Mike: Alight guys, welcome back to the Discount Property Investor podcast. I'm your host Mike Slane, joined with co-host--.

David: David Dodge, good morning, Mike.

Mike: Good morning, Dave. How are ya today?

David: Doing good, buddy. Good afternoon if it's afternoon time.

Mike: Good evening if it's evening. Let's think about some other languages. Beunos dias-- amigos! I don't know; whatever. Alright guys, what are we talking about today, Dave? I'm excited, because it's one of my favorite things to talk about; rental properties.

David: Yes, rental properties. Specifically getting them with little to no money.

Mike: Yes, that is one of my favorite ways to get them. I think it's just because-- my whole life I have always been, what's the nice way to say it? Thrifty. I just like getting stuff for a deal.

David: Who doesn't?

Mike: I always found that really exciting. So when we stumbled upon this, and it was really our third partner Bill, who doesn't do the podcasting as much with us, but he's out there grinding, doing deals with us, and he has always been out there just hustling. What he does, or what he kind of taught us, and again, this was before BRRRR became the terminology that everyone knows it as today, he was doing BRRRR, he was buying rentals, he had a little bit of cash and said, you know what? I'm going to buy some rentals. He leveraged the bank money because he was a bankable person. He said, I've got this great job, I am going to refinance these rentals out. Again, he was able to get properties and have little to no money in them. That is essentially the BRRRR method, is buying a property, rehabbing it, so fixing it up, and again, I think there is a difference between rehabbing and remodeling, this is rehabbing the property.

David: Yeah, that's a good point.

Mike: Renting it out, so getting tenants in place, so you have a cash flowing asset, and then refinancing that property. So you've basically put your money in, then you are able to pull your money back out. So that's how you're getting a property at a discount in my opinion. It's not getting a discount, but you are leaving very little money into it. It's a very thrifty way, an economical way to use your money. You use your money to buy it maybe, or you borrow somebody's money. We use private lenders here in our business, then you refinance it out. You are getting all that money back, and you have a cash flowing rental.

David: That's right.

Mike: It's unbelievable! It's unbelievably powerful. We are excited because Dave really hits the wholesaling hard, and I have been hitting this really hard. We are excited to help some people jump into this. If wholesaling isn't your thing--.

David: That's okay.

Mike: Yeah. Contact us, we would be happy to help you guy learn the BRRRR method as well.

David: That's right.

Mike: So --.

David: Let's talk about the BRRRR method. Let's break it down. As Mike state earlier, buy, rehab, rent, rehab, refinance, repeat. That's what it is. The way I look at the BRRRR method, or the method at all, is all it is, is a strategy to acquire a lot of rentals very quickly-- let me rephrase, it's a strategy to acquire a lot of assets very rapidly with little to no money, right? Now, the BRRRR method does take some time. I want to preference that to people.

Mike: Dude, that's--.

David: You have to have some time invested to get it to work properly, especially if it's not your own cash purchasing, you're borrowing that down payment money. It takes time.

Mike: You could be borrowing, exactly you could be borrowing down payment and rehab money from somebody, then financing the rest with a bank, so again, you could still be 100%, you know, leveraged.

David: We do with our business.

Mike: We do. A lot of private lenders, so it's just easier and faster to buy and close on the properties, then we will refinance with the bank at the end of the day when we are finished with everything.

David: Right. But, nothing in life that is worth anything is quick or is free, you have to earn it.

Mike: Let's talk about-- there's kind of a neat distinction though. There are different personality types that match up with different investors. There is more the running and gunning, and the sales type. I like to go out there and hustle.

David: Sure.

Mike: You can wholesale, and that little bit more aligns with somebody who likes to wholesale. Again, if you don't have any cash and you need to get chunks of money, and you like going out there talking with people, wholesaling is the perfect strategy.

David: Right.

Mike: We always encourage people to start there, because again, you learn so much about real estate.

David: It's the best way to get the best deals too, and you're in control.

