You're a hard asset to me for just providing me with this education (wisdom) KEN , YES YOUR KNOWLEDGE DOES INSPIRE ME & FOR THAT I'AM GRATEFUL & A FOLLOWER OF YOUR CONTENT.🤝☮🙏
What is cool about that is this does not include the debt destruction of that principle payment the renter is paying down and the depreciation that is seen each year. In terms of REAL cash flow long-term, it's more like a 16-18% ROI.
This is Excellent! Prior to the price boom, I bought a few fully renovated small Multifamily income properties off of a general contractor that I met in Landlord and Tenant Board court. He just wanted to renovat properties and sell them. And I wanted to buy fully renovated income properties and rent them out. This worked out well for the both of us! 🇨🇦
Thanks for posting, enjoyed video. Approx 3 min in, Ken said "this" was removed/ out of equation... If you watched, "this" proves to be "rent," a listener does not receive the same point in a timely fashion... Just makes me understand more readily what you're teaching me... Or you might take the video splash of the word "rent" out till later. Enjoyed video. Cheers, SV Good Karma
ITS NEVER TOO LATE TO START PREPARING YOURSELF FOR A BETTER AND MORE FINANCIALLY SAFE FUTURE, THE TIME TO BEGIN IS NOW. START SOMEWHERE START ANYWHERE!
Nice video, and quite informative! Thanks for sharing! I imagine 1 caveat, is that the $2,000 monthly loan cost most likely only represents principal and interest? If we factor in property tax, maintenance and insurance, our ROI will be reduced accordingly.
Ken, Robert kiyosaki, Donald trump, Jeff beside, elon musk, Steve Jobs, Dave Ramsey, and warren buffet all have inspired me to work my best to become wealthy. My goal is to possibly become a high end millionaire if not a billionaire, I have listened to every video Robert has made on the rich dad radio show and have read his book rich dad poor dad. I feel I’m ready to start and have the confidence but still not sure on how to go about starting being I have no money and how to use the “ how do I get this free” strategy Robert made. Any advice would be amazing and Ken your videos are amazing and very informational, hopefully soon after I move I can start my dreams and get everything going.
Watch out if using credit cards for short term capital during rehab. If you use to much of your lines of credit it will drop your credit score before you refinance and force you into a higher rate end financing. Didn't see that one coming.
This is really good because the market is so expensive and that property doesn't come close to the 1% rule. I'd love to see your take on the 1% rule in a market where houses are selling for $600k and rents are $2500/mo
Thank you Ken, I'm taking as much knowledge as possible before I apply in Peru where I am, great video, great book ABC of real state currently reading it, regards from Machu Picchu.
All sounds great, please take next step on the long term rental, for cash flow purposes, the unit will turn over, will need reserves to keep payment current,, need reserves to cover material and labor costs,,,return of deposits, other repairs and maintenance, 1,000 cash flow a month, it may take 800 to 1000 to install new stove, fridge, etc, Also, your rent is not guaranteed, you have to collect it, know your state laws, if they fsvor the owner or the renter. Landlords who think this monthky cash flow can be used for cost of living usually end up with deferred maintenance and in trouble. And the process starts over again.
The next steps would be to take the capital that you didn’t deploy into the property (because you aren’t locking up all of your capital in a brrrr) and use that capital to put in reserves for the aforementioned costs you just discussed. Brrrr is going to be better for people with lower capital that can’t afford to buy 1 property a year for 10 years. If you use other peoples money right, you can have someone fund both the purchase price and rehab and then the home ends up being turn key. Thus you get a cash flowing, low maintenance property and get most of your capital back to keep for the unexpected expenses
RE is like saving account not for getting rich fast. 3 market cycle will build size-able equity. 8 figures going to 9. Every Market cycle One get a little more aggressive from being seasoned.
