Cash Out Refinance: How does the repeat in BRRRR Real Estate Investing Method work?
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- Опубликовано: 20 окт 2024
- So after the two video's I did last week on BRRRR strategy or Cash Out Refi - it seemed like there was still some confusion - Hoping this video presents things in a clear manner for everyone!
What is the BRRRR real estate investing strategy? How can you use the BRRRR investing strategy to make money in real estate? This strategy may also be known as a cash out refinance.
BRRRR is a term coined by bigger pockets. It stands for:
BUY
RENOVATE
RENT
REFINANCE
REPEAT
When BRRRRing a property you purchase a distressed or underutilized property, improve it through strategic renovations, then rent it out for a higher value - now because you've improved the property through the renovations + increased rents - you can now have it reappraised and pull out the new equity you've created.
Want to read the book that inspired Matt to get into real estate investing: amzn.to/2y7aCqg
In this video (and the next one) Matt walks you through a real life example of the BRRRR investing strategy in action! And shows you exactly how to calculate a successful BRRRR investment!
Early Retirement Extreme: amzn.to/2xNamN1
Think and Grow Rich: amzn.to/2xMLVPU
earlyretirement... At Early Retirement Extreme Jacob goes indepth into the theory behind how to retire within 5 years.
Mr Money Mustache: www.mrmoneymust... and the amazing article that discusses the 4% safe withdrawal rate and the trinity study: www.mrmoneymust...
Matt McKeever
Facebook: / fieh.ca
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Website: www.fieh.ca
Matt McKeever is a CPA, CA and Real Estate Entrepreneur in London, Ontario. On this RUclips Channel Matt will walk the viewer through how to invest in real estate using such strategies as the BRRRR method while also documenting his personal experience as a real estate investor. Matt began investing in real estate at age 25 by purchasing a student rental near Fanshawe College. In 2016 he's acquired over 25 units.
As well on this channel Matt will share his personal monthly spending and discuss the strategies and tactics needed to reach financial independence (retire early) at a young age. We’ll discuss such topics as safe withdrawal rates, how to build passive income streams and how to reduce your personal consumption
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BRRRRing investment properties is the most powerful and fastest-scaling strategy I have seen to date - it's awesome that you're breaking it down so that everyone has access to the same information. The playing field has been levelled - now time to play ball!
I LOL'ed at the Hedonic Adaptation
😂😂😂- I need that subscriber and share fix now - I blame you for getting me hooked on it Graham.
can someone explain me this? So, I got 64000 in my hands but I also have a mortgage of 160,000? So, if I do that with a lot of property I would have a lot of mortgage, right? Also another question, how much equity do you have in that example? 6:08
@@manpatel6984 also there are taxes implications for the profitsfrom the rent. Probably they are incorporated.
Finally I have been able to make sense of the BRRRR method! I could not wrap my head around it until now and I'm learning a lot form the comments! Thank you!!!
Watched many videos on BRRRR - this is by far the most comprehensive through showing totals in each metric. Thank you
Love this comment Brendan!
Bro you are a freaking genius... well I know that it doesn’t take rocket science but a little explaining is all I need keep the content coming I’m subscribed 😂
thanks bro game over!!!!
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This is easily the best explained video on RUclips. I love the way you broke it down
Great video. Only thing missing is the interest when refinancing.
Hate to see this video so late as so many opportunities have been wasted. Glad that i finally understand how it works now. Thanks a lot!
Life changing advice. You do an awesome job with your videos Matt, it's a pleasure to follow you. Look forward to using this strategy with impending deals to come. Thanks for sharing!!
Thanks Isaac! Once you start implementing - let me know - I'd love to hear from people who's lives were impacted by my videos!
Thanks for the video! The only comment I would make is that single-family residential properties (even up to 4 units) won't be valued on a cap rate, but on a gross rent multiplier (GRM). Cap rates are used on bigger multi-family properties, and other commercial properties. (Im an appraiser)
Thanx dude, this clarified a lot to me, got my second property! Im following your guys BRRRR strategy but the laws are slightly different on this side the jungle pertaining to interest rates on mortgage loans, but this strategy is still so very do able!! For information, you deliver the message across to me better then the other guys and girls out there. Its going BRRRR here in South Africa but not because its cold but because we investing right!!!!
