Podcast Summary
Expanding a Real Estate Portfolio with Minimal Cash Outlay: Jenny Bayless' success with the BRRR strategy and rent-to-retirement method shows how to acquire multiple cash-flowing properties with little to no money down, building wealth through cash flow, appreciation, and equity.
Real estate investing can lead to acquiring multiple cash-flowing properties with minimal initial cash outlay, as demonstrated by Jenny Bayless' experience using the BRRR strategy and rent-to-retirement method. This approach allows investors to expand their portfolio and build wealth through cash flow, appreciation, and equity with little to no money down. By utilizing resources like BiggerPockets and companies such as Rent to Retirement, investors can access education, networking opportunities, and financing solutions to help make these strategies a reality.
Discovering Real Estate Investing as an Alternative to Savings or Retirement Plans: Real estate investing offers opportunities for both active and passive income, making it a valuable consideration for wealth building.
Real estate investing is an accessible and profitable alternative to traditional savings or retirement plans. Jenny Bayless's story, like many others, began with a desire to find better investment options than a savings account or 401k. She discovered real estate investing and was drawn to its potential benefits. However, she initially believed it was only for the wealthy. Once she learned otherwise, she made the decision to invest, even in expensive markets like Denver. Another option for those interested in real estate investing but who don't want the hassle of ownership or management is passive investing through platforms like Connect Invest. This allows individuals to earn a fixed monthly income without the responsibilities of property ownership. Overall, the key takeaway is that real estate investing offers opportunities for both active and passive income, making it a valuable consideration for those seeking to build wealth.
An Accountant's Journey into Real Estate Investing: Accountants have unique skills that can benefit real estate investing, such as understanding financial statements and tax laws. Starting with turnkey properties out of state can be a good beginning, but investing locally and doing BRRRR transactions can lead to greater equity growth and scalability.
Real estate investing is not limited to the wealthy or those with a business background. Accountants, in particular, can bring valuable knowledge to the table due to their understanding of financial statements and tax laws. Jenny, an accountant and real estate investor, shares her experience of starting in real estate investing by investing in turnkey properties out of state, but later discovering the benefits of buying local properties and doing BRRRR transactions to create equity and scale faster. This discovery led her to reevaluate her strategy and invest locally instead. While turnkey investing can be a good starting point for those new to real estate, local investing can offer greater potential for equity growth and scalability.
Learning from Turnkey Real Estate Investments: Turnkey investments offer a low-risk entry into real estate, but investors should aim to transition to self-managed properties for greater control and potential returns.
Turnkey real estate investments can serve as valuable learning experiences for beginners, providing a foundation for understanding the investment process while minimizing risks. However, they come with trade-offs such as limited control, inability to create equity, and dependence on the turnkey company's management and contractors. Ultimately, the success of a turnkey investment depends on the reputation and reliability of the company. While they can be an excellent starting point, investors should aim to transition to self-managed properties to maximize their potential returns and build long-term wealth.
Doing Your Own Due Diligence is Key to Long-Distance Real Estate Investing: Even when hiring experts or investing locally, it's essential to conduct thorough research and math to ensure successful real estate investments.
While it's possible to invest in real estate long-distance, it's important for individuals to still do their own due diligence and math, even if they trust the expertise of others. This was emphasized in a discussion about hiring property managers and making investment decisions based on market research. The speaker shared her personal experience of transitioning from out-of-state turnkey properties to a local market in Colorado Springs, where she found success by researching the market and starting with a single-family home purchase. The first property, which she referred to as an "accidental BRRR property," was acquired through a conventional loan and self-funded rehab. Overall, the message was to take an active role in your real estate investments, even if it means driving an hour or two to check on properties.
BRRRR strategy for wealth accumulation: Buying undervalued properties, fixing them up, renting, refinancing, and repeating can generate substantial wealth through immediate application of funds from each sale
Buying a property below market value and then fixing it up, renting it out, refinancing it, and repeating the process (BRRRR strategy) can lead to significant wealth accumulation. The majority of the profit is made when you buy the property, and each subsequent purchase builds upon the previous one, allowing for the stacking of wealth. This strategy is effective because it allows for the immediate application of funds from the sale of the refinanced property towards the purchase of the next one. By consistently buying properties at a good price, the potential for wealth growth is substantial.