Mike: It is, again, you just learn so much about real estate. Dave has shared his story multiple times. Just about how he has learned--.

David: Learning every day. Learning new things everyday.

Mike: Perfect.

David: Absolutely. So the process takes a little bit of time, but that's okay. I think the most important part of the entire process is the refinance. And I think that people should start with that, instead of think that's the end game. Whenever you're playing this-- this game consistently, that is the end game. To refi you pay yourself back or the lender or lenders, that you borrowed the money to get into the property with. But, you have to know going in that you have an exit, that you can get refied. To me, I suggest people start by getting a relationship, or building a relationship with a local banker. So that way they can actually do this.

Mike: Very important. That's one of the things in my journey in real estate investing that I wish I had of done--.

David: Sooner?

Mike: Exactly. I would have gotten bankable, and I would have kept my day job for longer. Again, it's very exciting, I am going to quit the job, going to jump into wholesaling full time and I'm going to make money. That is awesome, and I applaud people that do that, and have the guts to do it, I did it. Again like I said, I wish I would have waited, because I had a W2, it would have sped up my journey to owning my own little rental and buyer, just being truly financially free.

David: Yeah absolutely.

Mike: If I would have got as many loans as I could have while I had that W2, then seeing where I would have gone next. Again, Dave has a really good point; focus on the end goal when you are a rental investor, and you're going to be much better off. Go out there, talk to your local banks, find someone who will work with you. If you can't find one that works with you, listen to them. Why did they not finance you? That's the question you have to ask. They will have an answer.

David: Use that a learning experience.

Mike: You have too much credit card dept. Your dept to income is a little too high, we don't think we can get you-- we can't do it. Well perfect, okay great. Work on lowering your debt to income.

David: Yeah, turn those bankers into coaches.

Mike: They are happy to do it, they want to loan.

David: They want to loan, that's how they get payed. What have I got to do to get a loan from you guys? Here's the list, I will go start working on that list, yeah absolutely. But having the ability to refinance these properties out-- is the most beautiful thing about the BRRRR strategy, and it is really what makes it so powerful. So if you are not able to get a loan, the strategy won't work for you today. Doesn't mean it won't work for you later, but definitely start there.

Mike: It's extremely important to know, because if you borrow private money to get started, and you are unable to refinance it out, well you are kind of SOL guys. You cannot-- I would not recommend starting down that path unless you can get a loan at the end of the day.

David: Totally agree.

Mike: Cool. So that's the--. That's like one of the last R's, right? The next one is repeat. Again, we are going to say go ahead and you R on on this one, and get your refinancing lined up again of time, extremely important to focus on that first.

David: That's right.

Mike: Next up, okay let's talk about buying rental properties. So Dave you mentioned that if you are out there wholesaling, you've done that, it's a great place to find the best deals, because you know what you're looking for, you know what deals are, right? Well let's say you're not a wholesaler. Let's say you're working that day job, your 9-5, you have got approved by the bank, or you know you would be approved by the bank. How do you find the best deals?

David: You can contact other wholesalers and buy deals from them. That's a great place to start if you have no time or money to do your own marketing. You are going to pay those guys a wholesale fee. But you can still get great deals from wholesalers. We buy from wholesalers all the time, even though we are wholesalers.

Mike: One thing you are going to find from wholesalers more often than no are distressed properties, which guys is really what you're looking for. You are going to do a rehab so that you can add value to that property.

David: Before we talk about the buy, let's just take a quick second to-- explain how this works for most people. So when we're talking about getting a refinance-- so we are going to work this whole thing backwards real quick. We need to be in the deal for little to no money, let's just say no money. We have to have our refinance pay back all of our lenders. When a bank gives you a loan, that loan is going to be usually between 70-80% of what the property appraises for. So the goal is what do we think this will appraise for? Can we get it cheap enough that we can pay our lender's interest, and increase the value of the property, yet still be blow that 70-80% of the appraisal? So there are a couple of things that we have to factor into play here. To get into a property for no money, which is very possible, Mike and I have done it 40 plus times, in the last couple of months alone. We have to be buying at a steep discount as well as increasing the value of the property via a rehab to make those numbers work. Again, it starts and ends with the appraisal or the ARV of the property. Then we determine what the cost to fix that property is, plus the cost of the interest that we are going to be paying to borrow to get the deal done. Then, at the end, we are in it for 70-80% of what it appraises for. So when we are talking about buying, we need to know that, that's something that is very important, especially if I want to be in a deal for little to no money, in this scenario no money.

