Implementing BRRR in Order to meet 45th Birthday Goal

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Implementing BRRR in Order to meet 45th Birthday Goal

Brian Larson
Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes

**This is the intro to a possible multiyear diary. Sorry for the long first post, I wanted to give context. My goal is to update this every month when I update my personal balance sheet**

So today is my 38th birthday. I do not mention this because I want a nice comment or seek something, I mention this because I use my birthday as my fiscal year. I have set a goal to be able to retire/full-time invest starting on my 45th birthday (if I choose to do so...I love my current day job so maybe I will do that forever). So my fiscal year runs 11/1-10/31 when I do budgeting and planning for my family/investments

As I track towards my 45th birthday, I have set some very clear goals ahead of myself.

  • Earn $10k in Passive Income per month by 10/28/2022
  • Have a Net Worth of $2M by 10/28/2022

I have been tracking against each of these numbers off and on for a few years but have not been crystal. About 9 months ago I read the Millionaire Next Door and it helped crystallize where I am today and then a combination of BRRR and the Millionaire Next Door made the steps necessary to hit my target net worth today and tomorrow tangible. (you can see from chart below that I am where I am supposed to be per the formula)

I plan to get where I need via 2 asset types:

  • Rental Properties (SFR/MFR) - leverage BRRR in order to buy and rehab for cash then refi into portfolio.
  • Notes - First Position with a minimum yield of 13%
And have set some minimum goals to how I now acquire each of these assets.
  • Rental Props - add 6 units that average out to $150/mo cashflow and $25k equity per unit
  • Notes - Add 2 notes of $25k or greater that yield the above 13% minimum
My acquiring with these numbers I will add $200k in net worth and $1,520/mo passive income per year which will in turn yield the growth I need. See below You can see where I am today and where I want to go. So, with that, I hope to post lots of additions over the coming year as I need to add 8 assets this year (starting 11/1) and have already begun the process. Stay tuned Last note: I have uploaded my acquisition sheet that you can edit to your own liking. It may not be perfect for you as it only goes out 7 years but you can add more data/rows as needed. Acquisition Tracker Thanks for reading brian
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Mike H.
Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
10y

Thats funny that you hit on those numbers 38 and the goal is to 45.

I bought my first intentional rental at age 38. My initial "dream" goal when I started was to hit 10 houses - 1 a year. I actually thought that was pie in the sky when I set it. After I did my first one, I was hooked. I set a new goal of 3 a year. I hit that almost every year. It wasn't as easy it sounds given how there were no lenders wanting to lend in SFH investment properties during the bust.

But fast foward to now when I am now 45......

I have 51 houses (#52 under contract).  Once these recent purchases are rehabbed and put into service, I'll have a net income of roughly 13k a month. And my net worth is a little over 2.5 million. 

One thing I would add thous is doing 3 a month would not have gotten me to this point. As the financing environment loosened back up about 3 years ago, I jumped from 3 to 6. And then to 10 and then to 18...... 

It was a crazy run. But your goals are very doable. 38 to 45, I went from 0 a month in rental income to 13k net per month. And I went just above your net worth goal.

Given that you have a pretty good head start, I'd bet just about anything you can double your numbers and thats probably where you are going to end up when you're 45..... 

Good luck. But I would definitely recommend sticking with it. Its not always easy. But when you get there, you'll look back and have the kind of options in life that no other investment vehicle on the planet outside of real estate could have offered.....

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  • Dana WhickerPro Member
    Investor · Fernandina Beach, FL · Member since 2014 · 557 posts · 374 votes
    11y

    So does your fiscal year start on 10/28 or 11/1 ?.?.?  I'm just busting your balls.  I love the concept of doing your b-day as the start of your fiscal year.

    Putting your goals in writing is a huge start on your way.

    Good luck kid although I don't think you'll need it!