Building Wealth with the BRRRR Strategy: The BRRRR strategy involves buying fixer-uppers, renovating them, renting, refinancing, and repeating for wealth accumulation in real estate. It attracts better tenants, generates higher rental income, and provides a cushion during market downturns.
The BRRRR strategy, which stands for buy, rehab, rent, refinance, repeat, is an effective method for building wealth in real estate. By buying fixer-uppers, renovating them, renting them out, and then refinancing, investors can recoup their initial investment and repeat the process. This strategy, which has been used for decades, allows investors to attract better tenants, generate higher rental income, and build a substantial real estate portfolio. Additionally, the strategy provides a cushion during market downturns, as the initial cost basis is lower than the refinanced value. To find good deals, investors need to be persistent and look for properties with distress that they can solve. So, if you're interested in building wealth through real estate, consider giving the BRRRR strategy a try.
Creating Deals Instead of Just Waiting for Them: Successful real estate investors actively seek out deals, negotiate favorable terms, and think creatively to turn potential investments into reality
Successful real estate investors don't just wait for good deals to come to them; they create them. In the discussed example, the investor was able to negotiate the seller to pay for structural repairs at closing, saving them money on a lower-priced property. This strategy, along with making multiple offers and thinking creatively about property potential, led them to buy a second property on the same day and eventually amass 10 buy-and-hold properties in Colorado Springs. The investor also shared their experience of finding deals on the MLS and off-market, including through methods like Zillow's "Make Me Move" feature. Ultimately, the key takeaway is that real estate investing requires proactive effort and creative problem-solving to turn potential deals into reality.
Building Strong Relationships in Real Estate Investing: Networking, communication, education, and trust are key to successful real estate investing. Building relationships with agents, contractors, and other professionals can lead to valuable insights, better deals, and increased chances of success.
Being proactive and building strong relationships with real estate agents and contractors can lead to successful real estate investments, even in markets where competition is high. The speakers shared their experiences of using creative strategies to secure deals, getting help from agents to assess properties remotely, and learning from contractors to estimate rehab costs. They emphasized the importance of networking, communication, and education to navigate the challenges of investing in real estate. Whether you're a beginner or an experienced investor, building a team of trusted professionals and learning from their expertise can help you make informed decisions and increase your chances of success.
Understanding Contractor Pricing for Effective Real Estate Investing: Learn how contractors evaluate and price their work for effective communication and informed decisions. Utilize resources like BiggerPockets rehab estimator calculator to help navigate contractor bids.
To effectively navigate the world of real estate investing, it's crucial to understand how contractors evaluate and price their work. This knowledge will help you communicate effectively with them and make informed decisions. The metric they use can vary, from price per square foot for flooring and countertops to cost per unit for certain projects or a flat fee for others. To further assist you in organizing and understanding contractor bids, BiggerPockets offers a rehab estimator calculator. This tool allows you to input various categories and choose between three common ways contractors estimate projects: time and material, cost per unit, or flat fee. Moreover, being well-versed in various aspects of real estate investing but not doing it all yourself is a successful strategy. For instance, Jenny, a successful real estate investor, understands how contractors value things, how to increase ARV, and how to manage properties. However, she doesn't swing the hammer or run appraisals herself. Instead, she hires experts and ensures she makes the right decisions by understanding their roles and perspectives. In summary, having a solid foundation of knowledge in real estate investing and the ability to communicate effectively with contractors will set you up for success. Utilize resources like the BiggerPockets rehab estimator calculator to help you along the way.
Treating real estate investing as a business: Focus on growth and scalability by buying properties at a distance and outsourcing management for financial freedom
Successful real estate investing often requires treating it as a business rather than just handling issues as they come up. By buying properties at a distance and outsourcing management, investors can focus on growth and scalability. Jenny, a real estate investor, shares her experience of buying properties an hour away and prioritizing growth over handling every problem herself. She's currently focusing on paying off her first 10 properties to retire comfortably. This strategy, as Jenny and her partner discovered, can lead to financial freedom even with a smaller portfolio. The key is to adopt business principles and outsource tasks, rather than relying on employment principles and handling everything yourself.