So just to use a quick example, let's just say I think a property after I rehab it, again, that's where the after repair value comes in, the ARV, is going to be worth a hundred grand. I assume I am going to be able to get an appraisal at a hundred grand. Well I know my bank in this area is lending at 70% of appraisal, not 80. So I know at the end of the day, if I can get it to appraise at 100 thousand, that I can be in it for no more, not a penny more than 80'000, right? Because that's what they are essentially going to lend to me on this deal. So if I have to spent 10'000 in rehab, or renovation, to get it to appraise at 100'000, then I need to be at 70'000 in purchase, not 80, and I need to also compensate for my holding costs, my interest, my closing. So really I need to be closer to about 65'000 in order to make this deal work. My offer would probably really be at 55-60 to allow for some wriggle room. But you have to account for the amount that the appraisal is going to take off which is 20-30%, and then the cost of the repairs. So you really have to be buying great deals to do this. You can still find these deals from wholesalers, but they have to be really great deals. You can't be paying 20 cents on the dollar when it needs a rehab still.

Mike: That's a great point, Dave. I think that is extremely important. Rental investors have to be a little more analytical, and it's begin with the end in mind. So that's what Dave was talking about; you have to think about your refinance, because that is kind of the end game here. You have to think about that ahead of time, all the way back to when you're buying the property, super important.

David: That's really when it starts. There isn't really a beginning and an end with the BRRRR, it's kind of like you're doing all of them at once. Not all--.

Mike: Once you have done one or two of them, you realize it's just kind of a circle. You are just going to keep riding that Ferris wheel of buy property, fix property, rent a property, rehab a property. You are just going to keep following that circle.

David: 100%.

Mike: What's neat about it too is-- you can recycle the same money. If somebody out there has a day job like we said, you could literally just keep using the same funds that you have access to. Maybe you have a 401K or an IRA you can tap into to, money from yourself. You could use that to build your rental portfolio.

David: Or a life insurance policy, a lot of people have that, or know somebody that does, and they can lend against those policies.

Mike: Yeah, so there are a lot of ways to--.

David: But you don't need millions of dollars to do this, you need a little bit of money from somebody, or a hard money lender, there are companies that provide this too.

Mike: This is not a get rich quick play. This is a get wealthy slowly play. I don't know who the quote comes from, or what the quote is anymore. It talks about-- real estate is like the number one way people build wealth. You know what I'm talking about?

David: Yeah absolutely.

Mike: It's literally like-- you're going to get wealthy--.

David: It's the number one way I'm building my wealth.

Mike: One of the things you told me a while ago; I am so bad at saving. These are just like little piggy banks.

David: Exactly what they are.

Mike: Who cares? Again, when you create--.

David: -- put your savings on auto pilot, you don't have to be good at it.

Mike: Exactly.

David: And that's the beautiful thing.

Mike: This is fun. So we talked a little bit-- we are really good at train of thought guys, we just keep changing it up. Let's talk about buy. You want-- what do you want to buy? We suggest you kind of define your rental criteria. Go out there, network with other people, see what they are buying, and see what's going to work. What is going to cash flow you $300-400 per unit? Decide what your target is ahead of time. Decide what your target ARV is going to be ahead of time.

David: Figure out what the bank is going to loan on that ARV ahead of time. Is it 50%, 70%? Some places could be 85%, right. It could be 97% if it's FHA and you move into it for a week then you move out and rent it out. I am not suggesting you do that, but things happen.