    0Reply
  • William CollinsPro Member
    Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes
    11y

    @Brian Larson  this is exactly the same sort of goal I am pursuing. I am a bit farther ahead on the age portion ;), but in the last 6 months I have added two small multi's which are adding and immediate 100k equity gain for this year. This is not counting cashflow.  If I can get up to 4 multi's/year my goal is to get to 100 units under rental with a 100/door minimum cashflow and value add average of $20,000/ unit.  

    0Reply
  • Ravi P.
    Boston, MA · Member since 2015 · 72 posts · 16 votes
    11y

    thanks for the file upload and good luck!

    0Reply
  • Michael Hong
    Real Estate Agent · Philadelphia, PA · Member since 2015 · 59 posts · 10 votes
    11y

    45 was the magic age I decided I want to retire as well! Will be following good luck !!

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    thats awesome Michael. You wrote was, does they mean you have made it? If so,  how did you get there and when did you start?

    0Reply
  • Michael Hong
    Real Estate Agent · Philadelphia, PA · Member since 2015 · 59 posts · 10 votes
    10y
    Originally posted by @Brian Larson:

    thats awesome Michael. You wrote was, does they mean you have made it? If so,  how did you get there and when did you start?

    Negative. I am still young have about 17 years to go. I say "was" because I found that in this industry, there are literally an unimaginable number of strategies and ideas, that I found myself never having a solid goal for more than one week, and I love it! I would love to retire early, but I am just not 100% sure if it will be at 45. 

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    ah, I got it. thanks for clarifying @Michael Hong

    So here is what has been interesting. I have been doing this with more or less focus for 13+ years. I would say the past 1.5 has been very locked in with the previous few years beign distractions (you know, marriage, kids, moving states, small stuff. haha)

    Anyways, in April of 2014 i said to myself that i had to get serious again and began locking in goals. My initial goal was to retire by 50. My friends said i was nuts but also know my track record when serious and thought it was doable.

    After reading some great books and listening to podcasts and comments from folks like @Brandon Turner i said no to 50 and made my stretch goal 45. It didn't feel real and was only a stretch goal BUT that's where I drew the line.

    So, with that, I setup a plan. add x doors per year at x numbers. In order to do that I would need to save X $ per year and do X flips in order to generate enough income to fund those deals.

    Now, with BRRR the game has totally changed. As I have locked in more and started setting tangible goals 45 has actually become easier and based on a tweak in my strategy in the past few months I believe I MAY be able to actually accomplish 'retirement' closer to 41/42 (i.e. 3-4 years out). I may not get there but through focus I have been able to set a more rigid goal structure and the results are tightening up that stretch from 'maybe 45' to 'wait a second, maybe 41' Its CRAZY but awesome.

    anyways, if you ever want to compare notes just hit me up. I am on here reading ALOT :)

    brian 

    3Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    Update - Made an offer today on a place in KC. Its a little low but its the right price for the amount of work needed and my goals. I will update if we get acceptance and share numbers if folks care (once under contract/purchased)

    Also, I have a place I closed on in Indy on Friday (a last year deal based due to how I account for fiscal year with my birthday) and my team has an initial estimate of work. They think they can get the thing turned around and marketed 12/1. again, this is a last year deal but lapsing into this year. So it doesn't count for my 2016 acquisitions but that's ok, it all hits the bottom line :) the numbers were tight on this one but I like the area and based on conversations with my wholesaler and rehab/pm team it made sense even if not crushing the numbers I like. Sometimes you want to get the ball rolling with the teams and test the model. This is #1 for this model in Indy. if it goes well I can see a lot of deals due to good wholesaler network and my team on the ground from a rehab/rent perspective.

    1Reply
  • Shawn Holsapple
    Residential Real Estate Broker · Indianapolis, IN · Member since 2010 · 1k+ posts · 557 votes
    10y

    @Brian Larson - congratulations on your recent Indy purchase and the KC offer!

