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David: All right, guys, welcome back the discount property investor podcast. Your host David Dodge and Mike Slane. Mike, how you doing, buddy?
Mike: Hey Dave, I'm doing very well today, very excited to be here.
David: I am pumped.
Mike: Talking about our new book.
David: New book.
Mike: New book we've just published, just finished, put out there. It is called the BRRRR method.
David: That's right.
Mike: I'mma go grab a copy, we don't have a copy in here. I'm gonna go grab it.
David: I don't know if we do have a copy.
Mike: I'm gonna go grab one.
David: Yeah, go get one. So guys, the BRRRR method is a book that Mike and I just released, we just published this. It's available on Amazon and Audible so- and also the Kindle now too. We just released it earlier this week. It's a thick book, it's like 375-ish pages and it breaks down how Mike and I have been able to basically buy, rent or- buy, rehab, rent out, refinance, and repeat, and basically acquire about 50 rental properties in the last 15 months using this simple strategy. So, again the strategy is buy, rehab, rent out, renovate, repeat. It's a very basic strategy and we wrote a book. So, you know people have asked me hey, how does this differ from a couple of the other books that are out there. I don't know, I haven't read those books.
Mike: I'm back guys, hopefully Dave was able to fill the airtime.
David: Yeah, no problem.
Mike: I know he struggles with speaking sometimes.
David: So- but you know, I don't know, I haven't read any other BRRR books to be quite honest with you, I know about the strategy but this book, we wrote this from our own experiences.
Mike: Yeah and- so you're just talking about the book, I think this book is neat because if you don't know what BRRRR is, this is going to kind of walk you all the way through it.
David: Start to finish.
Mike: Exactly, start to finish, every part of it we cover with as much detail from our experiences as we have. If you are familiar with the BRRRR method and you want to use this as kind of just a reference guide, we've got the glossary up front and you can kinda just read certain sections of it like, you don't have to read the entire book which I think is kind of cool about this one.
David: I like that.
Mike: I mean it is very comprehensive or at least we think it is, about 300 pages give or take so again, it's a very comprehensive book and if you just want to skim to one section on oh, how do these guys deal with tenants? or how do you deal with screening tenants? You can flip through and find that in the book or here's another one, like how do you buy your houses? So this is- oh, this is a really cool thing about the BRRRR method that I think is kind of overlooked.
David: What's that?
Mike: It's that you don't have to have money to start doing this.
David: No you don't, it's true.
Mike: Good credit is very very helpful, but you don't even have to have that, you can find a partner or someone else who's willing to cosign.
David: That's a great point.
Mike: But one of the coolest-
David: Age doesn't matter, credit doesn't matter.
Mike: Exactly, so what's really cool though- so, and I was just flip to it and said private funding, you don't have to have your own money, but you get to recycle that same money over and over again so if you have- if you- or you know someone, or even a hard money lender, you don't have to know someone. You can go and use the same $100,000 that someone's willing to lend you and build yourself a multimillion-dollar portfolio pretty easily. I think we even lay out an example of: if you just do this once or twice a year, I think it's twice a year, after five years you're going to have about-
David: 10 houses.
Mike: 10 houses.
David: That's one in every 6 months, that's not- that's so doable. We're doing three or four or five.
Mike: At a time.
David: In a month. Right.
Mike: So if you just do one or- again, you keep your full-time job, you keep working doing your daily grind, and you did one or two projects kinda as a side hustle instead of trying to sell you know, makeup or if you did, whatever your side hustle might be, if you did this instead and you did it twice a year for five years, you would literally create a million-dollar portfolio of each house is worth only $100,000.
David: Which is awesome.
Mike: You've created a million-dollar portfolio in 5 years, super super doable.
David: Super crazy.
Mike: If each of those properties, okay so you got 10 properties. If each of those properties cash flows only $300 a month, $300 per month * 10, that's $3,000 per month. That's $36,000 per year.
David: Taxed a lot less than earned income too.
Mike: That is more than a lot of people make in a year.
David: That's a great point.
Mike: So again, I mean this is- this is a great way.
David: That's 18 dollars an hour.
Mike: Yeah, I mean you can- well yeah, this is just- this is assuming no increases in the rent. This is assuming no- I mean none of the tax advantages of it as well.
Mike: I mean something like that you can retire your wife. I mean if she's making 40, 50 thousand dollars a year.
Mike: I mean, it's pretty neat. It's a pretty powerful method and that is-
David: 360-ish pages, I think.
Mike: Just flip to the glossary in front man.
David: 373, holy cow.
Mike: Or anywhere in there, just pick a topic.
David: Yeah, I love that idea.
Mike: Next topic. I mean again, so to me, it's really neat the private funding, like again, you don't need your own money. You can create a portfolio of rental properties almost out of thin air using this method.