Good morning Ken, absolutely love your videos but I’m confused on your deal sorry. Ok so you bought it cash meaning with your money? Or other peoples money like HML? If you paid cash, then did you get a HML to give you the $330k to remodel? Or to refinance it after you paid cash to alleviate your money? Then when it got some equity you refinanced it with a long term loan to pay them back so you can get the property on a dept not leaving it with your cash stuck in it. Am I understanding it right? I’m about to start buying my first deal so trying to learn and understand all your deals and techniques. Thank you again
Excellent video thank you. I have a question . Do you buy those properties under a LLC ? Then refinance that property once it is under LLC ? Thank you so much as always
Thanks Ken. Just commenting about the 70% LTV & fixed rate refinance. This kind of financing would not make the numbers work on a deal I have going currently so my plan is to do a commercial loan with 80% LTV on the cashout refi. Once I have the opportunity I will refinance in the future to a long-term fixed rate since I know I’ll be paying a slightly higher rate that is also variable in the meantime, but my amortization period is shorter as well & the property still cash flows nicely so it’s a better option compared to a fixed rate with 70% LTV. I’m also able to get the loan in my LLC this way without the risk of triggering a due on sale clause
My biggest criticism of the BRRRR method is the minimal cash flow it generates -- by design. Sure, you might end up using this repeated-leverage refinancing plan to secure five BRRRR homes with an overall investment of $XXX,XXX dollars, but if they cash flow only $200 apiece and the HVAC blows up or the tenant's dog trashes the carpet, you've just burned through 12 months of rental income. I'd much rather take the same $XXX,XXX and spread it over fewer homes, which means fewer headaches, fewer tenants, less mortgage debt, and way more cash flow. This way, when one of the homes needs a new roof (I just had one installed yesterday), I have enough rent money to do it.
The real advantage of BRRRR is that as long as we're being pushed into an inflationary environment, being levered is a bigger win long term. Suppose you had interest only loans on 5 houses, vs fully owning 1 house. Even with no principal paydown, in 5 years the overall purchasing power gained because of inflation is much greater since the levered money is static, but the dollars are worth less. Your purchasing power in the single home only goes up as much as the asset inflation. Example: Houses bought in 2017 @ $200,000 using government CPI numbers. 1 house all cash, you would have $229,396 in purchasing power (plus any rental income kept). 5 houses with $40,000 equity, $160,000 loans. Total purchasing power is 5 x (229,396 - 160,000) = $346,980 (plus any rental income kept) Unless that difference in rental income minus expenses can match the extra $117,584 in purchasing power, the BRRRR method is the faster way to wealth. That being said, if the extra headaches involved in those 4 houses aren't worth $117K to you, then stick with the one house method.
This strategy is made to solve not having capital, if the rental income isn't worth then you should have a decent amount of equity. Just sell the house. It's not for everybody
@@coopcoo , I agree but it also depend on the timing of your purchase. In 2009, I told my friend to keep just one rather than flipping. He bought a penthouse in South Miami beach for 270k that was once purchased for 1,7 million. He sold for $350k at a quick profit.
Where did the 480k come from to begin with in the long term strategy? Where is the 150k coming from to repeat? Where is a 480k rehabbed house renting for 3k?
You are not getting an 8% CoC return. You DID NOT factor in 10% property management, Monthly Insurance, Monthly Yaxes and another 10% for vacancy & maintenance costs. PLEASE EXPLAIN where I'm wrong Ken??
What? You put 480k into the deal so you got 150k cash? I repeat this part but still don't understand it. Do you mean you bought it for 330k? Someone explain please?
So Ken, in your long term scenario, you now have 330K to invest in another property? If you want to repeat, you have to raise another 150K somehow to do the same thing again right? Can you explain the next couple steps in this strategy? Thanks!
This is why it doesn't pay as well to be in cyclical markets like CA and NY. The price to rent ratio in those places is usually around 0.5% rather than the 1% you're likely to find in linear markets. Go to the midwest and you'll find 480K houses that rent for over 3K everywhere.
Way to break it down. But not all peaches n cream, property management is one of the most miserable jobs in the world if you do it yourself and hard to find or afford someone good to do it for you.Real talk.
