BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
Looking to find financial independence through real estate but don’t want to be responsible for a portfolio of 100 homes? Well, that’s exactly what today’s guest is doing!
Jenny Bayless is a real estate investor in Colorado who is using long-distance investing principles to systematically build a portfolio of cash flowing properties using the BRRRR method! Jenny is absolutely crushing it by "making" deals in today's tough market and shares what she looks for that other investors miss.
Learn her system for targeting fixer-upper properties, how she estimates rehab costs, and the method her real estate agent uses to send her videos of potential properties so she doesn't have to drive hours to see them. Jenny also shares how she uses hard money to buy "cash," how she found a rockstar agent, and how she backed into an "accidental BRRRR" that led to future success!
Today’s episode is equal parts inspirational and practical with TONS of actionable advice. If you want to retire early with real estate but don’t want the headache of managing 100 homes, don’t miss this show!
I think you bring up an awesome question/observation! Here are my experiences:
1. I have experienced the same issue you have with the 6-month seasoning requirements for a cash out refinance. We also recognized this would be a hurdle in being able to turnover and stabilize properties as quickly as we wanted. Personally, I could not find any local or institutional lenders willing to waive the 6 month seasoning requirement for a cash out (but that's not to say they aren't out there!). A strategy that we adopted in a few instances to be able to turn over these properties faster, is by utilizing a private lender/HML in conjunction with a rate/term refinance (opposed to a cash out). We have private lenders that are willing to lend 100% of purchase price and renovations, not to exceed a percentage of ARV. What the rate/term refinance does, is a 'conventional lender' (caveat: always check with your lender!) can refinance the rate and term of that private loan (so for example, taking a 3 month 12% interest rate loan for $120k to a 30 year 5% interest rate loan for $120k). Our lender requires the loan to come in at 80 or 85% of appraised value. No cash has changed hands during this process of the refinance, and now we are able to get the property (a good example of this is in the Deep Dive) for just a few thousand dollars out of pocket (some additional renovations not covered by the loan less the purchase price). Of course, this method exposes you to the risk of having to potentially bring money at the time of refinance to close out the first loan if the property does not appraise for what you had estimated originally.
2. Definitely a great point to bring up. The way I consider it is, say for example you can pull out $30,000 in a cash out refinance BRRRR. At 5% interest, that increases your monthly payment by about $160 a month upon completion of the refinance. Say for example on house #1 you were originally cash flowing $500 a month but are now cash flowing $340 a month (due to the increased mortgage payment). If you re-leverage that cash you took out and applied it to acquire property #2, and that property cash flows $400 a month, you've now increased your net cash flow from $500 (just prop #1) to $740 per month ('new' cash flow of prop #1 and prop #2), in addition to both properties are now able to realize all the other benefits of real estate, such as mortgage pay-downs by tenants, etc.
@Tim Polk
Scroll to bottom. Theres a button that says "Tap to load more", and hit it.
Also, you can change how the episodes are appearing. Oldest episodes first/ newest episodes first.
Realtor · NWI (Northwest Indiana) · Member since 2018 · 63 posts · 36 votes
7y
@Daniel Forte Just figured it out. There's "BiggerPockets Podcast" & "The BiggerPockets Real Estate".. Both with Brandon Turner. "The BiggerPockets" being the newer one with the updated episodes..
Rental Property Investor · Member since 2018 · 1 post · 1 vote
7y
#Brandnew #newbie, as in today 29Dec2018 is my birth date into investing. I am so super excited. This podcast was an amazing start for me. Thank you BP team!!! Next my beginner's guide and eagerly awaiting my 2019 journals. Have a happy and prosperous New Year!!!
Rental Property Investor · Chicago, IL · Member since 2017 · 293 posts · 383 votes
7y
Love your story @Jennifer B. BRRRR investing is really a powerful strategy and it will help a lot of people out to hear your story. Keep up the great work!
Brooklyn, NY · Member since 2017 · 26 posts · 13 votes
7y
@Brian Ploszay
I've had an investment property that has allowed me to build a new home, retire early from a excellent paying job, and travel at my leisure. Perhaps you need a little guidance on how to receive passive income.
Investor · efrat, israel · Member since 2014 · 93 posts · 20 votes
7y
Thanks to all who contribute here. I have found, being 'older,' with a very limited income, that I do not qualify for loans or mortgages even though my credit rating is fantastic. That's okay, as I am not comfortable owing money to anyone. What that has meant for me is:
1) bought an apartment (A area) to live in , hacked it (made a small rental in it, besides living in it), and it was slated to appreciate, which it did (doubled in eight years/now plateaued)
2) bought half an attached house (C area) with a partner, rent has stayed the same, house is maybe keeping up with inflation but no more than that
3)bought another apartment (A area) as a rental, which is slated to appreciate, which it did (up 25% in five years), rented at what BP thinks is too low, but for me it's fine as appreciation had not yet plateaued
I wish I would have gotten into this sooner, (I did try, but it didn't go, and there was no BP to help me at the time), but as it is, these properties will allow me to eventually retire much more comfortably than I would have been able to on my small pension and social security.
