“Once you sell the asset, you're selling the golden goose,” explains Raina Bayas, real estate investor with The Bayas Firm. Today, Raina talks about how to use the BRRRR method to build equity and generate passive income.
The BRRR method refers to purchasing a low-cost home that needs a lot of work, investing in improvements, and then renting it out. At times, you may have to look outside your state for lower cost investment opportunities. Lenders will loan out 75% of the appraised value for the house, and you can use that money to invest in your next property and just keep doing that. When you flip a house, you will have higher taxes and a loss of long term equity. Instead of flipping and getting rid of that asset, get more out of your investment through renting out the property.
You have to be more careful investing in real estate when the interest rates are high. Even so, the BRRRR method is still a great way to achieve success and build long-term wealth.
Quotes:
“As a new person going into a new market that is very popular, Nashville or whatever, you cannot compete because there's already people there. It’s already saturated with real estate investors and investors that have been there for a long time that have already established relationships.” (7:14-7:31 | Raina)
“You have to create equity in the house.” (14:09-14:11 | Raina)
“Lenders will lend 75% of the appraised value of the house.” (15:23-15:29 | Raina)
“Once you sell the asset, you're selling the golden goose.” (18:33-18:38 | Raina)
“By doing a flip you're capitalizing on the equity that you can make right now, but then that's it. That's all you have.” (18:54-19:01 | Raina)
“A lot of people will buy a house looking at the current tax bill, not realizing that next year when it hits that you've bought this house for $20,000 more than what it is appraised at for the tax assessor that they're going to be raising your taxes.” (20:41-20:57 | Raina)
“A good BRRRR with the monthly cash flow, minus taking out maintenance and property management fees, is about a hundred dollars.” (25:41-25:49 | Raina)
Links Mentioned:
Connect with Raina Baya:
Website: https://www.thebayasfirm.com
Phone: (720) 619-3522
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