Property management is miserable that why you don’t do it yourself and just hire it out. Pay someone 10% of your rent (that’s not that expense and worth every dollar). It’s not hard to find good people when you take time to interview them. Stop making excuses. Sounds like you’d be better just buying a REIT
The other issue is that you have to hire the right property management company and you will make sure they are on top of every and timelines - I know - I know The people on social media have no issues , delegating task to xyz and making millions as a 100% passive investor 🥲
Didnt you end up paying almost twice out of pocket to make 12k in a year? Meanwhile, the flipper made more than double with half the cost in probably the same timeframe to repair and add value. I do not see how you are making more money/time in
flipping is a headache, renting is also a headache but no where near flipping. you must be able to do this time and time again, create proper relationships with people such as your contractor, takes LOTS of time , and you pay lots of taxes. In renting, you can be cash flowing on the first week of purchasing, you can hire a property manager to take care of the headaches, you don’t pay taxes. You might make money flipping short term but that 8% return on rentals (if done right) is a return for the rest of your life, every month! Not only that but those percentages differ, some properties can give you much more.
Love these straight forward clear explanations and strategies!
So true. Be careful everyone. Build wealth
You're a hard asset to me for just providing me with this education (wisdom) KEN , YES YOUR KNOWLEDGE DOES INSPIRE ME & FOR THAT I'AM GRATEFUL & A FOLLOWER OF YOUR CONTENT.🤝☮🙏
Love This Video!!!❤
Fantastic video
I am going to rewatch this Multiple Times.. Thank You!
Great vid Kenny
Gucci Brrrrr
Thanks, Ken
What is cool about that is this does not include the debt destruction of that principle payment the renter is paying down and the depreciation that is seen each year. In terms of REAL cash flow long-term, it's more like a 16-18% ROI.
I love these short, and sweet videos!
Super interesting love seein the actual numbers
This is good material! Thanks for posting… and have a lovely weekend.
This is Excellent! Prior to the price boom, I bought a few fully renovated small Multifamily income properties off of a general contractor that I met in Landlord and Tenant Board court. He just wanted to renovat properties and sell them. And I wanted to buy fully renovated income properties and rent them out. This worked out well for the both of us! 🇨🇦
Teach me
Great video, Love your energy Ken!!!!
On point as usual.
awesome video!
Awesome video I'm doing a refi now so I can buy more property and this video was right on time with things I need to know. Thank you
Sounds nice can't wait to try it out... Thank you
Thanks for posting, enjoyed video. Approx 3 min in, Ken said "this" was removed/ out of equation... If you watched, "this" proves to be "rent," a listener does not receive the same point in a timely fashion... Just makes me understand more readily what you're teaching me... Or you might take the video splash of the word "rent" out till later. Enjoyed video.
Cheers, SV Good Karma
Good video Homie!!!
Ty for all these tips my friend
great vid kenny my boi
ITS NEVER TOO LATE TO START PREPARING YOURSELF FOR A BETTER AND MORE FINANCIALLY SAFE FUTURE, THE TIME TO BEGIN IS NOW. START SOMEWHERE START ANYWHERE!
Nice video, and quite informative! Thanks for sharing! I imagine 1 caveat, is that the $2,000 monthly loan cost most likely only represents principal and interest? If we factor in property tax, maintenance and insurance, our ROI will be reduced accordingly.
He said the loan costs were about 1500 with 500 in other expenses.
Yep
Ken, Robert kiyosaki, Donald trump, Jeff beside, elon musk, Steve Jobs, Dave Ramsey, and warren buffet all have inspired me to work my best to become wealthy. My goal is to possibly become a high end millionaire if not a billionaire, I have listened to every video Robert has made on the rich dad radio show and have read his book rich dad poor dad. I feel I’m ready to start and have the confidence but still not sure on how to go about starting being I have no money and how to use the “ how do I get this free” strategy Robert made. Any advice would be amazing and Ken your videos are amazing and very informational, hopefully soon after I move I can start my dreams and get everything going.
Appreciate the video and offering insight on the long-term game. I also live in AZ. Where is a 480k home renting for $3,000/m lol
Watch out if using credit cards for short term capital during rehab. If you use to much of your lines of credit it will drop your credit score before you refinance and force you into a higher rate end financing. Didn't see that one coming.
This is really good because the market is so expensive and that property doesn't come close to the 1% rule. I'd love to see your take on the 1% rule in a market where houses are selling for $600k and rents are $2500/mo
My guess is that his answer would be, "Find a different market." It's never been easier to buy out of state.
