How did David Greene increase BRRRR Frequency?

23 Replies

I have been re-listening to David Greene's BRRRR book for the umpteenth time. I am currently doing 2-3 BRRRR deals per year with the same money. We held some and sold some after a couple of years of BRRRR. I noticed how David Greene wrote he scaled to 2 per month. How did he manage this?


If i use hard money to rehab i am still 30-40k per property locked up for about 6 months to complete the rehabs +4-5 weeks for closing. That money includes the down payment + funds to front rehab costs before reimbursement. In today's market i can still find value properties on the MLS with some effort or through my agents if they are substantial renovations which is fine. If i want to do 2 per month, and say only did BRRRR no flipping i could focus on getting more efficient in the renovations and get down to maybe 4 months + tenant placement + refinance still 5 months of money locked out. Seems like i would need to increase my funds available from 70-80k --> 350k in order to maintain a steady flow of properties. I could see doing this in stages - If i tried to focus on 2 per every other month i could do 12 a year and would need about maybe 200k.

Seems like with 8-10 in progress at any given time i would also want an extra 25-50k+ for additional reserves. Doing these massive renovations there is always something unexpected once the walls get torn off even if i count of replacing all plumbing and electrical.

Does anyone know how David Greene was able to scale? In his book he mentioned saving up 90k, did he save up more than this to increase his velocity of BRRRR properties?

Would welcome any insight on this so i can work through mechanically how to increase from 2-3 a year to 10-15 a year.

Thanks in advance!

Mike

@Michael Cross Regardless of those big numbers the answer to your question is simple.... perfect market conditions. When Mr. Greene was shopping for deals there was plenty to go around. His net worth was and is probably insane. He was smart and had money or convinced OTHER PEOPLE with money and went on a shopping spree from roughly 2010-2017. You could BRRRR, flip, and rent properties from any direction. Remember when Sherriff sales and auctions were a thing? Now my county auction has 22 properties for sale per month.

One of my investing mentors bought his entire rental portfolio during that time going to auctions. He owns 40 SFH rentals, cash-flows, and flips "just for fun" because cash-flow is near impossible to find right now. I think investors today (you, myself, anyone reading this post) have to find a new path to scale. If you try to follow what Mr. Greene did you'll probably fail. The numbers are higher in every step of the investment journey. Creative tactics come with increased risk but if you're experienced you'll save reserves like you mentioned to shield against it.

It sounds like you're killing it man! I'd like to BRRRR two properties per year! I wouldn't be a rush to change anything.

Im sure part of the equation is David makes north of $1 million per year, and perhaps double that amount. So his access to capital is probably a little bit different than yours.

Originally posted by @Russell Brazil :

Im sure part of the equation is David makes north of $1 million per year, and perhaps double that amount. So his access to capital is probably a little bit different than yours.

I seem to recall when this first came out he was investing in Jacksonville FLA in very low value assets C D type stuff I could be wrong but I thought I remember reading that.. the bigger issues is controlling and managing that amount of rehab consistently

if the process start to finish takes at least 6 months to 8 months IE by the time you buy it rehab it then refi. after 6 months you have 12 rehabs in some sort of motion  that is NOT easy for most investors by a long shot.

I think the other issues is how do you actually refi them.. you would need some pretty unique financing situations.. the bigger portfolio lenders want to do 500 to 1 mil at a time and they take forever with deep complicated head scratching underwriting

you up on on your 10 loans pretty quick for the easy loans  then what.  ??  drag on capital to purchase all these then refi cost I suspect really hammer into the delta your trying to create with this model .. Now if you have cash that alleviates that part.

So I see this as a good question how did he do that? :) Even my most experienced IN market clients have a hard time when volume gets to 4 or 5 a month.. and these are companies in the business of doing this. Not just investors counting on other to implement their BRRRR strategy.

Originally posted by @Jaron Walling :

@Michael Cross Regardless of those big numbers the answer to your question is simple.... perfect market conditions. When Mr. Greene was shopping for deals there was plenty to go around. His net worth was and is probably insane. He was smart and had money or convinced OTHER PEOPLE with money and went on a shopping spree from roughly 2010-2017. You could BRRRR, flip, and rent properties from any direction. Remember when Sherriff sales and auctions were a thing? Now my county auction has 22 properties for sale per month.

