Basics from BP Book on Rental Property Investing

8 Replies

Surely someone knowledgeable in these forums must be familiar with the BP Book on Rental Property Investing?

I became obsessed with this book and am beginning my journey into RE investing. And still trying to understand the wealth generating possibilities. I’m still not sure how I am on a path to greatness with a single rental property that earned $200 a month, but I have faith.

So I am trying to understand the wealth generating paths available.

On p54 of the book, Brandon presents the 7-yr model. It is based on the premise of making your first property purchase a 4-plex for $100k, buying at a discount at $80k. My first plan actually is to look for a 2-plex or 4-plex, maybe house hack for a while.

But my question is this. Where the hell is he buying a 4-PLEX for $100k? And at a $20k discount?

Even for low income areas, this seems like a total fantasy. And the model doesn’t work without this!

So let's say hypothetically I buy a SFH for $100k, 30k down, with one income stream of $300/mo.

With an income of $3600/yr, it would take me 8.3 years to save up another 30k for another down payment. That’s not going to cut it.

So follow up question, I’m just trying to understand examples of growth model possibilities as a beginner getting started.

Thank you for any help!

You can buy a 4 plex in some areas in WNY for 100K but they all need work. Buying one for 80K will need substantially more work.

Buying things for a 20% discount is always preferred but, very tough to pull off.

The basic premise is true though. Get a 4 plex for a reasonable price, house hack, or rent out and build wealth through debt pay down, cash flow,
And appreciation

@Matthew Irish-Jones I appreciate the honest response. And the reality I also assumed was somewhere in the middle.

There is always a path, and I’m just a devils adequate on trying to fully understand if a concept will apply in reality.

Another example, p55, he buys his second 4-plex for $80k again. But then suddenly this second 4-plex is worth $113,500 in the same year (10% immediate appreciation on the 100k value that you purchased for 80k, plus also another 3.5% appreciation that somehow miraculously materialized. This 3.5 was supposed to come from yr 2 appreciation.)

Not trying to poke holes here, just trying to fairly assess these claims and gauge my plans and expectations. It’s really, really stretching reality here. But I do have faith in investing as a path overall.

@Christopher Davis I am in the process of reading this also. I agree with your assessment that the concept may be "stretching reality"....but that the basic premise holds true. With regard to your comment on the single family home plan: "With an income of $3600/yr, it would take me 8.3 years to save up another 30k for another down payment" - if I remember correctly don't his calculations include money you are saving from other employment income to get to another down payment?

@Louise Fuller you are correct, I do recall he supplemented the rent savings with personal savings. Just trying to make a point that if you can't supplement with personal savings, etc. It's a very slow method to save rent, although it is certainly sound. I was just wondering about further feedback or other thoughts since it is such a slow process to save like that. Mostly I am concerned with the premise of buying a 4-plex for $80k. In fact, as I begin my search for properties my big concern is finding a good property, a good deal. I guess it's just patience and persistence!

Originally posted by @Christopher Davis :

@Matthew Irish-Jones WNY = Western New York?

Yes western New York.  And I can tell you these things do happen, it’s just rare.

I bought a home for $87,000 and it appraised before closing at $122,000 with 0 work, so it is not impossible, just not common.