Thank you 🙏
Thank you Ken, I'm taking as much knowledge as possible before I apply in Peru where I am, great video, great book ABC of real state currently reading it, regards from Machu Picchu.
How much do you have to pay off before you can buy another property??
did you use a HELOC to pull out the 330,00?
I see that you control the asset now for only 150k in, but your example seemed to state that you were making more money/same time frame
All sounds great, please take next step on the long term rental, for cash flow purposes, the unit will turn over, will need reserves to keep payment current,, need reserves to cover material and labor costs,,,return of deposits, other repairs and maintenance, 1,000 cash flow a month, it may take 800 to 1000 to install new stove, fridge, etc,
Also, your rent is not guaranteed, you have to collect it, know your state laws, if they fsvor the owner or the renter.
Landlords who think this monthky cash flow can be used for cost of living usually end up with deferred maintenance and in trouble. And the process starts over again.
The next steps would be to take the capital that you didn’t deploy into the property (because you aren’t locking up all of your capital in a brrrr) and use that capital to put in reserves for the aforementioned costs you just discussed. Brrrr is going to be better for people with lower capital that can’t afford to buy 1 property a year for 10 years. If you use other peoples money right, you can have someone fund both the purchase price and rehab and then the home ends up being turn key. Thus you get a cash flowing, low maintenance property and get most of your capital back to keep for the unexpected expenses
FUR - eff’d up rental
RE is like saving account not for getting rich fast.
3 market cycle will build size-able equity. 8 figures going to 9.
Every Market cycle One get a little more aggressive from being seasoned.
I tell all my friends that it's a "get rich, slow" process. Absolutely true.
Good morning Ken, absolutely love your videos but I’m confused on your deal sorry. Ok so you bought it cash meaning with your money? Or other peoples money like HML? If you paid cash, then did you get a HML to give you the $330k to remodel? Or to refinance it after you paid cash to alleviate your money? Then when it got some equity you refinanced it with a long term loan to pay them back so you can get the property on a dept not leaving it with your cash stuck in it. Am I understanding it right? I’m about to start buying my first deal so trying to learn and understand all your deals and techniques. Thank you again
Haven't found a good deal yet. Real estate in my area is through the roof.
I am confused. Ken is comparing Buy Rehab Sell, which is a flip model and NOT BRRR with his Buy and Hold model. Am I missing something???
Excellent video thank you. I have a question . Do you buy those properties under a LLC ? Then refinance that property once it is under LLC ? Thank you so much as always
Thanks Ken. Just commenting about the 70% LTV & fixed rate refinance. This kind of financing would not make the numbers work on a deal I have going currently so my plan is to do a commercial loan with 80% LTV on the cashout refi. Once I have the opportunity I will refinance in the future to a long-term fixed rate since I know I’ll be paying a slightly higher rate that is also variable in the meantime, but my amortization period is shorter as well & the property still cash flows nicely so it’s a better option compared to a fixed rate with 70% LTV. I’m also able to get the loan in my LLC this way without the risk of triggering a due on sale clause
How'd it go?
Sir I got to you through Robert sir, he was 100% accurate your the master of real estate , thank you for videos
My biggest criticism of the BRRRR method is the minimal cash flow it generates -- by design. Sure, you might end up using this repeated-leverage refinancing plan to secure five BRRRR homes with an overall investment of $XXX,XXX dollars, but if they cash flow only $200 apiece and the HVAC blows up or the tenant's dog trashes the carpet, you've just burned through 12 months of rental income.
I'd much rather take the same $XXX,XXX and spread it over fewer homes, which means fewer headaches, fewer tenants, less mortgage debt, and way more cash flow. This way, when one of the homes needs a new roof (I just had one installed yesterday), I have enough rent money to do it.
Steve, exactly. I think I am more extreme, I get them fully paid one by one before over leveraging.
The real advantage of BRRRR is that as long as we're being pushed into an inflationary environment, being levered is a bigger win long term. Suppose you had interest only loans on 5 houses, vs fully owning 1 house. Even with no principal paydown, in 5 years the overall purchasing power gained because of inflation is much greater since the levered money is static, but the dollars are worth less. Your purchasing power in the single home only goes up as much as the asset inflation.