One of my investing mentors bought his entire rental portfolio during that time going to auctions. He owns 40 SFH rentals, cash-flows, and flips "just for fun" because cash-flow is near impossible to find right now. I think investors today (you, myself, anyone reading this post) have to find a new path to scale. If you try to follow what Mr. Greene did you'll probably fail. The numbers are higher in every step of the investment journey. Creative tactics come with increased risk but if you're experienced you'll save reserves like you mentioned to shield against it.

It sounds like you're killing it man! I'd like to BRRRR two properties per year! I wouldn't be a rush to change anything.

its like much of what was written a few years back with the 2% rule people read that and figure out why they cant pop on MLS and find 2% rule rentals with a few clicks of the mouse.. so basically its all old data that was true for a time but times they do change and real estate is in constant motion.

@Russell Brazil

I thought David Greene was a cop when he was doing all the BRRRs.  He was making millions of dollars a year and doing BRRRs?  So at the time his access to capital would have been similar.  

I love him on the podcast and he’s a smart guy but I do feel like he does not miss an opportunity tell people he was a cop. LOL


Originally posted by @Eric Bilderback :

@Russell Brazil

I thought David Greene was a cop when he was doing all the BRRRs.  He was making millions of dollars a year and doing BRRRs?  So at the time his access to capital would have been similar.  

I love him on the podcast and he’s a smart guy but I do feel like he does not miss an opportunity tell people he was a cop. LOL


 David has been a real estate agent for quite awhile now, far surpassing what he was making as a cop. He is selling about $100 million per year, which should yield a profit margin over $1m a year. Now he has a mortgage company as well. Add in revenue from rentals, book sales, podcasts, etc.

Im not saying this to denigrate him in anyway. Im just pointing out, its not that worthwhile to measure ourselves against others, when they may being doing X at when their means may be much greater than our own. 

Originally posted by @Eric Bilderback :

@Russell Brazil

I thought David Greene was a cop when he was doing all the BRRRs.  He was making millions of dollars a year and doing BRRRs?  So at the time his access to capital would have been similar.  

I love him on the podcast and he’s a smart guy but I do feel like he does not miss an opportunity tell people he was a cop. LOL

well if he said he saved up 90k to start this while being a cop. that does not jive with millions a year income at the time .  But regardless I know a few retired officers who have done really really well in RE  One of our aheroshome.org co founders was in law enforcement and now is a very successful syndicator..  One of my other clients from back in the day and one of the major influences on OOS investing that we know today also has been very successful  that is Nick Vertucci  he still volunteers   LOL

Originally posted by @Russell Brazil :
Originally posted by @Eric Bilderback:

@Russell Brazil

I thought David Greene was a cop when he was doing all the BRRRs.  He was making millions of dollars a year and doing BRRRs?  So at the time his access to capital would have been similar.  

I love him on the podcast and he’s a smart guy but I do feel like he does not miss an opportunity tell people he was a cop. LOL


 David has been a real estate agent for quite awhile now, far surpassing what he was making as a cop. He is selling about $100 million per year, which should yield a profit margin over $1m a year. Now he has a mortgage company as well. Add in revenue from rentals, book sales, podcasts, etc.

Im not saying this to denigrate him in anyway. Im just pointing out, its not that worthwhile to measure ourselves against others, when they may being doing X at when their means may be much greater than our own.

got to love real estate sales at the highest level !!!!  takes a lot of BRRRRRRR to make a million a year income that you can actually spend  :)  

The market was a lot different when he was buying. It was a lot cheaper and more to choose from. I have been buying since 2011 and still today. I bought a home this month I paid $148 k which was a good deal for todays prices. I bought the same model home the next few blocks over in 2015 for 25 k. So there is a big difference in prices at least here in Orlando  I have done a lot of re fi's/brrr too but it's much easier to be done when your properties are very cheap and under valued and then double or triple in value over time. Not sure how he did it as I have not listen to his stuff. Its hard to cash out re fi right away in this market at least I find it to be, but my purchase from this year I think I would be able to brrr in a year or 2. I stopped listening to the podcast because its hard to compete with guys that are one of the most popular in the biz. A lot of them make much more money talking about real estate then actually in the trenches.  I like the good old podcast with josh where they got to the nitty and gritty of how guys were doing things.