Haha that's awesome! Thanks for sharing your story! That's awesome that you're doing it in South Africa!
So amazing to see how you've grown your subscribers from 2.5K to now well over 61K 🙂 #Respect Wishing you all the best as another fellow Canadian youtuber 🙏🎬
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Hey Matt thanks for explaining the BRRRR method.
Thanks for watching Mario!
I am so happy see someone in another Canadian market having so much success with the BRRR strategy. I work with Sandy MacKay, the cofounder of the Breakthrough Real Estate Investing Podcast, I'd love to see you on it sometime to share all of this knowledge. So nice to have another resource focused on Canadian real estate investing!
Moguls in the Making,
Whats the exact name of the podcast?
I'm just north of Montreal and looking for Canadian realestate content to help guide me as I start this journey.
Moguls in the Making,
Whats the exact name of the podcast?
I'm just north of Montreal and looking for Canadian realestate content to help guide me as I start this journey.
You explained this really well. Thanks for the great points about your strategy!
Glad it was helpful!
So the key to this is buying rough, run down properties in good areas that COULD be commanding a lot more rent with a rehab
Renaldo - Yes that's the ideal situation/profile of property you want.
Good to see you have gotten more subs since than. You deserve it!
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Thanks for the great videos Matt! Very clear lesson on BRRRR method. Only question I would have, and I think it is an important one, you don't seem to have included closing costs to purchase (legal, appraisal fee, home inspection, etc.) nor the holding costs (mortgage interest, tax, insurance, utilities). This would impact your final net worth figure you came out with once refinanced. Still a great method of course, just your profit would not be quite as juicy. Thanks!
Hi Paul - There are small costs incurred - though during the refinance and initial purchase - the bank pays for appraisal, and I don't do a home inspection (inspect it myself) but on the initial purchase you're right that there is legal costs (about $1600). Just for the sake of simplicity, I focused on the big puzzle pieces. (Hard to keep these videos from ballooning from 5-15min into 20-30min videos.) Thanks for watching and for sharing your perspective!
@@CanadianRealEstateChannel
I recently inquired while refinancing my home outside of Montreal this month and if you refinance while in negotiations to renew, the bank pays for the home evaluation or appraiser but once you sign a deal with the bank and then decide to refinance, the property owner pays for the appraiser. Also the costs of cancelling a deal with a bank to refi are high. Btw, as of last year my bank does not do 35 year mortgages, 30 years max and you cannot change the amortization from a short one to a longer one anymore.
Thank you, Matt! Very helpful. Appreciate you taking the time.
Thanks - glad you got value from it
🙌🙌🙌
Thanks for another great video. I think last week the assumption was that you initially bought the property in an all-cash transaction and refinanced once before repeating the strategy. Here, you technically apply for a loan/mortgage twice. I always enjoy listening to CPAs and T-accounts :)
Haha - that's exactly what crossed my mind when I was doing this exercise - T-accounts hadn't used them in a while though. 😂 thanks for watching & commenting!
Omg this video is great. Thank you for breaking it down.
Curious to know if anyone uses the Brrrr method by purchasing the property with cash and then mortgage it after its rented?
Nice explanation! But what happens with the months of the mortgage payment you need to pay while you are working on the renovations. It is this not important for the calculations? Thanks for all the information that you share with us
Great vid Matt! I should be picking up more rentals in London this winter!
Awesome! Keep us posted if you end up buying one!
Matt McKeever I have a condo rental on chapman that I have been very happy with. It's been very hands off.
Thanks for another great knowledge filled video. Matt, thank you for this video.
Thanks!
Thank you soooooo much this maid sooo much sense!! Keep doing what you are doing!!
+Martin Ross Jr. thanks!