Revolutionizing Real Estate Finances with Technology: Open a business bank account online, collaborate with team members, and access high-interest investment opportunities, all through technology in real estate financing.
Technology is revolutionizing the way real estate investors manage their finances and invest in properties. With Relay, you can open a business bank account online for your property and collaborate with team members, all without leaving your home. Plus, there are no monthly fees or minimums. Another financial solution, Fundrise, offers high-interest rates for investors looking to fund top real estate projects during this liquidity crisis. Meanwhile, 1031 Pros can help you save on taxes through 1031 tax-deferred exchanges. In the deal discussion, Jenny shared how she negotiated a discount on a Colorado Springs single-family home and purchased it using a hard money loan. These innovative solutions and strategies highlight the importance of staying informed and utilizing available resources in real estate investing.
Effective communication with tenants during renovations: Clear communication with tenants during renovations can lead to a successful BRRR strategy, maintaining a good relationship and ensuring a satisfactory outcome for all parties.
Effective communication with tenants can lead to a mutually beneficial situation. In this specific deal, the property was tenanted when it was purchased, and the tenants were understanding and accommodating during the repairs, which resulted in a fully repaired house for them. The landlord was able to increase rent gradually each year and reach the market value. A hard money loan was used to purchase the property, which was later refinanced into a conventional loan. The property's ARV was 160,000, and the outcome was a BRRR strategy with a rate term refinance. The lesson learned was the importance of effective communication with tenants to ensure a smooth renovation process and a satisfactory outcome for all parties involved. The tenants appreciated the improvements made to the property and felt it became their home. While rent was gradually increased, the landlord was mindful of the tenants' feelings and did not raise it significantly overnight.
Effective Approaches for Landlords: Focus on Capital Expenditures: Focusing on capital expenditures is a more effective approach for landlords to maintain and improve properties, leading to potential tenant loyalty and returns, while adequate reserves are crucial for unexpected expenses.
While small gestures like tenant gifts can be considered, they may not necessarily lead to significant returns or tenant loyalty. Instead, focusing on maintaining and improving properties through proper capital expenditure planning is a more effective approach for landlords. The discussion also highlighted the importance of having adequate reserves for unexpected expenses. Some landlords prefer having a large reserve, while others can manage with smaller reserves due to their financial situation. Ultimately, it's essential to understand your properties and financial capabilities to make informed decisions.
Commitment is key to real estate investing - train like an ultra-marathon runner: Commit to your real estate investment plan and take action, use affordable and durable materials for property upgrades, and utilize software for organization and management.
Commitment is the key to successful real estate investing. According to the guest, Jenny, commitment means putting action to a plan. She used the analogy of training for an ultra-marathon to illustrate this point. Just as you can't expect to run a 100-mile race without putting in the necessary training, you can't expect to be a successful real estate investor without taking action on your investment plan. Jenny also shared some practical tips for real estate investing, such as using laminate flooring and countertops for durability and affordability, and using software like QuickBooks, Cozy, and Buildium to stay organized and manage multiple properties. Additionally, Jenny recommended the books "Managing Rental Properties" for real estate and "Cash Flow Quadrant" for business as valuable resources for investors. In her free time, she enjoys traveling and a unique hobby called zorbing, which involves rolling down a hill in a giant ball.
The Power of Committing to Your Goals with a Clear Plan of Action: Desire alone is not enough to achieve goals, you need to commit and take action with a clear plan to turn your desire into reality.
There is a lot of value in committing to your goals rather than just desiring them. Jenny Dang shared a powerful insight during her interview on BiggerPockets Radio, emphasizing the importance of having a solid plan of action behind your commitments. She explained that while some people may claim to be committed to certain things, the difference lies in whether or not they are taking action towards achieving them. Jenny's experience in real estate investing is a great example of this concept in action. She is committed to building her business and being a good husband and father, and she has a clear plan for how to do so. This commitment, coupled with action, has led her to success. So, if you want to make progress towards your goals, remember that desire alone is not enough. You need to make a commitment and take action to turn that desire into a reality.