David: Absolutely, so let's talk about how we can do that without our own money, right? So, we have private lenders but you can use hard money lenders as well for the acquisition.
Mike: Cool, yeah so let's talk about a hard money lender.
David: That's the purchase side.
Mike: Real simple guys, if you go to any of the REIA's in your local community, or you know anywhere in your city, go to a REIA, I almost guarantee you they're going to have sponsors and one of those sponsors is going to be a hard money lender. They may not be the best hard money lender, but they are going to be a lender in your city that's working in your city on deals. This is someone who's essentially going to say hey, look at this house you want to buy, well I can lend you this much money on it so that should give you a good idea of whether or not it's a deal or not. If a hard money lender says I can only lend you $60,000 on this property and you've got it under contract for $80,000, it may not be the right deal for BRRRR. So again, it's kind of getting a second set of eyes on it. What else about hard money lenders?
David: Well you know, they're not necessarily lending on the person, you know, they're going to look at your credit, but you can have bad credit essentially if it's a good deal, right? They're looking at the property and the person, not saying bad credit but you can't- you don't have to have-
Mike: Less than perfect.
David: Less than perfect. You don't have to have excellent credit to work with a hard money lender. Hard money lenders are not hard to work with. It's a hard asset that they're lending on, that's why they're called hard money lenders. It's not hard money, right? It's the asset that they're lending on is a hard asset, it's real estate. Hard money lenders won't lend on anything else that I'm aware of, it’s basically real estate, right?
Mike: Yeah, I mean, to my knowledge, I don't think so.
David: Right, so, you know, using a lender to get a deal on a property is most lenders will even lend you the rehab if it's a deal. If it's a great deal, they're going to lend you the purchase and the rehab, they're all going to be a little different so shop around, but that's the first part. You don't need any of your own money necessarily to get into these right? You can buy them at a discount. You can borrow the money to fix them up. You can get a property manager, so we're moving to the next step- renting it out. You can get a property manager, you can do it yourself. We recommend doing it yourself for the first ten-ish, so you can learn it and then hire that property manager so you can scale, but renting it out, you know, that's easy. You show it, you find someone that wants to live there, get a lease signed. There's really not that much to it, right?
Mike: Well, it's funny Dave that you say that because I-
David: Probably 50 pages on it.
Mike: I agree a 100%. There's not that much to it and after you go-
David: There's a little stuff, of course.
Mike: After you go through it, it's not a big deal, but again when you're new, it is. It's like oh man, this is overwhelming.
David: That's great, that's a good point.
Mike: Where do I find a lease? How do I collect rent? How do I-?
David: It's all in there, yup.
Mike: It is very- it can be very overwhelming so you don't want to downplay it, but it is easy. Again, it's not that big a deal.
David: But we break it down in the book, that's right. Absolutely. So then, you know, once you have it- well we totally skipped renting it, we talked about fixing it kind of, but you know you're going to want to add value, rehab it, right?
Mike: It's a good thing we put it in the book because sometimes our train of thought just bounces all over.
David: It bounces all over, right? So, you want to fix it up, you wanna- you know, typically with the BRRRR method, not always but you're wanna talk to your banker and you want to figure out what it's going to take to get the entrepreneurial credit, right? Which basically just means that they're going to lend on the appraisal not the purchase plus repairs. If you're getting loans on purchase plus repairs, it doesn't matter what those numbers are, you're still leaving money in the deal because they're going to give you a percentage of what you spend, so math doesn't really change, right? If you were going to be having to leave a percentage in of what you paid, it doesn't matter what the numbers in, you're going to be in it for something. However, if you can get them to lend you on the appraisal, which again has a minimum typically, a minimum rehab amount, you can buy at a discount and you can add value and you can pad in that difference, where you can leave none of your own money in these deals which is awesome.
Mike: And so, here's another thing that's really important or really neat about borrowing money to buy it too, like even if you have the cash, I still recommend borrowing some of the money. Here's why: when you go to refinance it, the final R- refinancing, Well, not the final R, the second to final R- refinancing this property, you're not doing a cash out refinance, you're doing a rate and term refinance because you already have a loan, they have to pay off another loan, so the bankers aren't looking at you like thinking oh we're just giving this guy $80,000 for this property.
David: No, somebody else already lent him $80,000, somebody else already took the risk.
Mike: Right, so the bank- it's a lower-risk loan for them to lend a higher percentage usually or typically.
David: That's a really good point.