Ok I see one problem with this. Say you buy a house that needs work as you show in your example and as is the home would cash flow $100, after fixing it would cash flow for $300 (No refi). But now you go refi so you can get the equity, the problem is your payment would go up making the property be back at a cash flow of only $100. I know that now you can go buy another property and say the other property cash flows for another $100, now your total cash flow with 2 properties is $200. If you would have just done the original remodel without refinancing you would have a higher cash flow. So to me, it looks like maybe overtime your net worth MIGHT go up faster through the fact that having more homes would mean more assets getting inflated prices which you could than see whenever you wanted, but this is as some high risk potential.
This is a good video can you do one that shows what type of financing you use to make this happen. Are these FHA loans or are you using traditional loans or hard money?
Typically hard money to buy and rehab and then refinance into a conventional or portfolio loan.
@@RehabWithEhab hi so if you use hard money to purchase the property then once you mortgage it after its rented. Will the bank give you the total asset worth in cash?
Hi Matt I just discovered you and I am subscribing to your channel! Thanks for great info!!Ves
Thanks for the support!
Love it!
Thank you for your video Matt. It's mind blowig stuff! You mentioned in the video that there should be a market where this strategy would work within 4-5 hours drive from where we live. Do you have more information on this or could you let me know where I can find information on this? I currently live in Edmonton, but am willing to move to a bigger city (Vancouver, GTA areas) eventually. Thank you in advance for your time Matt.
this is perfect man. Anyone who cant follow this video shouldnt be worried about properties to begin with. Super simplistic and easy to understand
Thanks! Appreciate the support in the comments!
This was awesome thanks Matt!!
Thanks! Glad you got value from it!
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Incredible! Love the channel man, keep it up!
Thanks for the support!
I lowered speed to 0.75x and you were still talking fast, lol
Lol i increased to 1.25×. More like my preferred speed. Though admittedly he speaks fast generally speaking 😛
Speed it up, time is money!! Ahah
@@DoseOfVirality Absolutely!
I saw on a previous video where you did an analysis of three properties and determined one would pay you to actually live there. Can you go more in-depth for the extreme early retirement people who would like to use that method with the brr to boost their net worth and create a house hack situation for a zero cost housing situation. Especially for a focus on those who just want a place to live while they save without building an enormous rental property collection. Thank you and I subscribed. I have looked into renting a room out from others or rving it like Jacob, but this method seems way more efficient.
Yes - I'd be happy to go further indepth to house hacking - is there specific areas you want me to explain? I did how to reach financial independence ASAP which also highlighted some house hacking opportunities. Just let me know what areas you think I should dive deeper into - or do you just want more creative solutions or?
I think multi family units would be a good one since it would allows early retirement people to keep cost low while renting out the building, but maintain privacy. Also I notice you do a lot in a city area maybe in the aspect of more rural areas as well would provide another example of insight. Love your videos man I know you don’t have to make these so it’s awesome to see you trying to help people.
Solid suggestions - I originally grew up in a more rural area - it'd be fun to do a video on house hacking in a smaller town - added to my queue of videos to tackle.
Hi Matt, We were in a weird situation when returning to Toronto- we wanted a house in a particular area. The area was too expensive. Instead we ended up with a triplex. Luckily the house went up in value.
What the bRRRR system does not acknowledge is that prices may tumble. And you ignore the debt column. That net worth could evaporate in a situation where the overall market falls. And if rents fall with that, you would not be able to keep up with payments.
We are lucky- we bought at 1.2mil, it was worth as high as 2.1mil, and now has probably fallen back to 1.8. We put 250k into repairs (basement, asbestos, electricity, kitchens, bathrooms, etc.). If it fell to 1mil , a big dip that could happen with interest rates, we will not be able to afford the house as 1) rents would decrease and 2) renegotiating the mortgage at significantly higher rates could make payments and upkeep become unaffordable.
The odd thing is we wanted a home and this was the best deal we could find. A single condo or home was only a little less.
If we had re-fi'd at 2million we definitely would have taken some money out but the investment itself would go to hell...and we would likely walk away from it if prices fell 25%. If we had invested in another property with the refi proceeds, we definitely would be sunk.