Mike: That's a really good point, Dave. Again, the different amount that they will lend on the property effects everything ahead of time. It is, what can I pay for the property? So again, if you can only get a 70% loan to value--.

David: There are things that can change in the formula, and there are things that you can't, like the appraisal. You can change it a little bit by the quality of your rehab, but it is very fixed, right? The repairs on the other hand, you could swing 300%. Somebody could spend ten grand or spend thirty grand, right? But that could be in your control. Just certain things you can and can't control.

Mike: Tiny little example and I love this, hardware on your kitchen cabinets. The hardware on your kitchen cabinets, you're going pay $3-5 per little door knob at Lowes, HomeDepo, Manards, if you are getting kind of the higher end nicer looking finish. You are trying to cut costs. If you are not just putting the cheap looking-- maybe you can find those for a buck. Jump on Amazon and you can get these for a dollar a piece. Again, I buy the hollow five inch-- three to five inch bars. Those are going to be five or six bucks a piece at the hardware store. They are 97 cents, I buy 50 of them at a time. It looks and has the feel of that higher quality rental, higher quality improvement, but you are going to cut your costs by 80%.

David: Another thing too that is a pro tip on this topic is, if you put nicer hardware on it, the tenants are generally going to treat the cabinets with a little bit more respect too.

Mike: Right. You don't want them slamming doors.

David: Hopefully if they look nicer.

Mike: That's another thing, we try to create win win situations with our tenants as well. This is one of our big things back in wholesaling, we are always looking for a win win deal. Well we are looking for a win win when we buy the property, and we are looking for win win when we find a tenant. We want them to be happy. We don't want to have a high maintenance cost on these properties that we freshly rehabbed. So we are trying to do things to decrease our maintenance when they are living there, and decrease our maintenance when the turn over happens. That is one of the things and it's huge now. We have been using it for years is the luxury vinyl flooring. You want hard surfaces everywhere so that you don't have to rip out and replace carpet every time tenants turn over. It is just notorious hassle when you are renting stuff. Another thing we do is use the same paint color on every one of our rentals. It's really boring, it's grey and white everywhere. Guess what? When a tenant moves out, a lot of times we able to just send our guy in, in half a day he can touch up all the front. It is going to blend back into everything.

David: Versus having to repaint everything.

Mike: The whole house. So there are lots of little tips like that, I kind of digressed and moved over to that rehab portion of it. So back to the buy side again. You have to define what you want to buy. We like three bedrooms one plus baths. We like the bonus rooms in the basement. Again, you can kind of charge a little bit more for rent. So you are going to be able to massage your numbers a little better, get that higher cash flow. We like-- what else do we like, Dave? We like 100k target ARV.

David: 800 square foot or more, 100k target ARV. It can't be in a terrible part of town. We have some in B and C class neighborhoods, we would avoid D I'd say, definitely avoid D. We can't afford A, BRRRR is very difficult to make happen in A as well. One thing I do want to point out is-- the best way to get-- to have your end result end 80% or even 75% of the appraised amount is to add value to home via the rehab. A lot of bankers, and this is going to vary where you live and also on your relationship. But a lot of bankers are going to want to see at least $15-20'000 worth of rehab done on a property before they will even consider lending you on the appraisal versus the cost. That is one thing we kind of skipped over in the beginning I think, Mike, but most banks will happily lend on the appraisal, they will. But, they will only do that when the borrower can prove two things; one that they are legit, they don't necessarily have to have a track record, but they need to be lendable, bankable as you mentioned earlier. Number two, that the property was recently renovated or rehabbed and the value has increased, because the bank is taking a risk too. When they loan you money, they are basically on the hook for that house as well, just like you. They have to take it back from you, they want to make sure that it is something they can easily liquidate. So I think the rehab is very important, but also you can sometimes get two maybe three X in value increase versus the cost if you do it right. You can spend 15k and increase the property value by 30 or 40 in some scenarios.

Mike: Exactly.

