
    • “A proactive, rather than a reactive, approach”
    • “A specific market knowledge about real estate”
    • “A flexibility to learn better ways or get better at their job”
    • “The fact they own and invest in real estate themselves”
    • “The ability to understand the language of real estate investors (cap rates, ROI, cash flow, capex, etc.)”
    • “A strong understanding of current rental rates”
    • “A strong understanding of economic environment”
  • “I explain where I’m from and how I got started, go on to talk about what my needs are right now, then finish by detailing what my future plans are. While talking, I pay careful attention to their facial expressions.”
  • “Well, I’m a police officer who started working a lot of overtime and using the money to buy rentals. Because it took so much time and effort to save the money to buy these properties, I obviously value them very highly. They are representative of hours and hours, years really, of lost sleep damaged relationships, and unhealthy living. I gave it all up to get the money to buy them, so the way they perform is really important to me!”
  • “Now I’m looking to buy one to two properties a month. If you do a good job with the properties I give you, I see no reason why I couldn’t bring them all to you. What’s most important to me is you are brutally honest. Anyone can manage a property halfway decently and collect rent. I need more than that. I need advice on which markets to invest in, which parts of town to stay away from, what kind of rehab work I should be doing, and who the best agents, lenders, and rehabbers to work with are.”
  • “In the future, I plan on buying three to five properties a month. I’d like to own 75 to 100 units in the next ten years, and I’d prefer to use the same property manager for all of them. What’s important to me is that my PM is handling all the issues I can’t, and making sure my portfolio is profitable enough for it to make sense for me to keep buying. I need repair costs to be low and for rents to be raised every year consistent with the market average.”
  • “If you don’t have a portfolio yet and this would be your first property, I would recommend buying your first place and letting them manage it, then finding a different property manager to mange the second.”
  • “As a rule, I have a minimum of two property managers in every market I invest in.”
  • “To cover this problem, I’ll request the PM create a system of notifying me or my representative when a tenant makes a claim. I ask for a picture of the damage to be provided, as well as a description of how the tenant believe it happened and how they discovered it. After this, I ask the PM to send me an email with their recommendation on who should pay for it, and why. If the PM recommends I pay for it, I ask them what in the lease or in landlord case law justifies this opinion.”
  • “In most cases, I want to find a handyman of my own choosing, not theirs. I prefer this because I trust my own handyman more, they are usually cheaper, and I can get info from them regarding the condition of the property and how the tenant are taking care of it when they show up to make the repairs.”
  • “Another system I like to create with my PM is to have them set a reminder to notify me two months before a tenant’s contract is set to expire. I want to know two months ahead of time so I can start doing research to find what current market rents are and give the tenant the opportunity renew their lease  before it goes month-to-month. This also gives me the opportunity to consider selling the property if that’s an option, but most importantly, it makes sure the PM doesn’t forget the lease is month-to-month and go to the tenant with a rent increase letter!”
  • How to receive rent: “I prefer to receive mine via direct deposit or mobile deposit, and it’s important to communicate this to the PM before signing an agreement with them.”
  • “In most cases, you are going to reach out to a lender and ask for a pre-approval letter. The lender will ask you a few qualifying questions over the phone, and then send you a loan application to fill out.”
  • “If everything goes well, your lender will send you a pre-approval letter stating what you are able to borrow.”
  • “I recommend getting at least two quotes from different lenders.”
  • “The seasoning period refers to the period of time after you buy a property but before you can take a lone on it.”
  • “In general, a shorter seasoning period is better for you, as it will increase the velocity of your money.”
  • “Your loan to value (LTV) percentage is a huge thing to find out right away because it has such a big impact on your ROI. The best lenders will have programs with a 75-80 percent LTV. Some of the mediocre ones will do 70 percent, and anything less than that is typically considered not ideal for investors.”
  • “Some lenders will try to bury their fees among all the other title/escrow/tax related fees and tell you to expect ‘2 percent’ of the purchase price in closing costs. You don’t want this–ask for specifics.”
  • “Many lenders are trained to quote you one specific closing cost–say, for example, the origination fee. Don’t get fooled by this. Ask for a ‘net sheet,’ or a list of all the closing costs you’ll be paying, and compare these costs between lenders.”