Far too often people will explain that they bought a house at 120K, put in $40K in rennovation and sold or reappraised for $250K. This isn't at all typical in my market. My market is very similar to Colorado Springs, where we just bought a home for 126K, and rental in the area rents for $1300, but a home if rehabbed, could be worth up to $180K (sound familiar?).
This is a much more realistic episode for newbies like me!
Investor · Ocala, FL · Member since 2018 · 144 posts · 101 votes
7y
Such a great podcast! I wish all of my clients would listen to it.
I agree with the description that this is an attainable, realistic method. There are properties available on the MLS if you look, there are good agents than can help you find opportunities, and building wealth through methodical, intelligent real estate investing is possible!
It's not magic or luck, it's consistent effort. My favorite statement was that commitment is the difference between success and failure. So many people I talk to will never get past listening to podcasts, attending seminars, and buying books. At some point, you have to go out there and do it.
So I take it that if you use a HELOC secured by another property, that it would still be considered as a cash-out refi ? And so it would be subject to the 6-month restriction?
I've read about "delayed financing" which seems to be an option to get around the 6-month waiting, but perhaps still limits the loan amount to no more than the original purchase cost.
Golden Oak, FL · Member since 2018 · 78 posts · 25 votes
7y
Passive investing applies, in my judgment, only to acting as Limited Partners in a Syndication deal. That is the only time you can actually invest passively. The General Partner (sponsor) finds and manages the deal on behalf of the passive investors that receive monthly or quarterly checks, along with a detailed investment report that explains their investment and rate of return.
I agree with the comments above. Anything else in the RE is not passive income. You must know the details of your FF, BRRRR, etc
Carthage, NC · Member since 2016 · 21 posts · 3 votes
7y
@Dave Fagundes I really liked that you posted this as I have been thinking about this a lot lately. Unless I'm not looking in the right places I havent found this particular aspect discussed. You have to be on top of your numbers to make a BRRRR deal work (rehab cost, holding, etc). Even if my percentages are higher I would still want some cash flow to help build my reserve for capex and maintenance so I'm not taking it from my pocket. Its gotta be a good deal at purchase, as many have said.
Belleville, IL · Member since 2016 · 2 posts · 1 vote
7y
I really enjoyed this podcast. Jenny seems very down to earth and was very relatable. I love her achievable goal of owning 10 homes outright and just living off of the income. Bigger ambitions are awesome, but it's nice to hear people doing things at a smaller and what seems much more manageable level. Congrats!
Hello , my name is Chris and I am 43yo. I am a cash flow investor only. No flipping no anything. I am retired with 7 single family homes. Each renting between 1400-1700 month. Pay them off folks. I'm netting between
$10k- $11,000/month.
Had I opted to take out 7 mortgages like unwise people think, I would never have gotten here.
Been doing this since 22yo. I've played the mortgage game as a rookie which led down the road to forclosures and all kinds of debt and headaches. Don't do it folks. Cash flow is king not debt
I’m with you Chris. Truthfully not by choice. I own 3 homes outright. I live in one. My wife wouldn’t go for anything on a mortgage with the possible exception of our primary residence. She says that we’re the only people she trusts enough to make our mortgage payment. Never tenants. We make a couple grand on the paid for rentals and we’re only on the hook for taxes on our house. My biggest goal is getting her to agree to downsizing and freeing up some money to buy another rental. We could easily buy 2 smaller homes in decent neighborhoods for what our primary residence is worth. Our youngest just moved out last summer for the military. We don’t need 5 bedrooms and 4 complete baths and two living rooms. Selling her on it isn’t so easy. She loves her house.
That said, if I would have had that money spread out over 8 houses I would have made a fortune in Boise’s white hot market the last few years. I made one on what I do have. On paper anyway and rents to some degree. Thing is I could have just as easily went upside down and lost it all if the market tanked. I’m in my early 50’s so I’ll take safe at this point.
Investor · Colorado Springs, CO · Member since 2017 · 3 posts · 2 votes
7y
Hey Jennifer, Great podcast! Really enjoyed the interview. My wife and I are newer here to Colorado Springs and just getting involved. We have one rental and our own house which we house hack. Would love references for real estate agents, contractors...etc that you used to build your portfolio! Thanks! Chris
Investor · Seminole, FL · Member since 2016 · 94 posts · 41 votes
7y
@Christopher Jones Jenny was very motivating I love hearing how other people succeed especially locally. My wife and I are in the same boat you are, looking for houses that make great house hacking opportunities. Something as simple as adding "walk-out basement" to your search criteria will give you many more hits than there are duplexes here in Colorado Springs. Also one I search often is "mother" "mother-in-law" and other variants of the words turn up different results. I know a few great vendors here in town and my wife @Kaley Roberts can help you out with vendors and home searches alike. Good luck in your endeavors and let us know if theres anything we can do to help.
Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes
7y
@Dave Fagundes I’m really late to the party here but happened to be looking up Jenny B from a recent podcast she was on... so here I am. We have also had issue (twice) with the 6 month seasoning period. To get around this we did a non-conventional 15 year loan with a 30 year amortization schedule. This is a essentially a balloon payment at 15 years but this allows you to refinance immediately. You can then refinance later, anytime before balloon payment is due. And of course, if rates were better a rate/term refinance.