David: It depends though.

Mike: We have talked about buy. Find your criteria, most likely work with wholesalers or other investors to find some deals. You can also run to some agents if you have a relationship with an agent. Say, here is what I'm looking for--.

David: Or just start making offers, guys. There are deals out there all over the place if you look for them, and you are vocal about it. If you just sit around and say, they will probably not take my offer and not going to make my offer. Well you are never going to find a deal, so make offers. Agents, wholesalers, or do some of your own marketing. Yeah, start making offers, absolutely start with offers.

Mike: Buy them. We have talked a little bit about the rehab, we talked about trying to cut down on the rehab cost. What other pro tips do we have one that one? One, this is one of my favourites; it's buying a two bedroom house that is least 900-1000 square foot. If it has a dining room and an extra eat in kitchen, or eat in area, we like to add a third bedroom.

David: Convert that extra room.

Mike: Or a third bedroom to a fourth. If there is enough space, and that layout allows it, we like to-- a lot of times it's super easy, guys. You slap up a few two by fours, and some dry wall, put a door in, and you have a bedroom. It's really easy to convert some of the dining rooms into bedrooms.

David: It's not hard at all.

Mike: A lot of times dining rooms have closets already.

David: Some of them do.

Mike: Again, it is super easy to convert into a bedroom, that is a huge value add too.

David: It's huge, and in reality a lot of those rooms don't get used anyway, because people are hanging out in the basements. I know a lot of places around the country don't have basements, but we in the Midwest do. That basically doubles the livable square footage of some homes. If the family room had an eat in kitchen off the side of it that became a bedroom, you are losing a little bit of hangout space right there, right? But if you can add it-- if somebody has the option to use the basement it's not necessarily a loss.

Mike: You can inexpensively "finish" a basement by doing-- again--. All you would do is box out the utility room, you want to frame that out and make sure that's boxed off, maybe throw up an extra light or two in the ceiling, then paint. I mean literally just paint the walls, paint the ceiling, paint the floor. Could be considered good enough-- livable, people would go down there, it's not gross basement. But again, if you really want to jazz it up like Dave said, carpet squares, or the luxury vinyl, throw that down there too, just because it gives it a little bit of a softer feel.

David: It's decorated.

Mike: Those are our rehabs, some little tips. So buy, rehab, refinance. We started the episode--.

David: We forgot the rent.

Mike: Oh I'm sorry. Let's rent this out. So where are we at on our rents? I know when I started I used Cozy.co, not when I started out, not long ago.

David: I've used Cosy.co before too.

Mike: When we were self managing.

David: If you only have a rental or two, or even a handful, it's a great place to start.

Mike: So why is it great? Cozy.co allows you to do a couple of things, and I guarantee you, guys. If you Google property management software--.

David: Zillow has a thing too, free ones.

Mike: So what Cozy does, Cozy.co will allow you tenant screening, so they go on there and apply, I don't know what it is, maybe 20 bucks.

David: They pay for it though.

Mike: The tenant pays for it, so you are not making money off of it, and I don't recommend trying to make money off of applications, but that is neither here not there. So the tenant goes on, pays to basically apply for your property. That software goes out, does a background check for you, it can do a credit check for you, and provide you that information. It helps you screen the tenants. I suggest using another application as well, asking about prior rent history, things like that, so you can contact the previous landlord or landlords.

David: When you do the tenant screening online, that typically doesn't ask for that stuff. That typically just screens them for credit and criminal.

Mike: Exactly. Those are very important though, don't skip that step.

David: I know that Cozy probably has that built in. There are other services out there, LTS services--.

Mike: I'm not familiar with them.

