Real Life Example of BRRRR Real Estate Investing Method in Canada
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- Опубликовано: 31 июл 2024
- 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!
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Mr Money Mustache: www.mrmoneymustache.com/ and the amazing article that discusses the 4% safe withdrawal rate and the trinity study: www.mrmoneymustache.com/2012/0...
Matt McKeever
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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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Fabulous, and inspiring! I'm going to start watching the rest of your videos. Thank you!
Definitely recommend watching the rest of this series, so many valuable takeaways!
Great information. The key is executing and taking action. Too many people watch and do little to nothing with the information.
I can not believe that i missed this video 3 years ago. Otherwise i could have been retired now. Now the time to take me to their is longer though still doable. Thank you Matt!
Thanks for the support
Can you tell me what he said at 6:45?
Love your videos, you brake it down so even someone like me who has been stuck in the rat race for the last 15 years can make sense of it, it seems like every time I have a question you either have a video answering it or it’s in the comments. Keep pumping out these videos please.
Thanks for the kind words! It’s comments like these that encourage/fuel is to keep cranking out the videos!
Wow man, I’ve been watching many vids and I couldn’t understand , YOU JUST MADE ME UNDERSTAND!
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Fantastic video! Thank you so much! It is amazing to see this and I appreciate you taking the time to make this video. Cheers
Thanks Riun! Comments like yours mean A LOT to me and are a big part of why I keep making videos!
Awesome video Matt! This is a great plan thanks for sharing!
Thanks! Appreciate the comment and kind words!
Thanks for making these vids I’m so excited I found this!
Thanks Cody!
Amazing content, thank you for sharing sir! Outstanding value.
Thanks for the comment!
Matt, Your videos are pure gold! I have a co-worker that has 14 properties in London using a similar method. You answered every question I had and gave me a huge list of learning resources. Thank you for taking the time to make them!!
Thanks Scott! Your comment made my day! ❤
You and your co-worker should come out to LDNonFIRE sometime if you haven't before: facebook.com/groups/LDNonFIRE/
Looks interesting. I'm going to try and stop by. Thanks!
Great video! This really opened my perspective on real estate investing and it it's helping to motivate me a lot to buy my first property soon! 💰
That’s awesome!
you answered all of my questions in less then 10 minutes... AMAZING !!!
Ahaha! Matt's channel has that effect! Loved this comment
Can you tell me what he said at 6:45?
@@faisalbilal3840😅
This is the first video I’ve watched about to dive deeper into the plan
This series definitely has some insights which could go a long way!
Great video! Thanks for making it focused on the Canadian market 🇨🇦
Thanks! Glad to hear you got value from it!
works exactly the same in the US; even the 80% LTV refi from the banks - which applies to LLC's as well.
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Oh no, I'm 7 hours late to the party! Matt great content again. I cant wait to come back out to London.
Thanks Noel!
Lots of meet ups. For example tonight at the palasad at 8:30!
Great explanation! Thank you Matt!
100%
Seems like a good strategy. Good work!
Hey this is a great video. Im just starting off wholesaling however I haven’t found a channel to explain how to take It to the next level! I will share !
Thanks for the support! What market are you looking at wholesaling in?
Great information, this is a powerful real estate investing strategy interesting to see how you added value to the property. I have a similar video involving a flip property that i turned into a rental. Thanks for sharing this deal with us.
Thank you for doing ‘these videos ‘ !!
100%
Good job, I love it. Subscribed
Thanks!
Good video, I subbed. Thanks for this!
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Thanks for the videos. Really ingenious. Not my path to wealth but great to know.
Thanks Joshua! Appreciate you watching - what's your current path to wealth look like? (I'm always looking to learn and add new streams to my income).
Wow am I ever happy I came across this channel!
Thanks for the support!
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Such a good video, keep it coming.
Thanks Michael for the support!
Absolutely!
Absolutely brilliant!
Thank you :) Finally figured it out.
Absolutely, so much info packed into this series!
Love it, from Montreal
New subscriber, wish I found you when I was a teenager lol (25 now bought my first duplex at 23) really interesting strategy that I will consider using in the future
Thanks for watching Donny! That's awesome that you bought your first duplex at 23! I didn't get started in real estate until I was 25! You're already ahead of me 😀
The seccond you mentioned Jeff Wybo I knew you were in London Ontario too & this is the first video of yours I've watched.