@Jay Hinrichs

  If you have a couple few kids and are working Saturdays to give ourself a little extra space in your families budget making millions in my humble opinion is not realistic.

God bless guys who have millions to deploy and want to create mega systems leveraging everything under the sun.  It can just come across like wet blanket to folks who are hoping one day they have time to coach their kids little league.  I’m know you get that.

Originally posted by @Eric Bilderback :

@Jay Hinrichs

  If you have a couple few kids and are working Saturdays to give ourself a little extra space in your families budget making millions in my humble opinion is not realistic.

God bless guys who have millions to deploy and want to create mega systems leveraging everything under the sun.  It can just come across like wet blanket to folks who are hoping one day they have time to coach their kids little league.  I’m know you get that.

Balance my friend..  

Originally posted by @Scott Esmail :

The market was a lot different when he was buying. It was a lot cheaper and more to choose from. I have been buying since 2011 and still today. I bought a home this month I paid $148 k which was a good deal for todays prices. I bought the same model home the next few blocks over in 2015 for 25 k. So there is a big difference in prices at least here in Orlando  I have done a lot of re fi's/brrr too but it's much easier to be done when your properties are very cheap and under valued and then double or triple in value over time. Not sure how he did it as I have not listen to his stuff. Its hard to cash out re fi right away in this market at least I find it to be, but my purchase from this year I think I would be able to brrr in a year or 2. I stopped listening to the podcast because its hard to compete with guys that are one of the most popular in the biz. A lot of them make much more money talking about real estate then actually in the trenches.  I like the good old podcast with josh where they got to the nitty and gritty of how guys were doing things.

that is exactly right the top 5 % who talk about and teach real estate to others  make so much more money than actually working the systems they talk about..  or they can do what Cardone has done  huge training company AND big syndication company the training company feeds the syndication company.  Its  a natural extension.. and I for one have benefited from these folks Having been in on the inner circle and allowed to fund deals for their students over the years and in come years we did a heck of a volume over 200 deals funded for one guru in one year.  was a monster year for us.

Originally posted by @Russell Brazil :
Originally posted by @Eric Bilderback:

@Russell Brazil

I thought David Greene was a cop when he was doing all the BRRRs.  He was making millions of dollars a year and doing BRRRs?  So at the time his access to capital would have been similar.  

I love him on the podcast and he’s a smart guy but I do feel like he does not miss an opportunity tell people he was a cop. LOL


 David has been a real estate agent for quite awhile now, far surpassing what he was making as a cop. He is selling about $100 million per year, which should yield a profit margin over $1m a year. Now he has a mortgage company as well. Add in revenue from rentals, book sales, podcasts, etc.

Im not saying this to denigrate him in anyway. Im just pointing out, its not that worthwhile to measure ourselves against others, when they may being doing X at when their means may be much greater than our own. 

 He has also made comments on the podcast that his real estate agent business is so profitable that BRRRRing these cheap properties doesn't even make sense any longer. That is logical, because it is just finding best and highest value use of his time. 

It is also worth noting that people writing books and hosting podcasts have an additional revenue streams. So he is a full time realtor with agents under him, has a mortgage company and is paid for his podcast and book deals. 

Even when he was a cop, he commented that he worked extra shifts and he was young with no family. The point is he hustled then and he hustles now. There is 168 hours in a week. Most people work 40 hours a week, sleep 56 hours and waste the other 72 hours. The answer is find a way to make money in those lost hours.

Originally posted by @Michael Cross :

I have been re-listening to David Greene's BRRRR book for the umpteenth time. I am currently doing 2-3 BRRRR deals per year with the same money. We held some and sold some after a couple of years of BRRRR. I noticed how David Greene wrote he scaled to 2 per month. How did he manage this?


