Posted on: February 21, 2022
WI 891 Lauren Hardy and David Dodge | Rental Portfolio

 

A rental portfolio doesn’t only showcase the number of deals an investor has made. It also guarantees the next deal based on the quality of its returns. Its essence can be found, particularly in the method featured in this episode.

In this episode. Lauren Hardy and David Dodge take us through the process in which David transitioned from conventional loans to using the BRRRR method. David gives us all the necessary details on why this strategy can help you achieve financial freedom with ‌little to no money from your pocket. Also, the process of how your portfolio build-up can land you more deals.

Is Building A Rental Portfolio Really The Best Way To Achieve Financial Freedom In Real Estate

Before we jump into the show, I want to share with you some exciting news about a new Wholesaling Inc partner. Let’s face it. There are only so many hours in the day. In fact, the most valuable asset you have is time. Ask yourself, “Wouldn’t it be great to offload all the menial tasks on your plate, free up more of your precious time, and grow your wholesaling business faster than ever before?”

Chances are, a large portion of your daily activities are things you can outsource to a VA and at a price that is way more affordable than you think. I’m talking about stuff like cold calling, lead scraping, data entry, and appointment setting. There are so many things. Almost any task done on the computer or phone can be delegated, ultimately giving you more of the time freedom you want.

Time to work on your business instead of in your business, and more stress-free time to spend with your family and friends. The one catch here is that you need to make sure you hire the right VA for this thing to work, someone who is highly-skilled, productive, and doesn’t add more work to your plate. How many horror stories have you heard from friends and colleagues who brought on the wrong people, turning their businesses into a living nightmare? It doesn’t have to be that way.

That’s why we are excited to announce our partnership with one of the best virtual assistant staffing companies in the real estate industry. That is REVA. REVA is by far one of the best VA staffing services we have ever worked with. They specialize in training virtual assistants for real estate businesses and do everything they can to set you and your new VA up for immediate success.

If you are on the lookout for a fantastic VA who will make your life easier, head over to WholesalingInc.com/reva and schedule a free discovery call to discuss your business needs and see how REVA can help you. The team at REVA will help you find the perfect VA with the right set of skills to help grow your business. For a limited time, for scheduling your discovery call, you will receive a free gift. I’m not going to tell you what it is. You will have to go to the page to find out. Trust me. It will be worth your time. That’s a pretty good deal. Good luck, and let’s get into this episode.

My goal in this episode is to enrich your life by sharing my perspective and those of the people I interview. In this episode, our guest is going to be doing just that. Our guest is the BRRRR method expert, David Dodge, who is Wholesaling Inc’s newest coach and podcast host. In this episode, we do a deep dive into a BRRRR method transaction.

We talk about what most people are doing wrong when they are starting in buying rentals, investing in real estate, and how having a perspective shift took David himself personally from doing 12 deals in 10 years. That’s about 1 deal a year to 200 deals in 3 years, all with having one tool and a huge perspective shift. We talk about building wealth and what that does it mean to build your net worth.

I see this all the time. People want to build wealth by real estate investing, and want to do that by buying rental properties but they don’t know what to do, how to do it, and put the pieces together. There are a couple of problems you run into, you don’t have enough money and that 20% down payment or you live in an area where prices are way too high, and the rents don’t make sense for the purchase price or you never will be able to afford a property like that in the area you live.

I have some good news. You don’t need that 20% down. In this episode, I talk with David Dodge. He’s an absolute expert in buying rental properties using none of his own money. I’m so excited to hear what you think about this interview with David Dodge. Make sure you read it at the end. If you loved this episode, do us a favor and share it with anybody you think might benefit from reading it. Tag me on Instagram. You can catch me at @ThisMomFlips. Thank you so much for reading, and let’s get into it. David, welcome to the show.

Thank you so much for having me. I’m excited to have this opportunity, be here with you, and teach and spread as much value as I can.

I’m excited to be able to introduce you to being a host of the show. We have been good friends for quite a while now. I have gotten to know a lot about you. I have a ton of respect for you as a business owner and for what you have done. My most favorite thing about you is that you are so approachable and down to Earth.