Happy to have you on board! Matt's content is killer!
Liked and subscribed before you could even ask me too. Great info man.
I like the intro very informative!!!
Thanks Carlos - glad you found it useful!
Very powerful info I want to get into the real estate game
Thanks Juan!
Keep us posted on your first place!
This was very informative n I will put this to use this year!! I want to get 1-4 properties this year
That's awesome to hear Ron! Many great insights to pull from this video
important to note in case it isn't obvious, your previous cash flow will decrease due to the higher mortgage post refinance, so you use the equity from the refinance to repeat/reinvest in new property thus generate a new stream of cashflow
I like, subscribed and shared.
Thanks! Really appreciate it - particularly the sharing! Sharing is Caring after all!
That's a pretty good strategy. The main challenge would be finding a good value property in your area.
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Great vid Matt! Would you be covering topics for selecting home insurance strategy/ tips in the future?
I'd never thought of doing so - but yeah, it could easily be a subject I could cover in the future. (Though might be a few weeks - trying to maximize the attention/eyeballs I'm getting while I still have the Graham effect in full force - and I'm not sure home insurance would make for a click baity thumbnail.) Thanks for watching!
Thanks Matt this all makes sense and is a great break down for beginners!!!! My question is do you recommend get someone to get someone to manage the property is you live out of town. Also these deals you get in the houses where do you find them? Any realtor?
Thank you for all tips and ideas! (I am always listening not really watching your videos cause i am doing 100 other things ) and all of a sadden on
Min 9:34 hahhahahhahaaa 👍
Hahaha - glad you enjoyed that.
this is amazing
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Hey Matt, great video! Just subscribed and liked the video. One question, do you have to pay interest on the $9,400 cash difference? And even if you do, do you then use that money toward your next property down payment?
Matt very well done on the house and this video! A couple of questions though, very first step, buying. Did you do this through hard money or your reserve? Next, that $9k left over from the mortgage, is that really cash or is it tied up within your lender? Can you use that for a down payment on another property? Also a suggestion for your videos, every time you cut scened you popped up in my face and startled me lol. I would try to ease back a little before starting to record again. Bless you!
Awesome vid Matt.. I think youre the only one that goes this deep into the details, it builds a whole ton of trust within your audience when you open up like this.
Question: I havent seen any vids of you talking about this, but what is the benifit of buying with an LLC? I see a lot of posters on Biggerpockets suggestig to buy with an LLC but I dont really understand the benifit?
+Captn Han1k the benefits of buying in a Corp or llc is really depends on the region your buying in - maybe I’ll tackle it in a future video! Thanks for watching!
Thank you Matt, awesome information. How can I get your book?
Excellent video 👌
Thanks for the support!
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I am just curious if at the first step when you BUY...are you using your own funds? or a line of credit? Great video!
Dammit Matt - quit telling people all of our secrets!! I'm up to 8 homes now :-)
im on 17, plenty of room to grow, ppl die,get divorced,go underwater everyday
How can you charge someone to use the basement? What a thief
Can i get a 95-96.5% LTV cash out Re finance because i have a FHA loan?? please help
We need to talk Michael
I went all in on sweat equity and about to buy property #2. How do you guys offset your own apartment? Do you live in one of the properties you own or pay rent somewhere?
Hey matt, great video. One question, how many houses does the bank let you finance?
This is my first video ,I love the content! I'm 22 just graduated university and currently on the job hunt, but I want to start real estate investing... My question is should I be saving money for a property or real estate license ? I just want to start applying this knowledge. Anyways keep up the good work guys !
PROPERTY always.
Hey Matt, great video. So essentially to repeat the process I need to build up capital again but this time I start with 10k in pocket?
Matt love your videos...quick question tho, is it easier to refinance these properties if purchased for cash? And how many properties can u refinance?
Hi Matt! Love your videos. Do you use private lending for your initial purchase or do you get a mortgage? If you start with a mortgage, do you do the refinance with the same financial institution? are you charged early cancellation fees? Thanks!
Hi Matt, how do you find distressed property? Thank you.