  • “Many new investors are surprised when they find out the interest rates on ‘cash out’ refinances are higher than purchase refinances.”
  • “For us, as BRRRR investors, this isn’t good. Since we are likely taking out a loan on a property that has no debt on it, or small amount of hard money debt on it, virtually all our refinances will be cash out refinances. So be sure to ask your lender what their rate is for cash out refinances as they may be assuming you are getting pre-approved to purchase a house, not refinance one you’ve already purchased.”
  • “If you’re looking to finance a property out-of-state, make sure you let the lender know this right away.”
  • “Ask right away if the lender is a portfolio lender or if they plan on selling your loan after it’s originated. If a lender is a portfolio lender, you can adjust your expectations up front that you won’t be getting the low interest rates and terms that GSE (government sponsored entity) loans usually have.”
  • “Portfolio lenders can make loans when other people can’t, especially to real estate investors, so be nice to these people.”
  • “The following is a script I use if a lender tells me they can’t do my loan, but can’t quote any specific reason why I’m not eligible:
    Hello Mr. Smith,
    I just wanted to thank you for your time earlier with reviewing my application and getting back t  me so promptly. I understand you don’t always get compensated with results like these and I appreciate you treating me like a valued customer nonetheless.
    I also wanted to propose an alternative scenario. I understand your institution has determined it’s not in their best interest to provide a loan I requested at this time. I wanted to know if it would make any difference to you and your bank if I put a sizable deposit of $_____ in a saving account before funding the loan.
    My hope is for you to see I want a mutually beneficial relationship with you and your institution, and I understand and am willing to go the extra mile to establish that. Would you mind running this by the other parties involved in the decision and seeing if we could work something out under this new scenario?
    I hope to be banking with you all for a long period of time and I’d love to know more about how to create a win-win situation for everyone.
    Thanks again for your time,”
  • “For instance, you may be applying for loans at five different banks. This process involves feeling them out, looking into their products, and seeing how responsive their customer service and systems are. During this process, it would be wise to ask if they have a limit on the number of loans any one person can have with them.”
  • “It’s not very efficient to get a system going with one lender, then have to stop and build another entire new one after your third property is purchased. Finding out up front which bank will let you get the most loans is a resourceful method that will pay off in the long run.”
  • “Put in more practical terms, the LTV is amount of money they will let you borrow against the value of the property, and the LTC is the amount of money they will let you borrow against the total amount you invested in a property.”
  • “When reaching out to find the lender you want to pre-approve you, make sure you ask right away if they lend against the value or the cost.”
  • “For this reason, I avoid banks that will only let me borrow LTC.”
  • Portfolio loans: “These loans are typically offered by credit unions and savings and loan institutions as perks for their members. If you want to finance more than ten properties, you’ll want to learn how these loans work. Currently, you can’t have a conventional loan on more than ten financed properties.”
  • “If you own an investment and sell it within a year, that gain gets taxed at the same rate you pay on your normal income.”
  • “If the property is held for more than a year, the long-term capital gain rate kicks in. This is a minimum of 20 percent, and often more.”
  • Efficiency: “Where are my actions not efficient? How can I reduce the number of steps to allow fewer opportunities for some thing to go wrong? How can I make this task simpler to complete? What opportunities do I have to ‘trim the fat’?”
  • Effectiveness: “What can I do to raise my odds? How can I improve my ‘batting average’? What did I do well in the past that I can isolate and amplify today to give myself more opportunity to succeed?”
  • Expeditiousnesss: “Where am I slowing myself down with activities that don’t have an impact on achieving my desired goal? Where do I need to increase my sense of urgency? Where am I loosing out on opportunity because I am–or my system is–to slow?”
  • Employability: “What am I doing that someone else could be doing better than I do? What am I doing that isn’t crucial to achieving my goal? What am I doing that is slowing me down from achieving my goal?”
  • “The value isn’t found in the first time we do something, it’s in the tenth. The first few times we do anything, the goal shouldn’t be to excel or even succeed at it. It should be to learn from it. The more you learn, the more progress you make, regardless of what result you’re seeing.”