Also...you live in Canada. You know what deficits all levels of government are running. There will be increasing political pressure to "make the rich pay". See the CBC today. We escaped major problems, but it is just a matter of time before taxes get ratcheted up on property to pay for "free stuff". www.cbc.ca/news/canada/toronto/toronto-budget-2018-property-taxes-1.4529258
Be careful out there!
And thanks for your vids.
Victor.
Yes, this helped clarify things although I was tracking with you in the last video. I gotta save $54k now!
+Tyler Goudeau thanks Tyler!
Hello, the part that I don't get is that you've started with a Mortgage of 96k and now you have a new Mortgage of 160K ??? How good is that. Sorry for not understanding that step. Will appreciate if you could break that down for easier understanding and the Pros on that.
Quick question do you usually renovate the property yourself or get contractors to do that work for you? Also are you going with conventional loan to get the property or a 403k rehab loan.
Incredible break down!
Thanks Shawn! Are you going to start BRRRR investment strategy?
@@CanadianRealEstateChannel I will be - I have completed 2 projects thus far, and look forward to learning more!
I think it’s important to note that BRRRR investing should be calculated conservatively as if the refinance was only going to be 70-75%LTV. Those are more common and should be used to initially find your purchase price.
Depending on how tight your liquidity is (if one or even a couple refinances going wrong over extends you) then playing things safer is wise; like a lot of things it really depends on the situation and how you approach it - I perhaps don't make clear in my videos that often when I'm discussing my ARV it's a relatively conservative number - (Only once have I not got my expected or higher appraisal) - thanks for watching and commenting! I really appreciate it.
In this scenario about how much would the payment be on the refinance and how much cash flow would there be after property taxes and insurance
Great video thanks for sharing. 👍🏻
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Another great one Matt. Should be easier for people to understand this time around.
Thanks man! I like the new avatar
GREAT STRATEGY 💲💲💲👊🏾 Matt
On CASH💲💲-OUT 💯
Great video!
One question for you. When you go to the bank to refi the property, do you take out a home owners line of credit or a Home Owners Ready Line (will have to discharge our current mortgage as we have only had it for 7 months).
Thanks!
Kristyn
This is awesome material. Thanks broski
100%
Hey Matt! Thanks for the clarification. I've had this plan in mind but it was a bit hazy, now its crystal clear. My question is: do you have as much success doing the BRRRR method with multi-family properties? Its hard to find any under valued multi-family properties in my area at least. They are all already in great condition and overpriced.
Hi Roman - thanks for watching & commenting! Actually I almost exclusively focus on BRRRRing income properties. In my market there are a TON of baby boomer landlords that are approaching retirement and are 'limping' to the finish line of retiring as a landlord. They've let their properties slowly deteriorate, have units under rented and often rented to below average tenants (they took the first people that were interested). The best deals (in my market) are found privately though not on mls or realtor.ca - are there other neighbourhoods you could look in with older multifamily homes? I mainly focus on century homes that have been subdivided into multiple units. Hope that helps and good luck in yout hunt!
Hi Matt, great video! Quick question, I am still confused where the $64,000 comes from. The bank just gives it to you?
Man you shouldn't have cut the video so many times during the edit, too hard to follow
I agree I was like wtf very hard to follow and fathom it, shit teaching style but your comment has made me see it’s also the editing style that’s shit
Thanks for the solid information! Made perfect sense to me
Yes you have explained this very very well.
Thanks Steve! Glad to hear it!
How did you get to the $64,000? Thank you for the videos btw! All the way from Austin Texas ¡
You refi after you rehab
He got it from the bank as another loan and the tenets are paying it off in the form of rent.
I agree the $64,000 isnt explained well. It would be best if he did the math explaining this in more detail
because his mortgage is worth 200,000 now. at 80%, the bank would be loaning him 160,000. the 64k added to his mortgage already of 96k = 160,000.