Hello Matt, great video as always. I do sincerely get a great deal of value from your videos. Keep it up! Anyway, I’ve been doing research on the BRRRR strategy for some time now and I do think it is the best investment strategy for me to pursue in regards to real estate investing. However, there is still one aspect of the strategy I’m a bit confused about. So, I understand that in this example your acquisition and reno. costs came out to be $150,524.28. Which is approximately 75% of your ARV of $200,000. You then refinanced for 80% ARV to get $160,000 back from your lender. You used that to pay off your principal acquisition and renovation costs and ended up with a surplus of $9,475.72. As well as $40,000 in equity that you built into the property. Now, where I’m confused is, if you used the majority of the money you received via the refi to payoff your initial expenses to get into the property, then how and when does the “REPEAT” part of the strategy take effect? Sure, it’s nice to pocket $9,475.72 after the fact, but that’s not going to give you much capital to reinvest in another property in order to repeat the process. I thought the objective was to refinance and use the majority of that money to purchase the next deal.
I’m sure I’m just looking at it the wrong way or missing something. If you, or anyone else who sees this comment, could please clarify I would greatly appreciate it. Perhaps you could even do a video that focuses exclusively on the “REPEAT” stage. I think that would be very helpful for a lot of people. Thank you very much!
Hi Anthony, So let me lay out the example in a slightly different way - and let see if that clears up any confusion. (I'm going to use round numbers, cause I'm lazy).
So Buy a house for 120K, 80% mortgage (96K mortgage) on it, so I need 24K cash to buy it. Then I spend 30K on holding, closing and renovation costs. So my total cash needed was 54K, so before I even start this project - I need 54K. Then I refinance it at 200K, the bank gives me an 80% new mortgage for 160K. So I now have 160K -> I pay off the old mortgage of 96K and have 64K cash left. (When I started this process I had 54K) so I now have 10K more in cash than I started with - I then take this money and go buy another property (that's the repeat). Hope that clarified things - but I may do another video on the subject - and if I do - I'll try to make things clearer. Thanks for watching!
Okay, I see what you're saying. Thank you so much for clarifying! Originally I was thinking that you bought the property outright in cash. But you actually financed it with a short term loan and used a 25% downpayment to get into the property. Would that be an interest only loan for the initial 96K mortgage you used during the acquisition phase?
Okay, I see what you're saying. Thank you so much for clarifying! Originally I was thinking that you bought the property outright in cash. But you actually financed it with a short term loan and used a 25% downpayment to get into the property. Would that be an interest only loan for the initial 96K mortgage you used during the acquisition phase?
Hi Matt: I am from Canada and binge-watching your videos. Curious what the cash flow was on this deal after the refi
Watching from New York, curious about how it goes north of the boarder.
Also curious to know what the cash flow was and can this be done in B.C.?
So in buying my first home if i want to buy an investment property and live in one of the units will i loose out on the first time home buyers rebate?
A lot of banks here in the US have a 6-12 month seasoning period before you can refinance
Did you factor in the cost of the mortgage over the renovation period or was that included in the given budget ?
Hey Matt, I'm curious. At what point do you convert to debt pay down? Have you decided on a net worth, or your age at a certain point? I'm curious when you will change from acquiring properties to debt pay down. Great content! 🙌
Hey Matt, thanks for the info. Great vid for us Canadians! Bit of a silly question, but say you want to focus on the 'repeat' part. If you have $10k cash, that won't get us anywhere close to another down payment . Is there a way to access that $40k equity or how do you keep going on this? Thx!
Hey Matt! Love the video...when you say this is tax free....is this because you're not selling but holding to rent out? Forgive me for such a newbie question, I've recently purchased a duplex and am looking at doing another deal soon on single family houses, going to try and stick to the 1% rule!!!
What is the cash flow on this situation. the new mortgage vs collecting in rent. Could of added that to how you made out as well on this deal
Do you get a tenant first, and then get it appraised? How do you get it appraised when a tenant is living there
When you first financed this.house didn't you need to pay closing costs? Also for the refi isn't thier a closing cost? Thats where im some what lost
I've been watching your videos for a couple of weeks now. I'm trying to use your BRRRR method within the Fraser valley (my area). I've been through many properties and am unable to find one that makes the numbers really work. Are there any creative ideas or certain property types that you recommend I should be focusing looking at to generate any sort of cash flow in this area or should I be looking outside my area at this point? Thanks in advance. Enjoying the videos.