If i use hard money to rehab i am still 30-40k per property locked up for about 6 months to complete the rehabs +4-5 weeks for closing. That money includes the down payment + funds to front rehab costs before reimbursement. In today's market i can still find value properties on the MLS with some effort or through my agents if they are substantial renovations which is fine. If i want to do 2 per month, and say only did BRRRR no flipping i could focus on getting more efficient in the renovations and get down to maybe 4 months + tenant placement + refinance still 5 months of money locked out. Seems like i would need to increase my funds available from 70-80k --> 350k in order to maintain a steady flow of properties. I could see doing this in stages - If i tried to focus on 2 per every other month i could do 12 a year and would need about maybe 200k.

Seems like with 8-10 in progress at any given time i would also want an extra 25-50k+ for additional reserves. Doing these massive renovations there is always something unexpected once the walls get torn off even if i count of replacing all plumbing and electrical.

Does anyone know how David Greene was able to scale? In his book he mentioned saving up 90k, did he save up more than this to increase his velocity of BRRRR properties?

Would welcome any insight on this so i can work through mechanically how to increase from 2-3 a year to 10-15 a year.

Thanks in advance!

Mike

 I'm pretty sure that by paying all cash in some states you are able to immediately do a cash out refi or at least much faster than normal. 

@JD Martin

Bring on the big man himself!

Can't wait to hear what he has to say,

If I could be so bold as to ask Mr. Greene to address/comment on if he would agree with me that starting a business or breaking into the top echelon earners could be unrealistic and not worth the sacrifice because of family etc for many people.  But these same people could borrow a bunch of money from a bank and have a tenant pay it back to the bank, and create massive wealth for themselves in the future.  Sometimes the smart thing to do is not scale and focus on other parts of life. 

A little off topic but it is question I always want to heckle you guys with when I am listening to your podcast (which FYI I love),

@Michael Cross instead of using HML use a local bank when possible. Most commercial products I have came across allow you to refinance after rehab is complete. The only drawback would be lower cash flow because you could more than likely only refinance into a 20 year mortgage.

Originally posted by @Eric Bilderback :

@JD Martin

Bring on the big man himself!

Can't wait to hear what he has to say,

If I could be so bold as to ask Mr. Greene to address/comment on if he would agree with me that starting a business or breaking into the top echelon earners could be unrealistic and not worth the sacrifice because of family etc for many people.  But these same people could borrow a bunch of money from a bank and have a tenant pay it back to the bank, and create massive wealth for themselves in the future.  Sometimes the smart thing to do is not scale and focus on other parts of life. 

A little off topic but it is question I always want to heckle you guys with when I am listening to your podcast (which FYI I love),

I don't disagree with that premise. I am not at all on board the Cardone "If 1 is good, then 10x is better!" train. Everything in life is a trade off, including buying real estate, running a business, etc. There's really no free lunch and time/money/energy invested in one place is time/money/energy not invested in another. I believe you can build an empire so big that it consumes you. You might not be swinging a hammer or fixing a toilet but don't be fooled that finding financing, arranging loans, looking for deals, and all the rest of it is any less time intensive.

It's a fine line to walk. Everyone wants to have enough income that they're comfortable, can do the things they want in life, provide for their families, charities and descendants, and (maybe) never work again. How much is enough? Buddhists believe the desires of man can never be satisfied, which leads to a lifetime of suffering. I'm not sure if that's true or not but I don't question the idea that making money in and of itself can be addictive. There's also those that say if you love what you do that you never work a day in your life, which I'm also not sure of (everything has aspects that are not enjoyable), but even if that's true how much of the rest of life do you want to trade for work? 

These are questions everyone has to answer for themselves. I've never 10x'd it because I don't think I have any interest in that. I'm pretty happy finding a project or two a year to keep my interest and make a little more money. 

I would like to 10 x but I can not find the opportunity for the deals that I feel are good enough deals to buy or maybe my skills are not good enough yet to get me to the next level. I agree with the buddhist theory that one can never be satisfied. Here I am almost 10 years later still buying homes to rent when I surpassed what I said would make me happy a long time ago. Just got a deal today i'm pretty sure of and waiting for the signed contract. It was a decent deal and I wanted something to do since were slow right now anyways. My wife says I buy houses because I am bored and it keeps me busy, I think she's right like usual.