David: I think they charge like 35-40 bucks. They will give you a thumbs up or a thumbs down if they would rent to that person which is kind of neat. I'm looking online right now, Zillow rental manager. They have tenant screening, online rent payments. So essentially there are lots of places, guys. Cozy.co is great one as well too, but essentially all that these systems do is they help you manage the process of renting, which is simple. You post your property for rent, put some signs out, make some ads online. Once you start getting candidates, you have them fill out an application. If they look like they have good job history and they can afford it; usually you want them to make 2.5 to 3 times the monthly rent in gross income. Then you want to screen them. Those results are up to you. If it comes back and they have a DWI from 14 or 15 years ago, that doesn't bother me, but you are screening them to make sure they are not--.

Mike: You have to apply by all the fair housing laws, but what's nice about using a third party service is almost nine times out of ten, they decline people--.

David: For you, on your behalf.

Mike: Which is part of the service--.

David: What you're looking for is evictions, not criminal necessarily. If they have a crazy criminal record, then maybe you won't want to rent to them, I get that. However you are really looking for evictions, foreclosures, default judgments. Reasons they wouldn't be able to pay you rent.

Mike: Also when you meet the tenant and you are talking with them, you get a feel for whether or not this is someone you want to live in your home. So my point is, these online services, they decline most of the people because of something. Again-- but you can make people feel comfortable-- you want to encourage people to reply, you want people to rent the house, they are not going to have perfect credit, they are not going to have perfect histories. Again, that is up to you. If you're looking for an angel, you are going to look a lot longer. If you are looking for an average Joe that can pay the rent, you are going to find those pretty easily if you have a decent property out there.

David: Once you get through the application process, put a lease in place. You can find leases online, contact us we will help you with that. Mike is offering coaching on this topic now which is awesome. Or, just contact a lot real estate agent you may know, they have residential lease forms that are really standardized.

Mike: You can buy them at Office Depo, or-- whichever one is still around.

David: Put a lease together, we recommend collecting one months rent as well as a deposit. We don't even sign leases with people until they have both of those. If they have half-- no thank you, come back when you're ready. We are not going to hold the property either. Beyond that you want to--.

Mike: So Cozy.co, I am going to go back to this one more time, I think again you mentioned the Zillow thing. They collect rent for you as well.

David: So does Zillow and a lot of the new ones too, yeah.

Mike: A lot of them do it for free if it's bank to bank. It has to be an EFT I think from them to their software, then to your bank account. It is a free-- very cool. So that's an option when you're managing a few properties, that is where we recommend you start, doing something like that as opposed to going out and hiring a property manager. Why? You need to know what property managers know and do.

David: Before you hire, I think that's a great point.

Mike: I think it's very important, because otherwise-- well why didn't you do this? Why didn't you do that? Well you have to understand what the property manager is dealing with as well-- just to be a better--.

David: I think everyone should manage at least for a few months hand it over, so they can understand some of the problems that happen with properties.

Mike: Here's a great example--.

David: Which isn't necessarily a bad thing, it's great, because you can learn, so let's here.

Mike: Without fail, when we rent a property out, within a week or two weeks you are going to get maintenance requests from the tenant.

David: Typically right away.

Mike: Why? Because when somebody moves in, everyone has a different opinion of what should function what way in a house. One person may be like, oh these mini blinds are not good enough.

David: My water isn't hot enough. The door knob is loose. That's okay, they identify issues for us, so we can help maintain and keep the property up to a par that we set pretty high.

Mike: What's great is that this sets the bar for your relationship too. Jump on these first maintenance requests first and say, hey I noticed you wanted this fixed. Be like, I am happy to help, I am making a list and will have somebody come out in a week or two to address all the problems.

David: Perfect.

Mike: I know when you move in there are going to be issues, and I would love to fix that for you. That sort of thing is really important, sets the relationship, and let's get off on a good foot with our tenants, you are trying to create a win win relationship. Let's go ahead and talk about-- buy, we talked about the rehab, we talked about rent--.