    IMHO - your time line is too long!  $10k per month is about 40-45 leveraged rentals.  That's only adding 6 per year.  Based on The 10x Rule - I'd suggested moving that date up to closer to your 40th birthday and see what happens!

    I started doing type of aggressive [crazy] goal setting a few years ago and I've been totally amazed on what can happen when you have "out of reach" goals set for yourself...

    Just my two cents.

    1Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    I think you are right @Shawn Holsapplethus that 41st bday is quickly becoming the new norm.

    do you know anyone that can help me achieve my goals? ;)

    thanks

    b

    0Reply
  • Franklin Exkorn
    Investor · Sparkill, NY · Member since 2013 · 4 posts · 1 vote
    10y

    Very inspiring reading your posts, Brian!  I will pick up the turner book and continue to look for your updates.

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    So as I sometimes do, I forget I committed to a diary on how things are progressing. Luckily the inactivity on the diary does not mean I am slacking in the actual process. onward.

    Updates:

    • KC 2BR picked up in September is rented out through 4/2017 so that is done. It was took a little longer to get the rehab done so we didn't have it ready to really be marketed until Thanksgiving and of course that makes it tough. I am happy to get it rented this month. rehab was on budget so that was great.
    • Indy 3BR picked up on 10/30 is almost done with rehab. Again, the rehab took longer than expected but only by a few weeks and is over budget by a whopping $500 so I am happy. Leasing agent walked it and thinks it will rent quickly
    • Bought new 3BR in Indy. it officially closed on Monday and we hope our rehab budget is in line. I think the area is a winner and we have a good opportunity to put a nice product on the market in late winter/early spring (goal of 6 weeks)
    • I have been looking at properties (or my people have) the past week and thought I had 2 really solid opportunities in KCMO. Unfortunately they just needed too much work to make an offer now. I am struggling in KC market due to only having MLS pipeline. I am hoping to get more access to courthouse properties and have a lead on what could be a solid wholesaler but TBD on both fronts
    • In Indy I have a property that almost works. I will need to offer a little under in order to make it work and pass if not accepted. There are other deals always coming to analyze.

    My goal for the year was to add 6 properties but want to accelerate. Because I count 11/1 as the beginning of my year I am technically behind (added 1 on last day of last year and 1 this year) but hope to accelerate.

    I will update as I get more properties under my belt and as status changes (rehab done, rented, etc)

    3Reply
  • Stephen Hundley
    Realtor · Lafayette, LA · Member since 2011 · 297 posts · 175 votes
    10y

    @Brian Larson thank you for sharing! I love your passion and commitment to making things happen!!

    0Reply
  • Rob Barta
    Roseville, CA · Member since 2008 · 13 posts · 2 votes
    10y

       Hello Brian,

    It looks like you are really making this happen.  I'm wondering how your note investment plans are working out, and how you are doing that part of your investment strategy.

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    Hey Rob, so that side is a little slower. Luckily that is the 'easy' part in the sense that I have several note brokers and I just need to make a choice to buy one or two. My goal is to add 2 @ $25k per note returning 13% per year. I have a note in front of me that only pays 12.1% but is for $60k so I could essentially take down the note passive income and amount in one feel swoop.

    Another reason I have been slow is because i have leveraged other investment opportunities. I am in a place right now where I have been keeping a healthy amount of cash for the purchase/rehab (B and first R before the other RR's) and also have enough cash on the side to either buy notes or invest in more appealing investments. As an example, I had a bridge loan out to someone wehre it was $60k for 6months and 8% return fixed (i.e. 16% annual). Instead of buying a note I took that deal.

    I know I need to get on notes and have a way to do so, but just haven't pulled the trigger as I need the rental unit ramp more than the notes so most effort going that way.

    Sorry, long answer to a short question.

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    Here is the latest news. I am trying to be better with updates.