@@Lucask888_ thank you
One question. What exactly is the process of re-financing? I cannot be the only one who is lost on that part..thanks Matt
+Morad Al-Muhandes hi Morad - it really does depend on your exact situation/technique. I have been getting a lot of similar questions - I’ll try and have a video shortly on this topic.
Bro I didn't understand anything when I watched for the first time. It was like hard math... But watched it again and again. And now I can explain it as well. Thanks man
Glad to hear you got value!
I hear ya and I understand the strategy, thank you... but what are the risks? Bank not agreeing with your valuation is the only one I can think of. Are there others?
The easiest way to explain it is that, once you refinance, you can take out cash of the difference between 80% of your property’s value minus what you previously owned on your mortgage. Hence, 160k - 96k = 64k.
Are you refinancing in an LLC or in your name then deed the property to the LLC?
What about closing costs? Do you have to pay those twice (initial purchase and refinance)? How does that affect the numbers?
Thanks! How soon can I apply for refi, 6 months or earlier as soon as the reno is done?
2500 subs! Time flies! Doing a quick refresher on how refinancing works ;P
100%
My question is how to pay off the mortgage with the rental property AND have money left for me to spend
Great video. but, if you refinance the Monthly Mortgage goes up right? So lets say I do have someone in that property and the value from RENO shoots up. Now the Monthly Mortgage shoots up by 300 and I'm renting 350 over the mortgage. ill be making less per month, however I will have more capitol on hand to purchase more properties. am I correct? so is this BRRRR method wise? when the conditions contains tight numbers in terms of profit?
you explained how to raise money but what about how to repay that amt particularly when property's rental income is lower than your EMI
Hey Matt, I am here in Winnipeg Canada, what is your opinion on the market here for the BRRR method? Where did you learn all this? Did you take a class? I am interested in doing this.
Hey Matt, i am a big fan of your channel and am based in Edmonton looking to BRRRR. Im curious what rate your orginial 80% mortgage is. Once you refinance the property do you typically do that through the same institution as you got your initial mortgage? and what is the new rate you are at once it's refinanced? what is the typical seasoning period for an appraiser to come and allow you to re-fi in YOUR market.
Thanks!
great video and cleared the BRRRR up for me - question though on the ARV - how are you forecasting it, and what calculations are banks using to revalue the property based on rental income / refurbishments? e.g. if you increase rent by $500 does that = a certain $$$k?
This does clarify things for me. My biggest question is how can we continually refinance after about 4 mortgages. Don't the banks cut you off?
Would this not just result in you getting more and more debt from all the mortgage loans on the houses?
Yes, but if the property cash flows after the refi - you’re making money every month and paying down the new mortgage and can go buy another property and repeat the process
@mattMckeever you should do more of these videos where you simplify from your perspective and tell people to share like that bc you don't plug the share anymore
How important is that net worth? Would you get more loan or something if your net worth is high enough?
Just to make sure I'm understanding this..
Your initial investment is 54k. Once all is said and done and you re-finance, you withdraw the new equity as a loan for 64k. Therefore you have profited 10k.
How do you pay back the new higher mortgage without eating up your profits - just by selling the place?
So let's say you sell for the 200k you got appraised at - that means you pay back the 160k, and walk away with an additional 40k.
So in total; your ROI is 50k? (40k from the sale, 10k from the Re-fi)
Am I on the right track or am I missing something?
These properties still meet the 1% rule so even with the refi they still Cashflow every month - been getting a bunch of similar comments recently so I’ll do a video on it soon
I liked your video, but it just gave me the understanding on how it works, but i am still left with 100 questions haha, maybe make another one with another youtuber and make a long thorough video.
Hi Matt,
Can you explain, where the closing costs expenses are, how much the before and after rental costs would need to be and if you need to wait till end of 1st term to re-fi or pay the costs of the appraisal yourself?
Thanks.
hey Matt! super informative video, but maybe it’s just in US, but im pretty sure the banks wont increase the value of the house by $50k just because you are cash flowing. im pretty sure you only get your refi based on appraised value which has nothing to do with rental income (unless the property is > 4 units)
I can't speak on the US, but I know bigger pockets often talks about needing 6 months for seasoning before they can refinance.