David: Let's pause for one second, when you are doing your rehab, you should know before you start, what your refinance banker is going to require from you. Again, there is a step by step process in the BRRRR strategy, but you kind of want to look at these things in advance like the refi, that is one of the most important parts. There is a big jump that everyone will encounter when they start using the BRRRR strategy, and that is-- their banker or lender giving them a loan based on the appraisal, not the purchase plus rehab. Typically the only difference between the two is that there needs to be a minimum amount of rehab. Of course you have to be bankable too, of course. But if you get to the point where you have good credit, and the banks want to lend to you, they will lend on the appraisal. You just have to ask them what their requirements are, so that way you can go about your buy and your rehab to meet those requirements. You don't want to get to refi and then they require a 20k remodel and you spend 13. They are not going to lend to you, or the numbers won't align. Definitely know your numbers. I just want to emphasize that.

Mike: What's that movie? Remember the movie? It's like the Alien movie where they come down and there are giant rock space ships. The language-- they spit out ink and it's like a circle?

David: Yeah that's Arrival.

Mike: So BRRRR strategy is kind of like Arrival with the little ink blots, where it's circuler where everything-- you have to know how everything relates.

David: It's not hard though, Mike and I just explained it. But yes, you are absolutely correct.

Mike: You do break it down into steps. But you can be doing all this stuff ont he circle at the same time.

David: We are, a little slow at this point, but eight to ten going on right now, two or three are in the buy stage, two or three or are in the rehab stage, two or three are done, they are for lease and being shown to people and we are taking applications. Two or three are already rented. They have been sent off to our bankers to be refied.

Mike: All day everyday.

David: So you have to realize that you can do all of these at once, but if you're new, contact Mike for help, because he is awesome at it.

Mike: I'm okay at it.

David: He's pretty good, he's a rock star. You want to make sure you have all the pieces in the puzzle together. Once you do, it's not hard either, you just have to know what you're doing. Once you do, you can start acquiring assets for little to no money. That's the beautiful thing about BRRRR.

Mike: Super exciting.

David: So the last R, repeat. Just do it all over, everyday.

Mike: Say one of these projects takes you six months, for easy math let's say six months. If you did this as your side hustle; buying a rental property, using the BRRRR strategy. Two in a year, right? Where does that put you in five to ten years?

David: Three years that's six properties.

Mike: Six properties. If you've got maybe, say 20k average equity--. Five years that's ten properties times 20k in equity, what is that?

David: By the fifth year, the ones you bought on year one and year two have been payed down.

Mike: Don't even worry about appreciation and depreciation and all this other stuff. In five years, if you just did this side hustle, just one property at a time, buying it and rehabbing it, you are going to have ten units that you have churned your money on. You will have ten units-- 20k is 200'000 in equity. Let's say you did $400 a month in cash flow in each unit. That's $4000 a month in cash flow, plus $200'000 in equity. I guarantee you, selling the essential oils what is the other one people sell? The fruit gummys. Selling that kind of stuff, it might make you a coupe of hundred bucks extra a month. It's not going to create $200'000 in equity, $4000 a month passive.

David: We talked about this earlier too, Mike. I am bad as saving money, try saving money when you make an extra 500 bucks here and there selling little things every time. I would rather get a check for a 100k every four or five years when I sell off a property or two, and I'm terrible at saving. So this puts it on auto pilot.

Mike: Again, when the market gets hot kind of like now, this is what Dave and I are talking about as our portfolio and our quest for 150 is-- we have been selling some off, the market is really good and we have more equity than we even wanted in them. Really fun stuff, guys. This is the BRRRR strategy, or Dave and Mike talking about the BRRRR strategy. If you have got questions please reach out. Dave, have you got anything else to add for anybody today?

David: Contact Mike if you want to learn more about this, guys.

Mike: Yeah, hit me up.

David: He has all the information, he is doing it for us. He has literally helped House Sold Easy, our company acquire 40 properties. I think our average price in them is less than a thousand bucks. Some are zero, some we leave a little in. They average out. So little to none is the way to describe it. It's not free, there are costs, there are efforts.

Mike: There is a lot of time and effort that goes into it.

David: But little to no money is 100% true. So check is out, guys. Thanks for listening. If you want more information contact Mike. He knows how to do this.