    I picked up another in Indy. nice little house that is old....much older than i usually buy and we know we have foundation issues going in but the team is confident they can makes this place shine within a slightly inflated budget.

    other deal still pending but i should hear more shortly.

    KC is just happening right now and its not for a lack of trying. i hope to get one picked up soon.

    update on goal: 2 of 6 picked up this year thus far (note i am in 3rd month of my fiscal so on track for 8)

    update on mindset: it dawned on me the other day when chatting with my wife just what a surplus of adds/year means. every additional add shaves 2months off retirement goal date (45th bday). so if i can stretch to 9 additions this year and next, i will be looking at a 44th bday. if i really scale up then i can knock this way down....love it!

    2Reply
  • Rick Santos
    Rocky Hill, CT · Member since 2014 · 30 posts · 11 votes
    10y

    @Brian Larson this is great how you laid everything out with an actionable plan. Look forward to your updates!

    0Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    10y

    Thats funny that you hit on those numbers 38 and the goal is to 45.

    I bought my first intentional rental at age 38. My initial "dream" goal when I started was to hit 10 houses - 1 a year. I actually thought that was pie in the sky when I set it. After I did my first one, I was hooked. I set a new goal of 3 a year. I hit that almost every year. It wasn't as easy it sounds given how there were no lenders wanting to lend in SFH investment properties during the bust.

    But fast foward to now when I am now 45......

    I have 51 houses (#52 under contract).  Once these recent purchases are rehabbed and put into service, I'll have a net income of roughly 13k a month. And my net worth is a little over 2.5 million. 

    One thing I would add thous is doing 3 a month would not have gotten me to this point. As the financing environment loosened back up about 3 years ago, I jumped from 3 to 6. And then to 10 and then to 18...... 

    It was a crazy run. But your goals are very doable. 38 to 45, I went from 0 a month in rental income to 13k net per month. And I went just above your net worth goal.

    Given that you have a pretty good head start, I'd bet just about anything you can double your numbers and thats probably where you are going to end up when you're 45..... 

    Good luck. But I would definitely recommend sticking with it. Its not always easy. But when you get there, you'll look back and have the kind of options in life that no other investment vehicle on the planet outside of real estate could have offered.....

    6Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y
    Originally posted by @Mike H.:

    Thats funny that you hit on those numbers 38 and the goal is to 45.

    I bought my first intentional rental at age 38. My initial "dream" goal when I started was to hit 10 houses - 1 a year. I actually thought that was pie in the sky when I set it. After I did my first one, I was hooked. I set a new goal of 3 a year. I hit that almost every year. It wasn't as easy it sounds given how there were no lenders wanting to lend in SFH investment properties during the bust.

    But fast foward to now when I am now 45......

    I have 51 houses (#52 under contract).  Once these recent purchases are rehabbed and put into service, I'll have a net income of roughly 13k a month. And my net worth is a little over 2.5 million. 

    One thing I would add thous is doing 3 a month would not have gotten me to this point. As the financing environment loosened back up about 3 years ago, I jumped from 3 to 6. And then to 10 and then to 18...... 

    It was a crazy run. But your goals are very doable. 38 to 45, I went from 0 a month in rental income to 13k net per month. And I went just above your net worth goal.

    Given that you have a pretty good head start, I'd bet just about anything you can double your numbers and thats probably where you are going to end up when you're 45..... 

    Good luck. But I would definitely recommend sticking with it. Its not always easy. But when you get there, you'll look back and have the kind of options in life that no other investment vehicle on the planet outside of real estate could have offered.....

    Thank you for the comments Mike.  I have seen many of your posts and definitely would like to (maybe I am starting to) hit the scale you have found. 

    I agree,  the financing is easier but the deals are harder to find.  It's funny,  but I now see how you can 'win'  when the market is hot and when it's not. 