Do you recommend doing this while owning your own home mortgage? Just worried about the risk.
What would make more sense? to washout refinance when you have the opportunity to OR obtain a Home Equity Line Of Credit (HELOC) ?? thank you
So helpful. Thank you. Can I get a phone call for sharing lol
Hi, what was your initial loan value? Did it cover the cost of property plus rehab or were you out of pocket for that? Thanks!!
I am new to this. With all these mortgages, how does that affect on personal credit score?
Basically an infinite return, also when you get loans on your investments what types of loans do you normally Prefer and do you do interest only loans?
Can someone or Matt tell me if he got two mortgages on the house. Did the second refinance mortgage replace the first. and if so did Matt pay for legal fees twice? Once to buy and once to refinance?
What bank are you using to refi? Do you typically talk to the bank before to get pre-approved for a refi before purchasing the house?
What did you put down on the property and how did you get the money for the repairs?
Doesn't Refinancing at a higher price, also Increase the monthly Mortgage? could this cause problems in terms of cashflow? any tips or clarifications on this? Thanks Matt
What about refinance closing costs and the higher mortgage payment after refinance?
What if the value of the property goes down though? In BC, it’s happening because of the real estate bubble.
Hi Matt, I'm new in business. Based on your experience, where the most attractive aries in Winnipeg for BRRRR ?
Nice demo
Thanks for the visit
@@CanadianRealEstateChannel Does it work the same way in USA as well ?
Hey, do you do seminars ? I’m from Toronto Ontario and I would pay to get coached
Can you do this for your first time if your using a convential Loan ? With renovation and everything Or would you need personal capital for the renovations?
Matt, what's the difference in the refinance % (80% in canada) that the bank will give you towards the value in the US?
How did you determine what your rent amount was going to be monthly?
VERY good video thank you. However, why not finance the original purchase rather than do it post renovation etc?
A one on one call would be amazing I shared to my social media for ya great content
Is the monthly rental income taxed? If so, at what rate? I would like to get an idea of the cashflow from this example.
What were your expenses on the property? utilities, repairs, cap ex, lawn care, snow removal, etc?
Great video. The only thing you're missing is the closing costs for the refinance. Am i seeing this wrong?
So how did you get enough of a grace period in paying back the 28k in reno costs for you to get the renovations done and the place refinanced?
hello can i ask how about the penalty in refinance?do you get fixed or variable to do brrrr
In order to apply brrrr must you buy via the mortgage route or cash purchase?
I am a Broker. You forgot to mention by refinancing you got your initial cash down back + 10K...so go out and buy another one!
Thank you for the clarity
Where is your profit and pocketed money coming from
@@jonahsd1818 I think it comes from the higher appraisal value of the home. The house value is 200k from the lender(bank)'s perspective after renovation, not 122k anymore.
What was the cash flow on the deal after the refinance?
Hi, I am new to your channel and was wondering what the point of doing the cash-out refinance is. I get you use it to pay off the previous existing mortgage payments and to cover the money you spent on rehabing the property, but doesn't that mean that you have to pay more interest because the cash-out refinance is going to be a larger value than the previous mortgage? wouldnt that negatively affect your cash flow?
Very informative video, thanks Matt. Whats the reliable source to find out average sale value on the street?
It will depend on your exact area, but in London Ontario - The local Realtor Board (LSTAR) posts monthly updates with decent information on the general market. CMHC also does regular reports on both The Canadian, Ontario and London Area markets 0 which again is good for more generalities. Access to a portal like Geowarehouse is also great for that. (Realtors in Ontario have this). For the average investor though - the best bet is develop a good/strong relationship with a local realtor who will access and provide you with that info. (Not all realtors are created equally)
Do you have to pay off the home right away after the refinance or i can keep all the money and reinvest it into another property?
What’s your net cash flow on this particular property?
Hi Matt, liked your video very much. But did I missed something regarding how much $ the investor should have to get the private investor, and how paid for RENO....
Matt, when you refinance, do you have a new mortgage payment ? I imagine you would, and then it would lower your cash flow if not make it a negative cash flow ? Pls respond 🙏🏽