Is there must be something that I am missing, but from what I read you can only hold 4 or so refi building at a time so how do I use the BRRRR method to get to 50 units?

@Julian Hendrix

Why on earth would you want to hold 50 mortgages? That's just 50 liabilities...read some books on building your portfolio without mortgages...

Rinse and repeat will get you there. And usually a combination of multiple strategies. The first property is in many ways the hardest, because it's your first. The second one is much easier, but then you start hitting against your DTI limits. Once you have 5 and have some cash flow, it get's easier again, because you are gaining financial momentum and don't have to rely exclusivley on your W2 for your next down payment.

You can try to do that without leverage, but it is not really practical. For some people it is a philospohical issue, not a practical or financial one. There is no 4 unit limitation for BRRR, but after 4 it get's more difficult to qualiy for 30 year fixed products. After 10 you will use commercial loans.

If you are in the single-family arena, you will eventually graduate to larger portfolio loans where one piece of paper is collateralized by multiple properties.

Originally posted by @Michael Maurice :

If you are in the single-family arena, you will eventually graduate to larger portfolio loans where one piece of paper is collateralized by multiple properties.

This exactly. You get to this level by establishing a relationships with a local lenders. 

Personally, I started with a little cash and got into my first batch of properties out of pocket. I took that bundle of homes to a bunch of local banks and found the best deal. Pulled the cash out of those as a line of credit and then pulled off that line to buy the next round of homes. Wash, rinse, repeat.

When my latest deal closes, I will have 49 doors (with 6 mortgages). For bigger properties or groups of properties you can use commercial financing-- you have to put more down (usually 25%), the interest rates are higher (by about 1-2%), and terms are shorter (20 years is common). Once you have 12 or so units purchased with residential financing it will only take a few years in a stable (slowly appreciating market) (probably 2-5) to pay down the mortgages sufficiently to cross collaterazlize of cash out refi those units for another group of units. It is my understanding that a married couple can buy up to 20 four units with residential financing-- but I'm no expert, that path is not open to us because we don't have w-2 income.

Oh wait if I count my own house I will have 50 doors. yay.

@Mark Fries thabks for the reply, any suggestions on books?

@Marcus Auerbach so if I'm understanding you correctly, after I get cash flow from the properties I can use that cashflow as my qualifying income and as a down payment for the 20-30% I'll need for a down payment?

@Julian Hendrix

The weekend millionaire. It changed my life.

I'm gonna go completely against the grain here because bigger pockets loves to push the BRRRR method...but you do not need that to be successful or buy properties.

Just take a minute and try to visualize yourself managing 50 different mortgages.. And then looking at your cash flow of 175 or 200 a month.. And then having to deal with repairs... That's like working for free... That's not financial freedom.. it's an absolute nightmare.

@Michael Maurice I am actually looking to purchase multi family homes. I have a few 5units for sale in my area that are under 100k would this make a difference?

Originally posted by @Julian Hendrix :

@Michael Maurice I am actually looking to purchase multi family homes. I have a few 5units for sale in my area that are under 100k would this make a difference?

If you have the cash to buy those, and the deal makes sense for your criteria, then suck those up. Once you have them stable, take them to the banks and pull the money out of them. Do it again.

If you don't have the cash, then you need to find a bank and determine what they are willing to do for you and how much cash you will need to make it happen. 

I have 103 SFR properties and 3 loans. We are about 30% leveraged, so still have a lot of powder in the barrel, just nothing good to buy right now.

@Jill F. Thanks for the reply this really opened my mind I think I'm starting to see how it works, so did you get your first 12 mortgages with traditional financing like FHA? Did you do as others have said and use several of the homes bundled as collateral for your new homes purchase?

Originally posted by @Mark Fries :

@Julian Hendrix

The weekend millionaire. It changed my life.

I'm gonna go completely against the grain here because bigger pockets loves to push the BRRRR method...but you do not need that to be successful or buy properties.

Just take a minute and try to visualize yourself managing 50 different mortgages.. And then looking at your cash flow of 175 or 200 a month.. And then having to deal with repairs... That's like working for free... That's not financial freedom.. it's an absolute nightmare.

   

How did it change your life Mark? I believe I have flipped through it, but did not read it. I remember the book talking about seller financing with low rates for long terms and then offering them an early pay off. You have to create equity somehow, you can either "buy" it or create it or preferrably both. But I may not remember correctly..

The real game in played IMO about equity. You can't make much money with cash flow, to your point exactly. Most people on BP don't realize that, they are chasing cash flow for to fund a life long vacation. So, what's the solution?

@Julian Hendrix I'll let you know after I purchase 43 more units. Ha! I'm with Mark on this. What's your motivation for 50 doors? Is that from some seminar? 50 doors at $200 per month equals $10,000 per month cash flow at which point you have "financial freedom". Be careful that you aren't trading in your W2 to become a full time property manager. That's what I'm actively trying to avoid right now. I want to grow further, but I have a strong preference for that growth to truly be passive.

What you are thinking about is standard financing. Use commercial lending. You can hold as many loans as you can qualify for. The rates aren’t as low but the upside is huge. I’ve used Commercial lending for both large and small deals. 

@Corey Hawkinson @Mark Fries

I'm not looking for financial freedom so much as more money per month. I enjoy working and Right now I manage about $15,000 worth of bills each month so manging bills isn't really a big deal to me. I plan on using property managers for most of the apartments I get, so I'm not worried about the calls in the middle of the night and I enjoy working with contractors and finding solutions to fixer uppers. It all just seems like a good fit. What else should I be worried about? I want to get it to about 50 doors at 100 to $150 a door That would make a really big impact in my life right now what do you guys think is wrong with that strategy? I love hearing the different opinions and learning from other peoples experiences.

@Julian Hendrix

If you already have $15,000 worth of bills a month then you must be crushing it with what you are already doing...why even waste time with real estate?

Sounds like you already have it made and you could just save a little bit of the money that you already make and put in the stock market and make a great return.

@Julian Hendrix Nothing wrong with that strategy as long as it isn’t causing too much stress. I just meant my comment on a cautionary tale.

@Corey Hawkinson I don't know about crushing it That's just the bills which are far more than what I make. And I don't like being responsible for employees I much rather be working with contractors