    Thanks

    B

    0Reply
  • Eben Cook
    Investor · Lindale, TX · Member since 2016 · 18 posts · 3 votes
    10y
    I have tried to stay in my small town to invest. The house prices are high due to great school district. It is extremely hard to find those great deals i keep reading about. Is it safe ti say i should expand my market? I am in north east Texas between Dallas and Shreveport. There are small towns around and a larger(100,000) city 25 miles away. Much competition for those great deals. Any tips helpful. Struggling with numbers too.
    0Reply
  • David Veeder
    Investor · Dallas, TX · Member since 2014 · 112 posts · 83 votes
    10y

    Looking to buy and hold or flip?

    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    Here is the latest. In order to keep them straight I will number them. This is 'all time' not numbered by this years addition (i.e. #3 may actually be my first addition this year)

    • Indy #3 - rented out on 2/7. Rented higher than initially planned. Happy with that. I am refinancing it now, should wrap early March
    • Construction on Indy #4 starts Monday with plan for mid March completion. will refit after
    • Indy #5 - I don't have final numbers yet but should soon. This rehab will take some time
    • I did not get the place I last offered on. We could not agree on price. Very close but the margins were already tight (as my ARV was lower than hoped) so I bailed. No worries, great seller so we will hook up on the next one
    • KC refi will start this week
    • KC still slow. May look to new pipeline
    • I definitely am looking for properties to add but sticking to the plan and the numbers
    • Notes - meeting with my note broker this week. My fund has been a bust so fr. No notes available to purchase
    I hope to have something new soon
    0Reply
  • Brian Larson
    OP
    Investor · Redondo Beach, CA · Member since 2009 · 147 posts · 129 votes
    10y

    alright, time for another update. it has been crazy the past few weeks (in a good way) and will look to continue into next month pretty easily. 

    • Indy
      • Refi on Indy #3 in progress. My guy @Jerry Padillahandling that one. Hope to close the refi in the next few weeks. 
      • Construction on Indy #4 has started and should be on track for mid March completion. I will get it rented and refi'd asap
      • Indy #5 - I still don't have final numbers yet. This rehab will take some time
      • Indy #6 - the place I offered on actually came back around to a price the seller and I could agree. All good and closed today. This will be a light rehab so we will get it started next week and hopefully have it ready the same time #4 winds down. Then onto rent and refi. 
    • KC
      • KC still slow. Have an interesting opportunity out there that i am going to pursue to see if we can beef up the pipeline of deals. I have a meeting Monday to discuss withe the team. 
    • Notes
      • I will close on a 1st position performing note early next week. 12.1% yield.14 years left on note. Not bad. 
    • Misc
      • i really ran into a cash crunch as i have so much in rehab state and i needed cash for this Note purchase. I found a new stream of private money so i was able to put another under contract and will do so once i see the PA (this weekend or Monday).
      • I have passed on many 'deals' that do not match my criteria. This is the hardest part but the great thing is that i pass on one that doesn't fit and a few days later a better/more aligned one comes across. Serve at the criteria's alter :)
      • I completed my DST and have begun getting bank accounts, cars, properties and notes into the proper entity.

    My acquisition chart that i have on my wall in my office (hand drawn tracking) is starting to look silly with the goal approaching 66% complete in the first week of March (my fiscal year runs through 10/31). If i were able to sustain this pace I would average 1 property add per month and double what i set as a target. crazy. 

    thanks for reading.

    1Reply
  • Patrick Young
    Real Estate Investor · Springfield, VA · Member since 2014 · 41 posts · 17 votes
    10y
    If you don't mind me asking it sounds like you need a huge pool of cash to buy this many properties so quick. Are you buying with your own cash or using private money and then refinancing?
    1Reply
  • Lance Robinson
    Investor · Scottsdale, AZ · Member since 2015 · 130 posts · 102 votes
    10y

    Brian - Subscribed! Solid goals and looks like you're blowing them out of the water already to begin to up those goals for next year! : )

    Keep it up, excited to see how it goes!

    Lance

    0Reply
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