AS A RENOVATOR OR FLIP PROJECT. AT SOME POINT
THERE IS A BOTTLENECK IN THIS TYPE OF BUSINESS.
WHETHER THAT'S TIME, MONEY OR SWEAT EQUITY.
If this is something you've experienced or are trying at all costs to avoid... talk to us today to see how we may be able to help.
We see this all too often with our clients when we first work with them
"We thought it would be so easy. " Buy a house, make a few cosmetic fixes, put it back on the market, and make a huge profit. At any given time, a half-dozen shows on television feature good-looking, well-dressed investors who make the process look fast, fun, and profitable.
Yet, the road to real estate riches isn’t all about curb appeal and “sold” signs. Far too many would-be real estate moguls overlook the basics and end up failing. So what are the five biggest mistakes would-be flippers make? And how do you avoid them?
✅ Know How It Works
✅ Know Where To Start
✅ Know How & Where To Spend
✅ Know Your ARV (After Repair Value)
✅ Know Your Financing Options
✅ Know How To Keep Track Of Time
✅ Know If You’re Sitting On A Gold Mine OR Not
✅ Know Your Contractors
Flipping houses is a business like any other: It requires knowledge, planning, and being savvy to be successful. Common mistakes novice real estate investors make are underestimating the time or money the project will require. Another error house flippers make is overestimating their skills and knowledge. Patience and good judgment are especially important in a timing-based business. More importantly, not knowing how to efficiently scale this business model so they can turn it into a profitable business.
How well can you manage a project from start to finish?
You don’t want to be the one pushing the envelope and getting into serious trouble. This is where Clubhouse Group can help you navigate all that. We can point out whether you’re sitting on a gold mine or NOT.
Why would you buy into stocks and bonds when we can show you how to create your own wealth through property investments?
(The BRRRR Model)
If you're investing in real estate or plan to start a real estate investing business, you'll eventually hear of BRRR or BRRRR investing. This method of investing in rental property has grown in popularity over the past decade and focuses on finding a distressed property to buy, rehab, rent, refinance, then repeat.
The BRRRR method of real estate investing has proven to be a great way to build cash flow and financial independence through rental income, but it isn't right for everyone. Learn how to invest with the BRRRR method, the pros and cons of this method of real estate investing, and how much passive income you can make from the BRRRR method.
What is the buy, rehab, rent, refinance, repeat (BRRRR) strategy in real estate?
The BRRRR method in real estate investing stands for buy, rehab, rent, refinance and repeat. This investment strategy is ideal for investors who want to grow a large rental property portfolio quickly and is done in the following manner:
Buy: purchase an undervalued or distressed property with alternative financing such as hard money.
Rehab: Make improvements to the property to add value and get it to rent ready.
Rent: Rent the property out to market standards.
Refinance: Use a cash-out refinance to pay off your original hard money loan.
Repeat: Use profit left over from the cash-out refinance is a new down payment for your next investment property.
What are the benefits of BRRRR real estate investments?
BRRRR investing allows you to grow a portfolio without having to tie up large sums of cash for a long period of time. Traditionally, if you wanted to own five rental properties, you would have needed a down payment for all five properties with a long-term mortgage on each. With this method, you can still grow a portfolio of five rental properties, but you are expelling far less cash than with the traditional investing method.
Since this strategy utilizes a cash-out refinance after the property has been improved and rented, you are able to pull out your money to reinvest in another property with the benefits of a long-term mortgage that has little to none of your money invested into it. Additionally, since you own rental property, you now benefit from several tax deductions.
If done properly, the BRRRR method has the potential to increase your net worth, create passive income through rental income, and ultimately create financial independence by allowing you to own rental real estate in a unique and continual manner.
What are the drawbacks of BRRRR real estate investments?
No investing method is foolproof. BRRRR real estate investments do come with drawbacks, probably the greatest of which is that your investment is relying on a future value. If the property appraisal during the refinance process comes back lower than expected, you may not be able to refinance for the full desired amount.
Another potential risk is the renovations taking longer than expected. If you've ever rehabbed a home, you know it's fairly common to have additional expenses from unexpected but necessary repairs or delayed timelines.
If you borrowed money from a hard money lender, you're paying high fees and interest rates. The longer your hard money loan is in place, the less money you make. Getting in and out of the deal as quickly as possible is a key component to the success of this investment method.
It's a lot to consider. There's more...but we won't overwhelm you with all the finite details here. Let's hop on a call or if you'd like to book a tour with us to experience a community (Covid-19 measures are in place) we'd be happy to guide you from there!
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