Example: Houses bought in 2017 @ $200,000 using government CPI numbers.
1 house all cash, you would have $229,396 in purchasing power (plus any rental income kept).
5 houses with $40,000 equity, $160,000 loans. Total purchasing power is 5 x (229,396 - 160,000) = $346,980 (plus any rental income kept)
Unless that difference in rental income minus expenses can match the extra $117,584 in purchasing power, the BRRRR method is the faster way to wealth.
That being said, if the extra headaches involved in those 4 houses aren't worth $117K to you, then stick with the one house method.
@@jbrandonporter ,My age and need does not warrant risk and headache.
This strategy is made to solve not having capital, if the rental income isn't worth then you should have a decent amount of equity. Just sell the house. It's not for everybody
@@coopcoo , I agree but it also depend on the timing of your purchase. In 2009, I told my friend to keep just one rather than flipping. He bought a penthouse in South Miami beach for 270k that was once purchased for 1,7 million. He sold for $350k at a quick profit.
Where did the 480k come from to begin with in the long term strategy? Where is the 150k coming from to repeat? Where is a 480k rehabbed house renting for 3k?
Info was too fast for me to catch on 😏
You are not getting an 8% CoC return. You DID NOT factor in 10% property management, Monthly Insurance, Monthly Yaxes and another 10% for vacancy & maintenance costs. PLEASE EXPLAIN where I'm wrong Ken??
Where is the best place to get other people's money.
Why not buy a property rehab it then rent it? You’ll have some extra 26k? No?
What? You put 480k into the deal so you got 150k cash? I repeat this part but still don't understand it. Do you mean you bought it for 330k? Someone explain please?
An 8% ROI through the BRRRR method? That seems kind of low for BRRRR. Am I wrong about that?
8% wasn’t on the brrrr. that 8% return was on a long term investment.
So Ken, in your long term scenario, you now have 330K to invest in another property? If you want to repeat, you have to raise another 150K somehow to do the same thing again right? Can you explain the next couple steps in this strategy? Thanks!
I have never seen a property that rents for 3k but only costs 480k to purchase…that’s a perfect scenario
This is why it doesn't pay as well to be in cyclical markets like CA and NY. The price to rent ratio in those places is usually around 0.5% rather than the 1% you're likely to find in linear markets. Go to the midwest and you'll find 480K houses that rent for over 3K everywhere.
@@jbrandonporter that’s still well below 1%
This begs the question: why the seller didn’t just rehab and rent it out. $3000 is very solid rent.
Ignorance
Way to break it down. But not all peaches n cream, property management is one of the most miserable jobs in the world if you do it yourself and hard to find or afford someone good to do it for you.Real talk.
This is where building the team, comes in and helps you both become successful brother. Networking is key
Property management is miserable that why you don’t do it yourself and just hire it out. Pay someone 10% of your rent (that’s not that expense and worth every dollar). It’s not hard to find good people when you take time to interview them. Stop making excuses. Sounds like you’d be better just buying a REIT
The other issue is that you have to hire the right property management company and you will make sure they are on top of every and timelines -
I know - I know
The people on social media have no issues , delegating task to xyz and making millions as a 100% passive investor 🥲
Who's he yelling at?!
Didnt you end up paying almost twice out of pocket to make 12k in a year? Meanwhile, the flipper made more than double with half the cost in probably the same timeframe to repair and add value. I do not see how you are making more money/time in
flipping is a headache, renting is also a headache but no where near flipping. you must be able to do this time and time again, create proper relationships with people such as your contractor, takes LOTS of time , and you pay lots of taxes. In renting, you can be cash flowing on the first week of purchasing, you can hire a property manager to take care of the headaches, you don’t pay taxes. You might make money flipping short term but that 8% return on rentals (if done right) is a return for the rest of your life, every month! Not only that but those percentages differ, some properties can give you much more.
It’s a long term strategy with better tax advantages
BRRRR: buy.. leave people homeless and crash the market.. repeat until U.S is BK
I wish you didn’t feel like you had to shout to communicate normal tone of voice would be much better for me personally thanks
SUCCESS. Fratelo.