Really appreciate all the advice. A little background on why i am asking this question. I have done 7 properties since Feb 2019, 4 of which were full renovations, in south central PA generally with a typical ARV of 125k-175k. I spent 2017-2018 learning and looking a lot for properties to BRRRR. I have a solid core 4 and am taking advantage of the hot market to sell off some of the properties to firm up my personal financial status and catch up from some of my mistakes on the first couple properties. I am not looking to be a full-time investor; pretty happy with my day job for the federal government.

Even the larger renovations are getting easier so i want to learn how to do this even better in 2022, increase the velocity of my money, and maybe try to do 6 properties with an average turn time of 4 months. Once the contractors get scheduled to do their part i am freed up in my time with mostly just making sure they showed up and did their job. My limiting factor seems to be money so i want to set new objectives on how to fund these to increase the volume without having to build out too much of a company at least until i retire and have more time. I will take the advice of @Jordan Woolf and start reaching out to some local banks. @Jay Hinrichs I have not bought any using traditional financing for the 10 available that way. All of my properties have been through an LLC with a commercial loan product. Nearly everything has been a massive rehab. Any suggestions on that to maximize those or should i keep with my model?


My end goal is ballpark 30 units paid off over the next 15 years by selling the least desirable ones which would make a solid base to add to my pension at retirement time.

I think most of these guys were quite early to the game and perfected their strategies before the market heated up so when it did, they were in the right place and right time.
I am also very curious about this since I have just two completed BRRRR's and getting those done required the stars to align. I used traditional financing for both and completed both in 20 months from purchasing the first one to closing on the 2nd refi this morning, actually.
I used a personal loan, worked two full-time jobs and saved my *** off to get started. Now, I am looking at becoming a full-time rehabber to properly hone that skill--keep the ones that work as BRRRR properties and sell the ones that work better as flips. Highest and best rules applies, of course.
My current dilemma is how can I refi the lower cost properties? I have two lined up that I would love to buy (off-market) but my DTI will prevent me from refinancing and commercial loan products have higher minimum loan amounts-even though the properties will appraise for $100k or more, the loans will be for between 65-70,000 each. There are lower cost areas I know very well--I am looking at a house I can pickup for $13k, put $16-18k into and it be worth $55-60,000. Nobody will touch those low cost properties and if my money is tied up the velocity stops.
Maybe these guys had just enough to get started on higher cost properties that the more flexible lenders work with and built strong relationships to keep it flowing.

Jimmy,

My advice on this is to get comfortable with going slow as you grow initially. I continue to work my W-2 and intend to continue for some time. I did a similar approach initially with personal loans and credit cards just to get started in 2018. I have only done 7 properties now so not living off any passive income yet, just sold one of the flips from this year. I also had to sell off some of them to improve my DTI but with COVID it took a year longer than i originally planned. I know from experience that you have more options then you you think. Like me you have done major renovations. You have learned a lot in the process and you can benefit from that education. Consider taking on a partner with a higher credit score so you can keep moving forward. As @Brandon Turner has said on countless podcasts - 50% of a day is better than 100% of no deal. If you keep with your W-2 and keep acquiring more BRRRR properties you will get faster.

Do not get discouraged that your BRRRRs took a while -- you will get faster. My last flip was a major renovation and took 9 months from purchase to sale but could have been rented at 7 months if that was the exit strategy. The first one i ever did took 13 months. For financing, change your focus to something you can action on. There are properties i would love to have a line of credit for that are major projects but too much risk for a bank or hard money lender. I choose to move forward on properties i can finance so i can continue to grow and learn. You will struggle to find banks to do 12k loans but you will find banks to do lines of credit. Start considering other strategies and maybe chart out where you want to be in 1, 3 and 5 years and take steps to set yourself up for the short medium and long term goals. Maybe focus on properties high enough to meet the minimum required loan for your bank or hard money lender. Perhaps you should consider house hacking or refinancing to a 15 year loan to create major equity in just a few years to allow you access to a HELOC. I recently refinanced my personal residence to a 15 year mortgage to give myself the option as i grow. Mathematically it doesn't make sense for cash flow but it is creating a forced savings account that will let have a larger HELOC in 5-10 years for BRRRR investing and eventually a paid off residence to reduce my risk.

