27 House Deal That Gave Us $700,000 in Equity in Under 90 Days!- BRRRR Method Example
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In this YouTube video, the speakers discuss how they used the BRRRR strategy to purchase 27 homes with no money out of their own pocket, creating over $700,000 in equity and adding $2.2 million to their rental portfolio in just three months. They came across the deal through a wholesaler who was looking to offload a package of 28 houses they had owned for 20-25 years. The deal was for 27 single-family rental houses within five miles of each other, purchased under one contract as a package.
Before purchasing, they analyzed the deal by getting all the information, including where the properties were, what they were rented for, and copies of all the leases. They plugged in the "Zestimate" to see if it made sense and realized they could use the BRRRR strategy. They negotiated to buy the properties at a discount and analyzed the cash flow, which was lower than what they normally shoot for but still worth it due to the value and opportunity presented.
After analyzing the cash flow and determining that the numbers work, the speakers discuss their due diligence process. They spend two days looking at each of the 27 houses, taking notes and pictures to ensure they are properties they want to buy. They also shop around for insurance and end up paying an annual premium upfront of $12,000.
To purchase the property, they use hard money, which they have been able to access due to building relationships with banks, hard money lenders, and private money lenders over the past 4-5 years. They have a great hard money lender with great rates, but they have a $15,000 a month hard money note. They pay this note by using the rent payments from the tenants, which barely covers the interest payment.
After purchasing the properties and letting them season for a bit, the speakers begin the refinancing process. They work with their long-term banker and hire five different appraisal companies to appraise the 27 properties. The appraisals come back at a little over $2.2 million, creating $700,000 in equity with not a dollar out of their pocket. They receive a new loan with a 5% interest rate and 25-year amortization, resulting in a monthly payment of $9,000, which is $6,000 less than their hard money loan.
Overall, the speakers stress the importance of getting out of hard money as soon as possible and into long-term money, which is much cheaper each month. They also emphasize the importance of due diligence and analyzing the cash flow before making any investment decisions.
In this YouTube video, the speakers discuss how they used the BRRRR strategy to purchase 27 homes wi