Mike: I mean, we just went through this with one of our lenders as well, as they said oh, you're doing this kind of refinance, we can only lend up to 70%, and I said, oh actually we have a loan on it and they said, oh okay, well then it turns out we can do 80% instead of 70%. So, that's how the banks limit their risk is again, it just depends on the type of loan that it is. So, when you borrow money upfront, it's actually pretty advantageous when you go to refinance it with a bank cuz it's a refi, not a cash out.
David: Man, I love that.
Mike: So, it’s very very powerful, so there's a lot of really neat things just by doing these steps just contained in this BRRRR thing. Yeah, very very powerful.
David: That's the coolest part about it is you can repeat this. You can take the same private lenders money and if you do like Mike said, let's just say you just do two a year for five years, that's going to put 10 properties in your portfolio, and you don't even have to be doing these at the same time. You could do one at a time, you use the same hard money lender, go get a loan for the purchase, maybe the rehab, maybe not but go and rehab it, get it rented, refinance it, get all that money back and then now you just go borrow that money again from your lender, right? So, there's really really cool advantages of this because you can turn this money over and over again. The refinance pays them back but once they're paid back, they're not making any interest anymore so they're going to be really eager to give you another loan, right? So, one of the things that Mike and I highly stress though to our students and in this book is that you got to think of the end in mind. Go talk to your bankers first, even though that's the third R- refinance, it really should be one of the first things you do, because if you can't- I mean, just think of it this way, this is so simple. If you can't refinance that, if you can't qualify, then you're going to put yourself between a rock and a hard place because you're going to have gone and found a deal hopefully, got a lender to let- help you buy it, fixed it up, rented it out, now you're going to be paying 10, 12, 14% which is fine short term to that hard money lender, but if you can't roll that into a 20-year, 25-year loan that you know has a rate of 4, 5, 6% versus 12, 14, 16% you won't be cash flowing, maybe even losing so you got to build a refi.
Mike: Well not only that on the refi is you also typically, the hard money lender or your private lender is only looking to do a short-term of six months to a year.
Mike: They don't want the 30-year loan, so you really do need to begin with the end in mind. It's one of the things we actually- we did, it's in the book as well, don't worry we cover that. Yeah, we call it PBR so get pre-qualified.
David: There you go.
Mike: Make sure you talk to your bankers.
Mike: PBRRRR, exactly- one of our little jokes on the BRRRR method book guys. Yeah, I've lost my train of thought. I was gonna mention something else.
David: Guys, that book is available on Amazon, both in a print version that if you have Prime its free shipping, which is great, but there's a print version, there's also the Kindle versions. If you have a Kindle you can download it, that's only a couple bucks, which is sweet. And we just got it released on Audible which is one of my favorites. Mike and I actually did the audio versions of the book just like the last version, we switched off every other chapter which I think it’s kind of fun to listen to, but again it's available in three different places. So, you can do the Kindle eBook, you can buy the hard copy, or you can download the audio version.
Mike: And we know you guys listening on the podcast most likely are gonna get that audio version and we appreciate that and yeah just let us know what you guys think. Feel free to comment here or if you want to give us a review, leave us a review on Amazon.
David: Yeah, leave us an honest review. We're not even asking for anything out of the ordinary. If you don't like the book, tell us. I'm going to be pretty certain that that's not going to happen because this is a damn good book and this is everything we do in our business Mike, everything we do in our business to acquire 50+ houses in the last 15 months with none of our own money.
Mike: Yeah, it's very cool.
David: I mean, zero. We've borrowed a lot, we have a lot of loans, but we didn't have to put up any of our own money to buy, fix, rent, refinance and of course we've repeated it 50 times so it's pretty cool you know.
David: The fact that I hadn't read a bunch of other books is you know, it's funny cuz I don't know why, I've gotten asked like four times already how is this different from two or three other BRRRR books that are out there? Well, I don't know, I honestly don't. I'd imagine it's similar however, this is my and your experiences.
Mike: It is.
David: This isn't just like hey, here's how to do something, right? Step by step. No, this is: here's how we did it and how you can do it too, and this is exactly what we did and there's lots of failures in this book and things not to do which is almost as important as the things to do because you need to know what not to do so you save time and money or screw up.
Mike: Yeah, well it's kind of funny people have asked that question because I'm the same boat, I don't have no idea-
David: You know how many books there are on real estate investing? I mean, there's thousands, Ten thousands.
Mike: I don't read other people's books sometimes and especially on this one, I think it was kinda good not too cuz otherwise it could have steered our book.
Mike: And again, it's like why cover something that wasn't our experience?
David: That's such a great point. I love it guys. Well, that's it for today, we're gonna keep this short but check it out, it's on Amazon and Audible, print version, hard copy, eBook, audio. We are super excited to launch this book and if you guys do get it, we would appreciate a review and again, be honest. We can take it, we can handle it. That's it guys signing off. Thanks for listening.
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