The definition of success is consistent persistent action. If you can do that, you will find success.

You are everyone’s man. I feel like, “I could be like David.” What you have done with your career is incredible. You are so approachable and make it seem pretty easy. I want to share your story with the audience but I also want to talk about buying rentals virtually. I’m the virtual coach. Everything I do is virtual. I want to make sure we take some time to talk about virtual rentals and the benefits of having rentals in your backyard versus when it makes sense to be virtual.

You can do them both at the same time if you want. Thank you so much for the kind words. I appreciate that. At the end of the day, why do we work? What’s the reason that we hustle and grind, and do all this? This is so we can live our lives, enjoy and spend time with our friends and family, and be married. I know that sounds corny but that’s what I try to focus on. I try to constantly be bringing it back. I work very hard, and I know you do, too. We’ve got to enjoy our life. That’s what it’s all about. Every opportunity that I can, I try to be as grateful as possible for the opportunity that real estate has given me.

Let’s talk about that opportunity real estate has given to you. How did you get your start in real estate investing?

I started when I was twenty. I was young. I was in college and didn’t really know what I wanted to do. I went to college for financial planning, and I don’t do that by any means. I started house hacking. That was the first thing I did. I went and found a house that was listed on the MLS full retail. I didn’t know that I needed to get a real estate agent to be able to do that type of transaction.

I went and found a bartender at the bar that I liked to go to. He also was a real estate agent. He helped me purchase this first home that I used to house hack. I didn’t do anything creative. In hindsight, it wasn’t the best approach but I’m glad that I did something. Lesson number one for anybody reading, take action and do something. Even if you fail, you are going to learn.

I bought that first property and paid $165,000 for it. I went and got a conventional loan, which means that they lent me 80%. I had to bring $30,000 to the table. I didn’t have $30,000. I was twenty years old but I wasn’t going to let that stop me. That’s another reason why people don’t let these problems stop them and keep going. They find success. My definition of success is consistent, persistent action. If you can do those things, you will find success. I went and got this property under contract. I walked into the bank, and the bank was like, “No problem. We will loan you the 80% but you need to have this 20%,” that I didn’t have.

I went and talked to my family and some of my friends. Finally, my grandparents were like, “We will help you out.” They lent me the $30,000 that was needed, and the co-sign to get this deal done. I paid them back over the next year and a half to two years by delivering pizzas, doing random ads, and then doing jobs while I was in school. To not bore everybody, I did this once a year. At the end of 10 years, I own 12 rentals. I’m proud of that, especially if you are putting down 20% or in my case, borrowing the 20% to then get the 80%, which is also borrowed. 12 properties over 10 years are awesome. By all means, I’m very proud of that.

Now, we can buy twelve houses in a good month or multiple, at least. You could do it differently. Don’t do what I did. To sum it up, what I did was I was paying full retail for properties. Even at an 80% loan, that requires skin in the game to have 20%. I did that in my entire 20s all the way until I was 30. Years ago, I went full-time. I thought to myself, “I don’t want to be a real estate agent.”

I would rather be an investor because that’s what I have done very passively at that point in time for ten years. I started researching, reading books, buying courses, and hiring coaches. I have hired lots of coaches, taken lots of courses, and read hundreds of real estate books. What all of that came to, and what I found was you don’t have to pay retail for properties. You can do direct-to-seller marketing, and you can find deals. That changed everything for me.

Some of the readers might be a little bit newer, and I want to pick apart the micro details. In your words, the first ten years of your career, you were doing it all wrong, meaning you were structuring the financing wrong, is that correct?

Yes. The reason that it was structured wrong is that it’s the only way to structure it when you don’t buy deals. I was paying full retail. I was finding all of my properties. I say the word deal but I wasn’t buying deals. I was buying properties at full retail. That’s a big difference. When you do that and go to the MLS and pay full retail for a property, you are going to leave skin in the game. I say I was doing it wrong because I’m comparing old Dave to new Dave. New Dave does not pay retail for properties. If you are reading this, you should not either.

