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!
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/
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.
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?
@@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.
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 😀
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
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 !
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?
Bro you mentioned you bought this property in London, Ontario. I doubt there is even a 1 bedroom house in that price range forget the added basement and garage.
Well he did say it was rough. When he says rough it may have looked like it had been through a war. But a good buyer sees through mess and filth. Often when tenants leave a place a total pigsty there is surprisingly little actual damage once you've cleaned it up. Mess is not important. Damage is.
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!
Hi. Great video. Can you share what's your cash flow on this property or your strategy as a buy and hold investor. I am new to the REI and are looking at the numbers. Based on the information in the video. The cash flow I est. is $85 a month after 6 months of works. The assumptions I have are, Monthly income - $1800 Monthly expenses - $1715 - mortgage 810 (160K, 30 years @4.5%) - tax 250 (3K/year)- insurance 100 (1.2K/year)- property management 180 (10%)- repairs 90 (5%)-vacancy/turnover 144 (8%)-cap x 90(5%) - misc. 50 (lawn, snow, trash etc) Please let me know if I missed something as that's a lot of work and time for $85/mo cash flow and the potential risk if one future renter trash the place which can wipe out muti-years cash flow earned. Please share your thoughts. Thank you again. -
The mortgage that he has on the house he said around 6:45 costs him about $450 a month, that being said his rental property pays it off easily itself with the $1,800 rental income. So the remaining money you get out of the loan of over 9000 can be used to repeat it all over again i think is what he's getting at.
(1) negotiate the price if possible (2) strategic renovation (3) 1% rule: gross rent=1% of value of the property (cann't really happen in lots of cities nowadays) (4) mortgage=0.8 of the appraised value of the property
😂😀😂 you're probably right! Haha - for any lurkers in the comments be sure to jump over and subscribe to Jeff's channel at the time of writing this he's got 58 subs - let's get him to 100!
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 !
Ideally what you would do is use the refinance funds to purchase another property and let the rent money alone pay down your acquisition and renovation costs (assuming that you borrowed money to finance those two in the first place). Otherwise you’re merely paying down debt with debt and I don’t see how that makes you any money unless your new loan terms are much more favorable than your previous loan.
Yes, that's exactly how this strategy works. You find cashflowing properties and use leverage to acquire more. This question comes up a lot though, so I will be doing a series of videos trying to further explain the subject matter to clarify any confusing points. Thanks for watching!
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.
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?
Hey Matt. I'm a new viewer and I'm really liking all of your videos. Thank you for sharing your knowledge. I'm 25 and have saved up 50g to invest into real estate. I have the mind set to get out of the rat race but what I'm having difficulty with in your process is the renovations. I'm not a handy person (YET!) and I'm really scared to get too far in over my head especially if it ties up all my capital. My questions to you are: Could I skip the renovate part and just buy a nice duplex and still refinance down the road when hopefully the property appreciated or i have gained more equity? OR also because it's not my sole source of income just use the passive income to keep growing and not refinance or rennovate at all? Also, how did you become good at renovations? Thanks again. Hope to hear back from you.
Great question. You can buy a nice duplex and refinance down the road, the only thing is - you're counting on general appreciation - which is something you can't really control... That's why I like the BRRRR better. What may work well for you, is a compromise between the two approaches, find a property that just needs cosmetics - ie paint and flooring and fix it up - you may not be able to refi right away, but you'll likely have some sweat equity at least - just food for thought. I mainly just learnt to be handy (not that I'm amazing) by watching youtube videos and watching trades people I hired on the job site, I'd also get friends/family to help me on weekends/nights and learn from them as well. Hope that helps and thanks for watching!
Helps a lot. Thank you for the quick reply. I live in Buffalo, NY just over the border. If you still live in London Ontario, I would be interested in meeting up someday. I can provide you with some free labor and you can show me your approach to real estate first hand. I believe we are both like minded individuals and I could see myself learning a lot from you. Let me know either way. Thanks Matt.
Got 120K CAD I been trying to figure out how to invest and this is now seeming to me my more favorable option. My only thought is I wonder if I could do a full serviced short term rental accommodation to increase cashflow by renting on Airbnb. Not sure if the headache of dealing with the high turnover and unstable rental efficiency is worth the reward, perhaps if I have enough units to justify hiring a property manager. Based on my research of the market I am currently looking into I could make somewhere between 2% and 3% of the market property value per month renting this way. I'm not inspired to take this all a step further and make a youtube series of my journey. Thank you for this great content and I hope to one day meet 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!
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!
No, in Canada you have to put 20% down on rental properties, hence the mortgages 80% Loan-To-Value making up the rest of the payment, you could put 5% down if you were house hacking though.