Hey Matt great video! I do have a question, how do you factor in if you would do this or not? Do you look at what the new mortgage will be at the higher level and see if it will still cash flow? If it will not cash flow positive will you still do the refi to get the cash to move on to the new property. Also with the Fed starting to raise interest rates do you think the mortgage rates will go up also and effect the BRRRR strategy? Thanks once again for the super informative videos!
Hi Chris - yes ensuring it cash flows is important to me. I aim to have it between .7-1% rule after refi, which means it usually is Cashflow neutral or positive
You’re awesome Matt but this video was too confusing for me. I’m super new to this though.
How does the refinance change the original mortgage repayments?
Thanks for the summary of this strategy. Do we have any insight where attractive 1% opportunities have recently been purchased?
In my markets they can be found:
London Ontario and Windsor Ontario
Matt McKeever thanks for the reply Matt. You have a supporter/subscriber here.
What do the mortgage payments look like after refinancing will they be the same?
Hey Matt, love your channel. I find each video super informative. Just a question. How soon can you refinance once you have the house rented out? Is there a penalty or fee for refinancing?
Usually 6 months
This might be a dumb question, but i just want to have a clear understanding. But the rental income pays for the monthly mortgage payment (after refi), allowing you to break even on that am I right?
Ok, got it, crystal clear. Thanks! So essentially u made $10 more than what you put in (plus you got out your seed money of $54), so you can reinvest. (All it took was 1 purchase, 1 rehab, 1 re-rental, 2 mortgage setups and appraisals).
+Diana Martin exactly! Glad you got value from it!
But how easy is it to actually refinance with banks considering your TDI
My man! Thank you so much for making this video Matt! This is by far the best video regarding the refinance phase of the BRRRR strategy I've seen to date. It's really helped to clear up a question I've had for a while. I'll definitely be sharing this video! One question though. What kind of mortgage is your original 96K loan? I've seen other videos on the BRRRR strategy recommending that you use a short term, interest only loan during the acquisition phase. What's your opinion on that? Thank you in advance!
Thanks for the kind words! In regards to what type of loan or mortgage - it really depends on the specific situation - but you just want to optimize things so that your spending as little as possible for financing. (which means make sure you understand breaking fees if they apply to your type of mortgage). A few options people use for BRRRR's are Improvements Plus Mortgage, Open Mortgage, 6mo-1 year mortgage with an option to break with no or small penalty, standard mortgage that's registered at a higher value, that has no or minimum breaking fee etc. Hope that helps (or gives you some ideas at least to research)
Awesome! That definitely gives me some ideas of things to research and look into. Thank you so much Matt!
So you are talking about bank financing, right? and Do you have a video doing the same process with private investing. I'm trying to get my first rental property. Good info thanks
The same principals hold true with private investing/mortgages (you just need to ensure the terms of the private mortgage apply)
Great content, Matt! I am doing my first BRRRR right now.
As a part of us getting mortgage, bank ordered an appraisal for the property (including potential revenue). The appraisal came back at $800 for the main floor and $500 for the basement (total of $1300 of rental income per month). As of today the main floor is rented our for $1400 and we are planning to rent basement out for $1300.
Few question: How soon can I apply for refinancing? Considering such a big gap between appraised rent and actual rent can we expect to get a higher value of the house?
Thank you!
WOW! THAT's MASSIVE! were you expecting to get such high rents?
In regards to refinancing - it really depends on your exact situation - if you're in Canada you can likely do it whenever - but it's often easier to do it 6mo-1yr after you bought it or later. It also depends on the mortgage product you have.
@@CanadianRealEstateChannel thanks for the reply. I am in Saskatchewan Canada.
I followed your suggestions and started researching cities within 5 hour drive of my town. I am from Saskatoon but we are investigating in My Jaw right now.
@@CanadianRealEstateChannel and we didn't expect such high rents and by talking to some local people we could have asked from more :) we learn something every day.