WI 891 Lauren Hardy and David Dodge | Rental Portfolio

Rental Portfolio: Whenever you’re buying a property, it’s going to be very difficult to not have skin in the game. But if you use hard money, you’ll have a short-term loan and then you can fix the property up.

 

Let me explain and break this even more down to somebody who doesn’t have any experience in buying property and how they are financed and everything. David was buying a property, and he was getting a conventional loan. There are different types of loans that you can get. For the average person, you pretty much know of the conventional one. That’s the, “I want to buy a house to live in, so I’m going to put 20% down, and they will lend the other 80%.”

It’s in my personal name. Most of these were primary loans because what I would do is I would move into them and rent out some of the rooms. I would live there for maybe a couple of weeks, months or even a year or two. What you said was exactly right.

You had to come up with 20% down. That’s like $30,000. How do you buy twelve of those? If you did it one every year, you had to find someone new to borrow $30,000 from and lock that up for a long time. That’s hard. What if you could buy that same property for 30% off? The same property that you bought for $165,000, what would that financing look like? Your down payment was now wrapped up in the equity of the house. I’m trying to help readers understand. It changes everything.

There’s a difference between buying a property and refinancing a property. When you are buying a property, it’s when you are acquiring it. Whenever you are buying a property, it’s still going to be very difficult not to have skin in the game, assuming you are buying it with a bank, credit union or whatever.  They are always going to want you to have money down. Even to this day, I don’t know of a great strategy or approach to buying a property and not having some money down. However, the caveat or the exception is if you use private or hard money, you have a short-term loan, and then you can fix the property up.

Sometimes that requires quite a bit of fixing. Sometimes it’s very little. The great thing about rentals is you can do this with little to none of your own money, and even be all in up to 80%. You don’t necessarily have to get these home run deals to make this work. To answer your question, when you go and refinance, and if there is equity in the deal, that is your 20% down. That is your skin in the game.

What I like to help people do and teach is you win when you buy at a discount but buying it is just step one. To do this with little to none of your own money, you need to go through the process, and it’s referred to as the BRRRR method. That process will result in a refinance. The cool thing about a refinance is it’s way easier to refinance than it is to purchase. The underwriting is typically way quicker, easier and shorter. I can refinance with a good bank that I have a good relationship with in 2 to 3 weeks. You are talking 45 days to 2 months, in some cases.

That is if you are purchasing with a conventional loan.

It’s using the bank to purchase. I don’t use the bank or credit union for any purchases. It’s all refi. Here’s the thing. Banks don’t like to take on new risks. That’s why there’s the underwriting process. They want to make sure that all the I’s are dotted, and the T’s are crossed. Whenever you approach a bank and say that you want to refinance, they look at that as transferring risk. It’s not creating new risks.

My goal is always to go to my bank and credit unions. There are a couple of national ones that I’m working with now as well but I’m never asking them for purchases ever. I have done the BRRRR method successfully over 200 times in the last few years. I have never once used the bank to buy. It’s always private or hard money to buy.

The bank is what does the magic because they pay back that private or hard money lender. Now, they allow me to use the equity in the deal from buying it at a discount. There are two ways to gain your equity, 1) Buying it at a discount, 2) To rehab or renovating the property, which increases the value even more. Those are two things combined.

If you do both of those two things combined, it’s hard not to get 20%, assuming you are buying at a discount. That’s the magic. The magic happens on the refi because if you are all in up to 75% or 80%, you have a good relationship with your bank, and they know what you are doing. They will not require you to bring money to the table as long as you are all in at or below, whatever that rate is they are lending if it’s 70%, 75% or 80%. That’s always the goal. It’s to borrow the purchase and the rehab. I will even borrow a little bit more to cover my holding and closing costs. On some occasions, when I get home run buys, I will even borrow an additional $5,000, $10,000 or $15,000 and pay myself on day one, which is awesome.

Take action. Do something. Even if you fail, you’re still going to learn.

I have three different property managers for different reasons in different types of properties in different areas. I will have them help with the leasing. I will go to my bank and say, “This property, I already have a loan. I don’t need a new loan. I just need you to refinance this current loan.” They love doing refinances.