  • Lenders: “Hello! May name is____, and I am a real estate investor who buys properties in the _____ area. I am writing to you because your name came up through several people I know as an elite level lender with experience working with real estate investors.
    I wanted you to know I’m actively looking for property to buy, and willing to pre-approved through your business for you to provide me lending on deals that pass my way. I’m hope you can send me your loan application and we can setup a quick phone call to discuss my file, what I’m looking for, and how we can help each other’s businesses.
    Additionally, I know as a lender you often put in massive time on a file that for various reasons beyond your control does not close. I wanted to let you know I would be extremely grateful for you to let me know when anything resembling a great deal falls out of escrow or otherwise crosses your path. If at all possible, I’ll buy it and let you represent me on the sale, refinance, or both.
    I would love to learn more about how I can help you as well, what programs you offer, and what kind of clients I can refer you to. Please let me know when a good time for a follow-up phone call will be. I’ll be happy to leave you a positive review on the platform of your choice after we do.
    Looking forward to working together!
    Thanks!”
  • Property Managers: “Hello! May name is ______, and I am a real estate investor who buys properties in the ____ area. I’m writing to you because your name came up through several people I know as an elite level property manager with experience working with real estate investors.
    I wanted you to know I’m actively looking for property to buy, and willing to have you manage the property once I do. I’m hoping you can send me your application and we can setup a quick phone call to discuss my file, what I’m looking for, and how we can help each other’s businesses.
    Additionally, I know as a property manager you often manage properties, stabilize them, then have the owners sell them. I wanted you to know if you find one of your clients selling a property manage, I would be extremely grateful if you would let me know first. If I can buy it, I’ll keep the property in your portfolio to manage, as well as as any additional properties I buy. Furthermore, if any of your clients come across a deal they cannot buy, I would be grateful for the opportunity to buy the property and have you manage it.
    I would love to learn more about how I can help you as well, what programs you offer, and what kind of clients I can refer you to. Please let me know when a good time for a follow-up phone call will be. I’ll be happy to leave you a positive review on the platform of your choice after we do.
    Looking forward to working together!
    Thanks!”
  • Wholesalers: “Hello! My name is ______, and I am a real estate investor who buys properties in the ______ area. I’m writing to you because your name came up through several people I know as an elite level wholesaler with experience working with real estate investors.
    I wanted you to know I’m actively looking for property to buy, and willing to be pre-approved through your business. I’m hoping we can setup a quick phone call to discuss my file, what I’m looking for, and how we can help each other’s businesses.
    Additionally, I know as a wholesaler you often put in a lot of time on a property that for various reasons beyond your control does not close. Whether it’s your buyer backing out or your seller being unwilling to make concessions, I would love to know about deals you come across that need a strong buyer to close. I would be extremely grateful if you could let me know if anything resembling a great falls out of escrow or otherwise crosses your path. If at all possible, I’ll buy it, refinance it, then buy from you again.
    I understand the need you have for strong buyers to follow through on their word. I am experienced investor who can get due diligence done very quickly, close quickly, and keep my word.
    I would love to learn more about how I can help you as well, what programs you offer, and what kind of clients I can refer you to. Please let me know when a good time for a follow-up phone call will be. I’ll happy to leave you a positive review on the platform of your choice after we do.
    Looking forward to working together!
    Thanks!”
  • Agents: “Hello! My name is _____, and I am a real estate investor who buys properties in the _____ area. I’m writing to you because your name came up through several people I know as a highly skilled and effective real estate agent with experience working with real estate investors.
    I wanted you to know I’m actively looking for property to buy, and willing to be represented by you during this process. I’m hoping you can send me your criteria of what is needed to be able to work successfully together, and we can set up a quick phone call to discuss my goals, what types of properties I’m looking for, and how we can help each other’s businesses.
    Additionally, I know as an agent you often put in a lot of time on a file that for various reasons beyond your control does not close. I wanted to let you know I would be extremely grateful if you could let me know if anything resembling a great deal falls out of escrow or otherwise crosses your path. If at all possible, I’ll buy it and let you represent me on the sale, then list it if it’s a flip property.
    I would love to learn more about how I can help you as well, what programs you offer, and what kind of clients I can refer you to. please let me know when a good time for a follow-up phone call will be. I’ll be happy to leave you a positie review on the platform of your choice after we.
    Looking forward to working together!
    Thanks!”
  • Attorneys: “Hello! My name is ______, and I am a real estate investor who buys properties in the _____ area. I’m writing to you because your name came up through several people I know as an elite-level attorney who often comes across situations with clients needing to find a sold, fast buyer for their property.
    I’m hoping you can keep me in mind, and we can setup a quick phone call to discuss my situation, what I can do to help you out, and how we can help each other’s businesses.
    Additionally, I know as an attorney your goal is to represent your clients’ interests, and I wanted to let you know I would be extremely grateful if you could let me know if anything resembling a great deal crosses your path. If at all possible, I’ll buy it and prove to you I am reliable, honest, and trustworthy. My goal is to become a resource and an asset to your businesses to help you serve your clients better.
    I would love to learn more about how I can help you as well, what programs you offer, and what kind of clients I can refer you to. Please let me know when a good time for a follow-up phone call will be. I’ll be happy to leave you a positive review on the platform of your choice after we do.
    Looking forward to working together!
    Thanks!”
  • CRM software: Podio
  • “Once I have three to four properties with one PM, I ask for a 1 percent decrease in the fee they charge to manage the property. Once I get six to seven properties, I ask for a 2 percent decrease. Once I hit ten or more, I ask for a 3 percent decrease.”
  • “The originator of that loan gets paid for selling it, and the salesperson (loan officer) gets a chunk of that money. If this is the case with your lender, you can ask for a ‘lender credit,’ or something similar. This sis the lender crediting you back money that come out of their bottom line.”
  • “If you are doing to do this, make sure you’re providing volume, and make sure your files are quick and easy to close.”
  • “If you’re doing your loans through a company that’s not selling them to a fund (a portfolio lender, for example), I recommend only asking for a lender credit if you are already providing this lender plenty of referrals.”
  • “In my opinion, a much better way to capitalize on the value through the volume you are bringing someone is to let them know you expect to see the best deals first. This will make you way more money in the long run than saving a couple hundred or thousands by shaving it off the agent’s commission.”
  • Possible funding sources:
    • “partner with someone who has money.
    • Borrow private money.
    • Use a hard money loan to buy/rehab, then refinance into a better long-term loan.
    • Take out a HELOC on a different rental property.
    • Take out a business loan.
    • Take a note against your car.
    • Find someone with self-directed IRA and borrow from them.
    • Borrow against your own retirement plan (when applicable).
    • Use seller financing for the short term.”
  • “In the case of low appraisal, there are three main options you can consider. The first is to challenge the appraisal, present your comps, and try to get a better result the second time around. The second is pay for a new appraisal (if your lender will let you) and hope for a better result. The third is to consider selling the property and hope for a higher sale price than your appraisal, and banking on the fact your buyer will order their own appraisal that will be higher than yours.”
  • “If non of these ideas are appealing to you, there is still hope. You an still accept your disappointment, refinance the property, start making money, and look to get’em next time!”
  • “By keeping the perspective that the point of BRRRR investing is to receive more of your capital back, not necessarily all of it, you can overcome the ‘what about a low appraisal’ objection and get on your way to creating wealth through real estate.”
  • “A rehab is one of the easiest and simplest way to add value to a property precisely because nobody wants to do them.”
  • Example ROI calculation:
    • “Amount financed = $82,500
    • Closing costs = $5,000
    • Net capital recovered = $77,500
    • Down payment/money left in the deal = $6,500
    • Mortgage payment ($82,500 at 5% over 30 years) = $443
    • Tax (1.25% of purchase price, $52,000) = $54
    • Insurance = $40
    • Property management (8% of $1,000 rent) = $80
    • Total expenses = $617
    • Total monthly profit (not including maintenance, capex, etc for simplicity) = $383
    • ROI ($383 x 12 = $4,596 / $6500) = 70.7%”

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