How do you get banks to cut a mortgage note that’s worth the original value plus even money or greater on your renovations? Banks here see through upgrades and fix ups and basically quote mortgages based off assessed property taxes which don’t fluctuate much, especially due to upgrades.
When you do the cash out refi, does that have to be a 30 year fixed or it can be an ARM?
I totally understand this method, but the money you got from cash out refinancing, does that go into an account or can you only use that whole amount for the down payment on the next property? If that’s true then I’d have to raise more money for renovations correct? Or could you use half for down payment then half for renovation?
Your videos are really helpful Matt, keep up the good work! So the hardest thing about this strategy is turning a 30k reno into an 80k added value to the house, am I correct?
How do you account for closing costs? Can you break this down in more detail?
Wouldnt it be hard to get the refinancing because it's already a Second mortgage on the property? thanks matt!
I live in Ontario too, I'm beginning to invest in real estate in Nova Scotia. I'm debating between buying personally or incorporated. I'm leaning towards personally because I would need a mortgage then possibly transfer to a corporation title afterwards? How would you start?
Curious as to which route you chose as I am planning on doing the same.
Hi Matt, great video. However, what if you bought a condo that doesn’t need any “rehabbing”, thereby eliminating one “R” from the BRRR, how are you able to yield an increase on your project? In other words (using your numbers) you wouldn’t get back $64,000...wouldn’t you only be able to get back the $54,000 that you started with? So would or could the BRRR strategy still work? Thanks.
Does the bank refinance a SFH based cap rate or comps? You didn’t mention comps at all
I’m wondering if you take out a hard loan for the initial purchase what I have to get another loan for the refinancing aspect and then take the additional income from the new loan and pay off the old one?
What about interest rates is going to be stable if the market gets lower?
Great video keep it up do you know if it will ruin your credit score if you refinance that fast because I think it Shows the bank that you are short in money that you take out 2 loans that fast
I've never had an issue with credit score... each persons situation will be different though - so it may depend on where your credit score was to begin with. Thanks for watching!
Great video to clear things up with simple to follow numbers...however after you refi you will not get all 64k back in cash from the bank... please explain why you think the bank will allow you to take all your equity "cash" out
Hi Tod - as I state in the video - the bank will allow you an 80% loan to value, allowing you to access 80% of the total equity. So if you had a 96K mortgage and bank determined the property was worth 200K they would allow you to access the 64K (ie 160K total). There may be small fees that reduce the total, but for simplicity sake, you do get access to the 64K in this example. This is an investing strategy I, as well as many other investors I know, use on a regular basis - and accessing 80% of the equity is a very common occurrence. Hope that helps
Hi Matt! I just wanted to say I love your videos! I just had a question with regards to the refi process.
What type of mortgage do you recommend using for the BRRRR strategy?
I was thinking a “mortgage plus improvements” mortgage, but when I talked with my broker, he indicated no matter what type of mortgage you get, you’re going to pay penalties once you refi the property to take out the equity to buy another property because you’re essentially breaking the term whether it be variable or fixed?Is there ways to avoid paying the penalties to maximizing the equity profits? And what types of mortgages do you use and what terms on BRRR properties?
Thanks so much for your videos, they are so incredibly inspiring!
Hi Mitchell! I use the improvements plus mortgage (sometimes) and incur no costs/breaking fees. Alternatively your bank can register the mortgage at a higher amount so that in the future if you wish to refi you will not incur any legal fees etc. There are a lot of nuances to all this - but in general there should be strategies to avoid any breaking fees etc or to get the bank to waive them. If you ask the question multiple times and keep getting the same answer, either change the people your asking the question to, or change the way you're framing the question. Hope that helps and thanks for watching!
What lender do you use? in Quebec you can only do Mortagage+ reno on owner occupied properties i believe
Scotiabank
are you assuming that you can keep your DTI levels high enough to keep doing these rifi’s? in the states. you cannot refi a property unless you’ve owned it for 6 months. so this takes forever!