If I’m all in at or below, let’s say 80%, and they say, “We will give you an 80% loan,” they give me a loan based on the appraisal. They don’t give you a loan based upon what you are all in it for. Remember in the beginning, when I was doing it wrong, it’s going to typically appraise about what I’m willing to pay because it’s full retail. There’s very little spread if any.

Sometimes the appraisal might even be lower than what you had agreed to buy it for. When you do it the other way and use the BRRRR method, what you are able to do is capture equity and use that equity as your down payment or skin in the game. Look at it a little bit backward. That’s the great thing about this model. For most of my rentals, 90% plus, I have zero money out of pocket.

You told me that for the first ten years, you bought about twelve properties. It was almost one a year but you were doing it all wrong. Let me make sure I understand what is doing it all wrong. What does that mean? You were buying properties on the MLS. You were looking on the market and buying something at full retail value. You were getting a conventional loan on the property, meaning that you had to put 20% down.

You had to come up with $30,000, and you would have to ask grandma, grandpa or Auntie Sue for the $30,000. You then had to come up with a way to pay them back, not just the bank. Although you were building a real estate empire, you were doing it one at a time. I have a lot of friends that do this. They think they are like real estate gurus and playing Monopoly or something.

I look at it and laugh. I’m like, “What’s your cashflow on that? Is that $55 a month after you pay everybody?” Why is it all wrong? It’s because, by the time you are done paying everybody, you are making $50 or something. You don’t have much equity because you bought it at market price. Your net worth isn’t much because if you’ve got a property for $165,000 but owed $165,000, your net worth has gone to $0.

For the first ten years, you weren’t building your wealth. A lot of people fall into this mistake of buying properties on the MLS at full market value, thinking it’s awesome that they own properties. All you own is a bunch of liabilities. Your net worth is still $0 if you owe as much as the property is worth. You discovered a tool, and that tool is the BRRRR method. What is the BRRRR method?

Simply put, the BRRRR method is an acronym. It is a strategy that allows us to buy a lot of assets with little to none of our own money rapidly. That’s the best way for me to describe what it is. What is the acronym? The first letter B stands for Buy. The first R stands for Rehab. The second R stands for Rent. The 3rd R stands for Refinance, and the 4th R means Repeat. The great thing about this strategy is it’s very repeatable and scalable. I have even heard some people say BRRRS. It’s the same thing. It stands for Buy, Rehab, Rent, Refinance and Scale. Scaling and repeating are the same thing.

It’s funny how you went ten years not knowing this tool. When you learned the tool of the BRRRR method, how many rental properties were you able to buy in the next five years or however many more years you were in business?

When I first started full-time, I was focusing my time and energy mostly on wholesaling because it was easy, especially once you get the groove. We fall into wholesale deals at this point all the time. I was still buying but it was slow. Over the last years, we have pivoted to making it our number one focus. Over the last years, we have done over 200 BRRRR deals.

For the first ten years, he was doing it all wrong. He didn’t have the education. He did twelve deals. He got educated. He learned a tool called the BRRRR method. Now he was able to buy 200 in only 3 years. You are buying these properties but you are adding to your net worth. The key to the BRRRR method, the first acronym B should stand for Buy at a discount. It shouldn’t be Buy on the MLS for Full Market Value.

WI 891 Lauren Hardy and David Dodge | Rental Portfolio

Rental Portfolio: Banks don’t like to take on new risks. That’s why there’s the underwriting process. But whenever you approach a bank and say that you’d want to refinance, they look at that as transferring risk.

 

Let’s use that $165,000 home you first bought. If you were to do it again, instead of going on the MLS, you would have sent that seller a postcard and said, “I buy houses. Call me for a fast as-is cash offer.” That seller called you. What would you have offered that seller? In an ideal scenario, lock it up under contract.

What I would do is I would take $165,000 and multiply that by 0.7. That gets me $115,000. I wouldn’t typically know that properties are going to need some amount of work. If it’s on the MLS, you would assume that it doesn’t need that much work but a good offer on that property would be $100,000.

We can keep it super simple with real minimal assumptions. When you did it wrong, you bought it for $165,000. When you are doing it the right way, utilizing the BRRRR method, which is what you teach, you would have offered $100,000 in an ideal scenario the seller said yes. If the seller doesn’t say yes, talk to more sellers. There are plenty of sellers that would say yes.

You don’t get desperate and go, “I really want this house because I want the deal. I was going to buy it for $165,000, so I could tell all my friends I’ve got a deal and post it on Instagram.” You are going to keep talking to more sellers. Talk to 25 more sellers, and you will find one that says yes. You are buying it for $100,000 now. Where are you getting the money for that $100,000?

That’s a private lender or a hard money lender every single time. I never used my own money.

You are not getting a conventional loan for that. You are going to rich Uncle Marty. I literally had a rich uncle, Marty. He was actually my ex-husband’s uncle anyway. And I would use it. That was one of my private money lenders. Private money lenders are friends, family or anybody that you know privately and have a relationship established with them, and you are borrowing money for a certain amount of time. You are doing maybe a private money loan or there are hard money lenders all over the place. Google hard money lender and insert your city. You will probably find one.

You are going to buy it “quick with cash,” but that cash could be coming from a hard money lender or private money lender. You paid $100,000, you’ve got your loan from there, which you teach this in your coaching program how to find these lenders, then you need to rehab it. How much are you putting in the rehab to get it ready for a tenant?

On average, it’s $15,000 to $20,000.

You are all in now for $120,000 on this house. In the previous scenario years ago, you already had bought this home for $165,000, and you still needed to rehab and put $20,000 in it. Now you are in at $185,000 doing it the wrong way. Buying it right and taking that time and extra effort to get the deal for 30% off of market value has already put money into your net worth. You already have built wealth right there just by buying it correctly. I’m in the property for about $120,000. The property has now been rehabbed. It’s clean. You put a sign in the yard for rent. What do you do? Are you renting it to a tenant?

Now that we have fixed the property up, that does two things. To answer your question, we are going to find a tenant and vet them. We are going to make sure they don’t have any evictions and have adequate income to pay the rent and so on. There’s a whole process. Here’s the coolest part. After we do the rehab, we now have a property that is in great condition.

It helps with getting a high appraisal but it also helps us get the top of the market rent. I’m not buying properties and doing this BRRRR method trying to get middle of the market rent. Every time we successfully do a BRRRR method deal, we are getting market rent or in some cases, we are setting a new standard.

Start owning assets. They put money in your pocket every month.

Let’s pretend this is a real-life scenario. What is the rent amount per month that you want for this house?

In that house, I would want $1,600 a month. I shoot typically for the 1% rule.

Here we are, guys. We are now in it for $120,000. We found a tenant who has a great job. He works in IT for Google. You’ve got a tenant in. The tenant has now paid their first month’s rent but, “I borrowed cash from Uncle Marty. I have to pay Uncle Marty back because I’ve got a hard money loan.” What do you do?

Now that I have bought it at a discount, rehabbed it, updated the property, essentially got rid of all the problems with it, it’s in great shape, and then rented it to that very awesome avatar that you described, what will I do is go to my local banks or local credit unions. I will ask them for a loan that I’m going to get on the appraised amount of the property.

What do you think this property would appraise for?

We are talking about a real deal that I did, the first one. I bought it for $165,000, and it appraised for $165,000.

It’s because you bought it at zero discount. This appraised value is now $165,000. You owe Uncle Marty $100,000.

In this scenario, whenever I would have gone to Uncle Marty, I would have asked to borrow around $130,000. $100,000 of it was going to go into the purchase. $20,000 of it was going to go into rehab. The other $10,000 that I borrowed is going to help cover the closing costs. It’s going to help cover the holding costs. It also may even help cover some of the interests that I have to pay, assuming I’m paying monthly, and this takes 5 or 6 months.

That is something that you will all forget to count sometimes as holding costs, insurance, and all that. We borrowed an additional $10,000, so we are now all in the property at $130,000. We didn’t add the $10,000 of additional costs. We owe Uncle Marty now $130,000. We went to the bank and said, “I want to refinance this home for its appraised value because I’ve got to pay Uncle Marty back.” The bank sends an appraiser down there and gets your appraisal back. Lucky for you, the appraised value is $165,000. What does that mean for your net worth?

