If you know anyone interested in buying or selling
My real estate team can help you find that dream home
REALTOR
Real Estate Agent with the Walsh team, with Realty Executives Premiere, based out of Pacific MO. If you know anyone looking for a home, feel free to have them give me a call 636-432-4258, or email Tonybeffa1@gmail.com
I‘m interested in real estate, as it is something i can do the rest of my life, along with allow me to serve my community in more than one way, ive always enjoyed drawing up interior designs and looking at homes on Zillow. Although, my ultimate goal is to become a dentist. Just being involved in my community is my main drive.
How The BRRRR Method Works
If done correctly, the BRRRR Method can provide passive income and a revolving method for purchasing and owning rental property. The method works through the following steps:
Buy a property: The property you purchase should be a distressed property that needs some work to get up to code and ready to rent. Because of the home’s condition, it will likely be cheaper to purchase. ex. 100,000, put down 25,000
Get a loan on the property, pay 20-25% down
Or apply for an FHA loan and only pay 3% down
do the math to ensure the purchase price (including closing costs) can cover your expenses to rehabilitate. Calculating ARV (after repair value) is helpful here. ex. if you repair it, it’ll be worth 200,000
Rehab the property: Since the property is distressed, it may require extensive work. In this step, you’ll renovate the property to make structural, safety and aesthetic improvements, and prepare it for renters. ex. put in 50,000 in repairs
Refinance the property: since the property is now worth more, and you refinance with a different company, you can get a high loan amount, because the new and improved building is worth more. You will be able to pay off your old mortgage loan, pay yourself for all of the work and materials you put into the property, and still have equity in the building if you had to sell
So your net worth goes up
so when you refinance the house after the new house repairs, it is assessed as worth more. Now getting a loan for 75% of value, of 200,000, being 150,000, you now pay yourself off for the 75,000 you invested of your own money. Along with paying off the other 75,000 of the other loan. Now you break even, everything you put in, is paid off. You now have equity being built up. You can hold onto the 75,000 of equity. 200,000-75k yours-75k original loan=50k equity
Rent out the property: Determine the rental price and find people to rent the home.
you get paid a couple hundred dollars a month
You charge tenants home insurance to cover any appliances that go out
Your rent covers taxes and utilities
of all the money you put in, you got paid off, and now if you rent it out, everything is profit, paying off the rest of the mortgage for you
Keep the property and take out a HELOC, home equity line of credit, on your home worth, and take that and invest in another property, or called a reverse mortgage
don’t sell any property once you acquire it, just keep getting more
The more units in the home the better
There is no reason to fret hurting your credit score if you refinance, who cares
Over a 30 year span, your tenants will be paying off the mortgage for you
If you live there, you can stay rent free
If you live there at least 2 out of the last 5 years, you can sell the property tax free
The catch with taking a financial risk
You have to watch out for bankruptcy. Its sets you back to ground zero, and life starts all over. That’s it. If you have anything, it gets taken away, car, family farm, house, anything that has your name on it that could be sold. Gone. However, if you have nothing, you are starting from nothing, you don’t want a family farm, you don’t want to own anything, you just want to be able to travel, move, pay rent in an expensive house that isn’t yours, and just make sure that all your income pays for every bill you have each month. Then you don’t ever have to worry. If you can be a minimalist and have nothing that is valuable to you, then absolutely go for it. Otherwise, have a good paying job that could pay the bills if some bills were not being paid by your clients or business. If bills add up too quickly, you need to be able to pay them off. If you can’t pay your bills then the bank gets angry and starts coming after you. It usually takes a couple notices, but if you have missed/skipped 5 or 6 payments, then its likely everything could disappear. Bankruptcy is only on your record for 6 years, but you can play the game again. You just might go through hard times for a while
The financial hack of having an LLC
Soooo, then here comes the trick. You can place your investment company, or any startup company for this same purpose, into an LLC. This Limited Liability Company, does not come after you personal assets if you go bankrupt. All anyone can do is go after the assets within the company, and that only includes any time and personal money you put in to get the company this far. So, if the LLC goes under, can’t make it’s payments, goes bankrupt, gets sued, the company turns into nothing, you still have your family farm, and all personal assets, and you skate away for free. This is why having a personal accountant is so important, they know all the ins and outs, and can make sure you are officials an LLC, and make sure you are official if you get audited.