Keep calling lenders. I have used 3 different hard money lenders i met through Biggerpockets. I have used 2 local banks - well 1 bank and 1 credit union. Credit unions have a much lower minimum loan amount. I have talked to over 10 local banks. Primarily to the commercial loan side of them. If you are not talking to your commercial banker then you are not allowing them the time to help you. @Ashley Kehr noted on her podcast how she talked to the bankers about what she was trying to do and ask their advice which allowed them to identify a short term loan product to help solve a problem. If you make it a goal to consider 50 financing options among partners, calling banks, and hard money lenders you will likely find a way forward before you get through your 20th on the list. It may not look exactly how you like but it will let you move forward. which sounds like your goal.

Originally posted by @Michael Cross :

Jimmy,

My advice on this is to get comfortable with going slow as you grow initially. I continue to work my W-2 and intend to continue for some time. I did a similar approach initially with personal loans and credit cards just to get started in 2018. I have only done 7 properties now so not living off any passive income yet, just sold one of the flips from this year. I also had to sell off some of them to improve my DTI but with COVID it took a year longer than i originally planned. I know from experience that you have more options then you you think. Like me you have done major renovations. You have learned a lot in the process and you can benefit from that education. Consider taking on a partner with a higher credit score so you can keep moving forward. As @Brandon Turner has said on countless podcasts - 50% of a day is better than 100% of no deal. If you keep with your W-2 and keep acquiring more BRRRR properties you will get faster.

Do not get discouraged that your BRRRRs took a while -- you will get faster. My last flip was a major renovation and took 9 months from purchase to sale but could have been rented at 7 months if that was the exit strategy. The first one i ever did took 13 months. For financing, change your focus to something you can action on. There are properties i would love to have a line of credit for that are major projects but too much risk for a bank or hard money lender. I choose to move forward on properties i can finance so i can continue to grow and learn. You will struggle to find banks to do 12k loans but you will find banks to do lines of credit. Start considering other strategies and maybe chart out where you want to be in 1, 3 and 5 years and take steps to set yourself up for the short medium and long term goals. Maybe focus on properties high enough to meet the minimum required loan for your bank or hard money lender. Perhaps you should consider house hacking or refinancing to a 15 year loan to create major equity in just a few years to allow you access to a HELOC. I recently refinanced my personal residence to a 15 year mortgage to give myself the option as i grow. Mathematically it doesn't make sense for cash flow but it is creating a forced savings account that will let have a larger HELOC in 5-10 years for BRRRR investing and eventually a paid off residence to reduce my risk.

Keep calling lenders. I have used 3 different hard money lenders i met through Biggerpockets. I have used 2 local banks - well 1 bank and 1 credit union. Credit unions have a much lower minimum loan amount. I have talked to over 10 local banks. Primarily to the commercial loan side of them. If you are not talking to your commercial banker then you are not allowing them the time to help you. @Ashley Kehr noted on her podcast how she talked to the bankers about what she was trying to do and ask their advice which allowed them to identify a short term loan product to help solve a problem. If you make it a goal to consider 50 financing options among partners, calling banks, and hard money lenders you will likely find a way forward before you get through your 20th on the list. It may not look exactly how you like but it will let you move forward. which sounds like your goal.

Thank you for such a detailed and thoughtful response. I do agree that W2 is important and I am going back to work. It's my life situation that is making that part difficult. I have money available from a private lender, but, in order to keep that money moving I just need ways to get long term funding elsewhere so that my lender is getting their returns. They're more interested in short-term plays to get in and back out.

I have brought the opportunity up to a coupe people for them to split the deal 50/50 if i source, rehab and manage while they finance so that we're able to acquire more sooner and start building equity. The cash flows will come.

Thank you again, I read through that response a couple times and it is very helpful!