What that means is in this area in that property, it’s a good area. It’s in a good district and has low crime. The banks have no problem lending me 80%. If you take $165,000 and multiply that by 0.8%, that equals $132,000. What I essentially did was I got all-in with my purchase, rehab, and even more money on top to cover the holding and some of the interest. I’m all in at or below 80%, which is $132,000.

The bank says, “No problem. We will lend you 80%. Since you added value to this property and mitigated the risk of us in the event that we had to take it back from you, we are now more than willing to give you a loan based on the appraisal.” I’m not asking for a purchase. I’m not going in that bank saying, “I want to buy this house.” I already own it at this point because Uncle Marty helped me buy it. I owe Uncle Marty money in this scenario.

WI 891 Lauren Hardy and David Dodge | Rental Portfolio

Rental Portfolio: The BRRRR Method stands for buystands for buy, rehab, rent, refinance, and repeat. That’s the great thing about this strategy, it’s very repeatable and very scalable.

 

The banks are going to say, “Let’s send the appraiser out, and we will lend you 80% of what it appraises for.” Now the bank says, “We are going to give you a $132,000 loan.” I only owe Uncle Marty $130,000, and I have been paying Uncle Marty interest every month. My payoff isn’t going to be a whole lot more than $130,000. It might be $131,000 or $132,000 if there’s a little bit of outstanding interest and some closing costs. Essentially, in this scenario, I would acquire a rental property. Now, it’s got $30,000 worth of equity. It’s a big difference from before.

You now have $30,000 in equity. That’s adding to your net worth. Whereas in the previous scenario, you didn’t have any money in it.

Sometimes it’s negative out of the gate.

You took that $130,000 refi. It goes through, and you pay Uncle Marty. Now, Uncle Marty is going to have money available for your next deal.

Uncle Marty is like, “This is great. I’ve got my money back, and you paid me interest. When can I lend you this again?”

We are on repeat. You ended up with a property that you own. You had to put $0 in to do this whole thing. You did this whole deal with none of your own money. You put $30,000 of equity that you can have in a property or add $30,000 to your net worth. In a way better situation than had you done your first strategy, what would that look like for someone if you just did this four times a year?

Not only did I gain in this scenario of $30,000 worth of equity but I’m also typically going to be cashflowing somewhere between $300 and $500 a month. The cashflow is the best part. The equity is great, and you can borrow against the equity as well, which is also great. The coolest part about this entire strategy is, A) I didn’t use any of my own money, B) I now own an asset. For anybody reading that doesn’t know what an asset is. It’s so simple. Assets put money in your pocket every month. I now have this house that I own. I have a long-term bank loan on it. There’s equity there, and it’s paying me to own it.

This is way smarter than your first ten years. I think that somebody reading this goes, “I will never be like David.” You don’t have to set those crazy goals. You can say, “I want to do this twice a year.”

I don’t own 200 properties now. We sell them off turnkey as well because you know we have to keep our business funded and keep money coming in. As of now, I own over 60 single-family homes, and I have about an additional 30 apartment units. With that portfolio, I didn’t use very much money at all. About 90% of that portfolio was built with zero out-of-pocket dollars.

The best part is that you teach all of this in your coaching program that you are launching with wholesaling. Tell me a little bit about your coaching program and what it includes.

The program is about how to do it right. I have a lot of experience failing at this, doing it the wrong way, and even when I first started doing the BRRRR method. In the beginning, I was still leaving $5,000, $10,000 or $15,000 in deals because there are a lot of things that you need to do the right way. In the program, we teach the right way to do these things.

Anybody can say, “You buy, rehab, rent and refinance.” It sounds easy but there are a lot of things that you want to do the right way or avoid doing so you don’t get into trouble. The program does cover all that. It covers how to buy, and how to buy at a discount. When it comes to rehabbing, there are certain things you want to stay far away from and things that you want to do. We teach all of that.

There’s a lot of things that you want to do the right way or avoid doing so that you don’t get into trouble.

When it comes to property management, I did my own property management for ten years. I suggest people do their own in the beginning to get familiar with the process. It’s very simple. If you don’t want to do property management, that’s fine, too. You can hire a property manager. That’s what I do at this point because I’m trying to build my portfolio, and it’s time-consuming to try to build and manage it. Last but not least is going to a bank. You are not using the bank to buy. You are using the bank to refinance, and there’s a certain way to go about doing that. We teach all of these things in the program.

Your program is so perfect for my model of virtual. Let me ask you your opinion here. The BRRRR method doesn’t work everywhere. I live in Orange County, California. To give you an example, I lived in a townhouse a couple of years ago for a very short time. They bought it, and I was the tenant. That’s why I have these numbers. They bought it for $650,000, and I was renting it for $3,000 a month. It doesn’t make sense in Orange County. If you are in Orange County, and you are like, “This is my backyard,” your returns might even be negative.

They might be negative because it all depends on the amount of rent that you are going to be able to charge. If they were able to buy that at a discount, they were all in at $300,000, and you rent it for $3,000, then all day that makes sense.

That will never happen where I live.

That would never happen because it’s very difficult to charge $7,000 a month in rent on a 2 or 3 bedroom.

It doesn’t make sense. What I’m saying is this doesn’t work in every market. That’s why you need the virtual component. When you live in an area where the purchase prices are where you can’t use leveraged capital to hold a rental because now your payment to the bank is going to exceed the amount of rent you are getting in, then you need to take David’s model and go to another territory where it makes sense.

For example, I’m virtual. I do business in Oklahoma because it does make sense there. The rent to price ratio is 1% or better. You want to find areas that are 1% or better. If you are reading this, super inspired, and want to own a bunch of rentals but you can’t because you live in California, Seattle, and in these high price areas like DC, you still have options. You can go virtual as well.

The Midwest works well but here’s the thing. Even if you live in California, New Jersey or New York, you can still do this. You are just not going to want to do it in the city. If you are in San Diego or Los Angeles, it’s not going to make a whole lot of sense. If you go an hour outside of the city, you are going to be able to get a good deal on a property that’s also not crazy highly expensive.

It depends because there are some places that, even an hour away, you are like, “This is crazy.” That’s okay. You can still go out of state. Once you are two hours away, what’s the difference? There’s a point where you are virtual. You might as well go where there’s opportunity. That’s what I love. I want to link up more with you and my following to you because there’s such a synergy in what we do.

I teach more wholesaling, rehabbing, flipping, and quick flips, which I say is the gateway drug to real estate investing. You are that next level of now let’s build wealth. That’s what we were talking about in this episode. I had to have David break down the numbers so you can see how he added $30,000 into his net worth by doing the same purchase he did but doing it the right way versus doing it the wrong way.

There’s a big difference there. Here’s the main thing that I want everyone to take away from this. If you get good at the BRRRR method, you can do it with little to none of your own money. You don’t have to have a lot of money. You can borrow all of it. That’s what I do. It’s super scalable. At any given time, I have between 10 and 25 properties somewhere in this process. You don’t have to go and do that many. You can do one at a time. If you want to scale it, it’s a scalable model.

WI 891 Lauren Hardy and David Dodge | Rental Portfolio

Rental Portfolio: Go all in with your purchase, your rehab, and even more money on top to cover the holding and some interest. So you’re all in at, or below 80%. So the bank will lend you 80% because you added value.

 

I love it. Where can our readers learn more about your coaching program?

BRRRRMethodMastery.com is the best place to find out more. You can book a call and learn more about us.

Thank you so much, David. It was great interviewing you. I’m super excited for you and for all the students who you are going to help. Thank you so much for sharing this with the world. Guys, thank you for reading. If you are looking into getting into the BRRRR method, make sure you check out David’s website. If virtual interests you, make sure you go to VirtualInvestingMastery.com, where you can learn how to invest in real estate when you live in a market where you don’t necessarily want to wholesale in, flip in or do the BRRRR method. If that interests you, make sure you check out my website. Thank you for reading. I will see you next time.

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