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 $9k left over from the mortgage, is that really cash or is it tied up within your lender? Can you use that for a down payment on another property? Also a suggestion for your videos, every time you cut scened you popped up in my face and startled me lol. I would try to ease back a little before starting to record again. Bless you!
Question: Where/How did you get deposit for 122K house which, in Canada is 10% so 12,200$ AND cash to do/cover 28K for reno and closing costs?? Thank you for your videos
I have a question. You pay 5% cash down : 6 100$ than the bank give you a mortage of 122 000$ Where the 28 524$ for the renovation come from ? Is it money you have already or the bank finance you that also ? That part i would like to understand. Awaiting your answer, Thanks you for your time. Great video !
All of it is great but the ARV and LTV are not what you always think it is going to be. It is variable and most people always mess up here and end up shaving the profits. Also never borrow max on LTV unless u plan on investing the extra money smartly because, remember you're still paying 3-4% mortgage interest on that extra money
Hi Matt, got on to your videos thru watching Graham Stephan's vids, and your videos have put me onto more other people and their ways of doing things. Its making me want to come to Canada to do some of this stuff, are there rules for mortgages for non-canadians? i'm from New Zealand.
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!
Hi Matt, i'm loving your videos! Just a quick question: A lot of other real estate investors get interest only mortgages as they can leverage more money vs repayment, is there any specific reason why you used a repayment mortgage on this property? Thanks and keep up the awesome vids! :)
Its variable interest . So if it's a buy and hold you dont want that. You want cash out loan. Use it only if you can pay it off in les than 6 months. Because you will get fucked otherwise.
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)
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?
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.
Great question Pablo - it can really vary and depend on your region/market and the regulations... In Ontario - you can usually do it 2-6months to refinance after purchase. If you're new to the process - I'd recommend on planning for it to take 4-6months to be safe
@@CanadianRealEstateChannel How do you factor in operating costs during the renovation period, like loan payments, insurance, property taxes, utilities, etc. while there are no tenants in the property? These kinds of costs dont seem to be reflected in the analysis videos ive seen.
Great content, just one quick note about the shooting, I believe you are looking back at your monitor/ screen/ notes a lot instead of looking right back at the camera, it feels a bit weird.
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?
I will be starting my channel soon showing a first rooking doing flips. Your explanations are easy to follow thanks Bro Good luck. I followed and will share hit me back when I get mine going Better together is correct
Good question. The reason I don't immediately sell is for two reasons: 1 Selling it would trigger a capital gain, meaning I;d have to pay tax where as a refinance doesn't result in an immediate tax liability. 2 The property is still a good cashflowing rental property, so it still makes me money every month. - Hope that makes sense
Great video however this only assumes no points and no closing costs or prepaid interest taxes and insurance for closing which means you’ll probably net 3-5k after refinance instead of 9.5k and the video would change to the 40-44k BRRR =D
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 👍
London Ontario (Canada) is where I bought the property! Thanks for subscribing! I really appreciate it! If you want to go one step further share on Social Media! 😉
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....
Hey Matt, i never really comment on any vids or subscribe but i did and i wanted to say great video and thanks for the upload. I had a quick question, how do you feel about toronto's housing market and the 1% rule? Some of the houses are over 800k (on the low side) and the rent is like $2000-2500 a month, are these people way over their head and is this just an over inflated market that no investor should go near? Would love to hear from you.
Personally - unless I was extremely wealthy and say a house there was 1% of networth - I wouldn't be interested in owning real estate like your describing. I'm very focused on cashflow. That's not to say that people who invest for appreciation don't/won't make money - just not my style/preference for a multitude of reasons I discuss in other videos. Thanks for watching!
No Tax. The 10k is drawn on a refinance, not a sale. It was part of the equity, but through a refinance, you can pull the equity without paying tax on the withdawl.
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! 🙌
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
Hello Matt very interesting Video. You say you have a 5 part on your investment strategy I am interested in as well. I don't see a link to it in your description nor any playlists labeled with that on page. Do you think you can link to it here? thank you
Thanks for explaining.. the part I don't understand is that what can be done with that extra 9k after refinancing ? Apart from a home equity line of credit or home equity loan.. coz' unless your income can't support more mortgage debt or if you've maxed your capacity.. can't seen to repeat the process as I found out that only 50bpercentbof rental income is taken is counted by the bank as cash flow
Matt, I'm confused about something. Why would you want to re-finance a property? Because the way I understood it, it seemed that you had a mortgage for 122,000 and now you have a new mortgage of 160,000, which would increase your monthly mortgage? I also don't understand how you would have 9,500 in remaining cash, considering the 160,000 is a new mortgage loan?
@@SupMirza you only refi after the rehab which appreciates the property so the bank will evaluate your property at the new renovated price. you then take that and pay off the mortgage and put down payment on another property that needs work and repeat.
