Creating Wealth With Buy, Repair, Rent, And Refinance

In this video, I explain the buy, repair, rent, and refinance concept and how it works.

Buy, Repair, Rent, Refinance, also known as BRRR is the easiest way to create long term wealth with real estate. It works so well because of the fact that when refinancing a property, the amount the bank will lend is dependent on the appraisal (not the purchase price).

We know that with investment properties, the bank requires a 25% down payment. So if you were purchasing a $200,000 rental property, the bank would require you to put down $50,000.

But what if you could find the exact same sized house in the same neighborhood that was in really bad shape and had been neglected and buy it at a discount? For example, say a hoarder house or a probate situation where the house had been empty and abandoned for many years. This house would be in need of a lot of repair and would be outdated.

As an investor, you are willing to offer only $120,000 cash for this property. Let’s assume you are one of my coaching students, and you come to me and ask me if I would be willing to lend you $100,000 to buy this property and I said yes. That would mean that with a purchase price of $120,000 you would need to put down $20,000 cash to purchase this property.

Now you renovate the property and it costs you $30,000 to repair the house. So now your total cost on this house is your purchase price of $120,000 plus the repairs of $30,000 for a total cost of $150,000.

Your goal now is to refinance the loan so that you can pay off the private lender loan and get a regular conventional mortgage. Doing this will allow you to have a lower interest rate on your mortgage. So you call up your mortgage broker and tell him that you want to refinance your mortgage. He orders up an appraisal and the house appraises for $200,000 which is what homes of this size sell for in this neighborhood.

Now you know that the bank is willing to lend you 75% of the appraisal amount for investment properties which works out to be $150,000.

So the bank lends you $150,000. You use $100,000 of that to pay off the loan to me and that leaves you with $50,000. Now you pay yourself back on the $20,000 down payment from when you purchased the house plus you pay yourself back the $30,000 in repairs. Once you have done this you have purchased the house with no money down. You put $50,000 into the house and now you get that $50,000 back. The basic concept of this strategy is that it allows you to buy real estate with no money down (or very little money down).

This strategy gets very exciting when you start using the leverage of borrowed money. For example, let’s say you had a Home Depot Credit card and you purchased all of the materials using your Home Depot card. Let’s say you paid your contractor with a credit card instead of with cash (you need a contractor that will take payment on a card). And let’s say that you borrowed the $20,000 down payment for the purchase from your mom. You have now effectively purchased a property with no money down (none of your own money down). When you refinance, you simply pay back your mom and pay off the Home Depot Card and your credit card.

This strategy effectively allows you to buy unlimited real estate because as soon as you have refinanced and paid back the private lender (and your your mom) she will most likely want to lend you the money again (and so will the private lender).

Imagine buying 10 rental properties with no money down (or very little money down). If you employ this strategy and buy yourself 10 rental properties you will become a multi millionaire. It’s just a question of time. My recommendation is that you refinance into a 15 year fixed rate mortgage.

Over 15 years, the property value will double and rents will double too. And when the mortgages are paid off, all of that cash flow will be coming into your pocket. That is how you create financial freedom and become very wealthy. If you want to be a millionaire do this.

I purchased my first 10 houses using this strategy. And I have trained thousands of students in my real estate training how to employ this strategy. Some of them are now multi millionaires.

If you want to learn how to build wealth, how to buy rental properties, and how to create financial freedom, then you should attend my next Fixing & Flipping Houses Boot Camp! Click the button below to learn more: