BiggerPockets Real Estate Podcast - 327: The “Buy, Rehab, Rent, Refinance, Repeat” Method Made Simple With David Greene

Episode Date: April 25, 2019

It’s here—THE book on BRRRR! And who better to write it than the leading authority on this strategy: our co-host David Greene. In this episode, he breaks down exactly how to “Buy, Rehab, Rent, Refinance, and Repeat” your way to wealth. David reveals how BRRRR allows him to force equity, leverage the talents of others, and recycle his capital so he didn’t have to keep working 100-hour weeks as a police officer. You’ll learn about the velocity of money, the “core four” players every BRRRR investor needs on his or her team, and the way to eliminate fear by taking a cold, hard look at the numbers. David also explains how this strategy can reduce capital expenditures and how to come to the bargaining table with a cash offer that puts you in the driver’s seat. He also addresses some common objections, including the notion that it’s difficult to influence the appraised value of your rehabbed property. Plus, you won’t want to miss the “Deal Deep Dive” where David goes into detail about one of his recent real-life BRRRR deals. Whether you’re brand new to this method of investing or are looking to fine-tune your BRRRR skills, this episode will provide you with a ton of value. Still, we only cover part of what’s in David’s book, so check it out on the BiggerPockets Bookstore. In This Episode We Cover: Who David is Defining and explaining BRRRR Discovering the main benefits to BRRRR How to increase your ROI Understanding what increasing the velocity of your money is Getting good at what you do How to decrease risk by building equity and pulling capital How to scale to financial freedom faster Ways to lower CapEx expenses And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Webinar Dave Visaya’s BiggerPockets Profile BiggerPockets Podcast 315: How to Read Human Nature to Succeed in Life with Bestselling Author Robert Greene BiggerPockets Instagram BRRR Calculator BiggerPockets Bookstore Books Mentioned in this Show Buy, Rehab, Rent, Refinance, Repeat (BRRRR) by David Greene Long-Distance Real Estate Investing by David Greene The Millionaire Real Estate Agent by Gary Keller So Good They Can’t Ignore You by Cal Newport Digital Minimalism by Cal Newport Tweetable Topics: “Make money work for me.” (Tweet This!) “Repetition builds mastery.” (Tweet This!) “Operating from ignorance or inexperience is operating with a massive amount of risk.” (Tweet This!) “Down payment has nothing to do with risk.” (Tweet This!) “BRRRR investing is about gaining equity without losing capital.” (Tweet This!) Connect with David David’s BiggerPockets Profile David’s Instagram David’s Facebook Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 327. It's time to burr. They say necessity as a mother of invention. And that was my problem. As I looked at my life, I'm losing my life doing nothing but working to make this money to invest in real estate. How do I do it differently? That burr was my how. So rather than having to work crazy hours to make this money, I just made my money work for me instead.

You're listening to Bigger Pockets Radio. Simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What is going on, everyone? This is Brandon Turner, host of the Bigger Pockets podcast here with the man, the myth, the legend, Mr. David Green. David Green, welcome to the show, man. Good to have you here. Thank you, my friend. Thank you.

very much. There is nowhere I'd rather be. Good, good. Well, today's show, I should hope not because you're the guest star. Not only you're the guest host, you are the co-host, you are the guest co-host interviewer, interviewee, I don't know. Is it an interviewee or interviewer of year? I don't know. You're the guy I'm interviewing today on the show. And in this one hour, I've patted my resume to add like 12 different things like you've just said. Very efficient, much like the Burr method. Very efficient. That's what we're talking about today.

through the Burr method. Look, here's a deal. People, like, we've been talking about Burr for a number of years here, our bigger pockets, like for the last, like, five years, right? And people love this strategy. Love this strategy. I built my portfolio on it. David built his portfolio on it. But the problem is, a lot of people still just don't get it. They don't understand all the rules behind it, how it works, the dangers. There are some things that are really important to be aware of. So we thought, why don't we do a show that is just like, here's everything you would ever want to know about Burr investing in a podcast, here you go. So that way in the future, when people are like, well, how do I Burr invest? We're like, listen to episode number 327 of the podcast. Oh, and also

David wrote a book on Burr investing, which we'll talk about today. So, you know, there's that. But I don't know, David, do you want to talk about anything else before we get into it? No, because anything that prevents us from talking about the Burr method is just a waste of time. This is the future of real estate investing right here. Well, I was going to tell you about my, you know, my little girl Rosie, but if that's just a waste of time, whatever, fine. If you want to, you know, do you don't want to hear about Rosie? But usually you just waste our time talking about your weird rashes or things that you're into that creep people out, your odd-tasted music videos. Yeah, that's all. I don't have odd taste it. I don't watch music videos at all, do I?

I'd rather eat, Glenn. Okay, I'd rather eat Randy. You're right. That's the best. Find me a human being that doesn't say that's weird. No, find me a human being that doesn't laugh hysterically when watching. Go to YouTube later and search for I'd rather eat Randy. and watch the music video I'd rather eat Randy. It's the best thing ever. There are two kinds of real estate investors. Those who have reviewed their insurance

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today. Our guest is also our co-host, Mr. David Green, the author of the brand new book, Rehab, Rent, Refinance, Repeat, the Burr rental property investment strategy made simple. If you're watching this on YouTube right now, you can see I'm holding up the book. But David basically wrote the, I don't know, the book, the book on Burr investing. It's amazing.

You can get it at BiggerPock.com slash Burr book. That's Burr book with four R's. And we'll talk about the book later on, but really I just want to jump right into Burr investing. So David Green, for those who don't know you, give us a 30 second overview of who you are why you're teaching this birthing, your story, and your favorite color. Go.

30 seconds. I like black because I am a- I didn't ask you why. I don't really care why. Very good point. Thank you for directing me there. I'm a former police officer that worked a whole bunch of overtime to buy a whole bunch of rental property because I fell in love with real estate investing.

Do you really like black? Is that really your favorite color? It's by far my favorite color. Everything is cooler and black. My ideal car would be black. All my clothes are black. I didn't know that. It's black.

All right. All right. Keep going. All right. Police officer, Black, go. I worked a lot of hours. I realized that this was killing me and very hard on my life. I was working like 100 hours a week and sleep in my car a couple times a week to work as much as I could to save money to buy a real estate.

I discovered or rather heard other people talking about the Burr strategy. I sold one of my properties. I used the proceeds to buy a new property in a different market. And I refinanced 100% of my money out. I actually refinanced about 15 or 20. 20 grand more than all the money that I had put in. And I had a very successful burr. And then I went on to start only using the burr strategy. So instead of buying about two properties a year, which is what I could afford it, I was saving up money and putting a big down payment and then putting a lot of money

into the rehab. I just recycled the same money over and over and over and I averaged about two properties a month. So my portfolio scaled incredibly. I got really good in investing in real estate because I was doing it so often. I started to master all the individual parts of real estate. And then I got to become the co-host of the Bigger Pockets podcast and best friends with the lovely Brandon Turner. Wow, that is quite the story. By the way, that was over 30 seconds, so we're going to have to edit that out. Dave, Dave's our editor. Just kidding. Just kidding. No, but Dave's awesome, by the way. Everyone say hi to Dave, Visaya. What's up, Dave? All right, I guess people can't actually talk on a podcast. Did you actually tie me? Are you just saying that was more than three? I have no idea.

You always do that. All right. Let's go into Burr. David, first of all, can you explain? And we're going to go broad overview. What is Burr investing? And then we're going to actually spend the rest of today's podcast going through each part of the Burr. Isn't an acronym? Is that what we call? It's an acronym. That's exactly what it is. All right. I'm not good at English. We're going to go through the rest of the Burr acronym one by one. But let's first get an overview. When we say Burr investing, it's a weird sort of phrase, what does that even mean? And then we're going to go through the benefits of it. But first, what is it? Burr is an acronym that stands for buy, rehab, rent, refinance, and repeat. It was coined by none other than the infamous Brandon Turner because he's very good at coming up with

clever names for things. In fact, the book is dedicated to him because he let me write a book on a topic that he created. So that's what it stands for. And what it really is, is it's the order in which you go about investing in real estate, right? This isn't some scam. It's not some top secret algorithm that only a really smart person can understand. You're just switching around the order of how you go about investing in real estate to maximize efficiency. You give us a quick, like, because I think a story, story format usually works better for like trying to explain the concept of burr sometimes. So can you give us just a quick story of a perfect burr, like either a hypothetical or a real one you've done? Okay. So you go and you buy a property

with an ARV of 120,000. So it's going to be worth, worth 120 when you're done, which is the after repair value, right? And you're able to, and this property is in terrible shape. It's just tore up from the floor up, right? Like this is definitely a fixture up or property. Does you make that up, Tor up from the floor up. If things rhyme, people remember them. I like that. Kind of like core four from your last book. That's exactly right.

And no one will ever argue with you if it rhymes. They just accepted it's true. I don't like people arguing with me. All right. So you buy the house. It's going to be worth 120. You pay $60,000 for it because it's in such bad shape and you get a really good deal. You probably had to pay cash to be able to do that because oftentimes these houses

are in such bad shape that you just couldn't buy it if you needed to get a loan. Okay. And you spent about $30,000 to fix this house up. that's your rehab budget, right? And for $30,000 in a lot of these markets where I'm investing like the South and the Midwest where you find 1% properties, 30,000 actually goes really far. If you're listening to this in Seattle, you're like, oh, that would buy me a toilet. But in some of these areas, I mean, that's almost an entire remodel of a house,

including the roof, okay? So now you've got this house that's been completely fixed up. I'd have to find something that rhymes like fixed up from the something that rhymes with fixed up. And you spent a total of $90,000, right? It could be your own cash. It could be money from your 401k. It could be you and some friends that pooled your money together, however you do it.

You go to a bank and you say, hey, I have this asset that's worth $120,000 and the bank orders an appraisal to make sure you're right and you are. Then they let you borrow a percentage of that asset, which is what they would call the loan to value ratio. Most banks will let you borrow 75% of an asset's value. In this case, 75% of $120,000 is 90, which, coincidentally, is the exact same amount of money that you put into this deal. So you end up getting back 100% of the capital you invested and you're left with a cash

flowing property that's been fixed up completely. So you're not going to have any capital expenditures or maintenance fees for a very long time. You then have your $90,000 that you could buy your next house with. That would be the perfect burr. Nice. Okay. So we're going to dive into each part of that. And I know people are saying, well, I don't have 90K cash.

I can't do this or I can't find a house for 50 grand in my area or 60 grand. I quit. I'm going to go turn this off. Stick with us. Like this works like Burr is cool because it works in downtown Detroit where you can buy a property for like six bucks and a pack of smokes or you can buy I mean like I burr apartment complexes and that like this kind of concept like came from what apartment owners do all the time big apartment investors so this scales incredibly large I mean you could buy a hundred million dollar property

put 50 million dollars of work into it and then go and refinance it to get that 150 million back because now it's worth 200 million right so like don't freak out if you're like I don't have the money or I don't have the location. It works everywhere all the time, anywhere, if you work it right. I actually discovered, like, I stumbled across Burb. You did at your first kind of, one of your first projects. I did as well. I tried to flip a house and it didn't sell because the market crash is like 08. And I was like, oh, crap, what do I do? I can't sell this property, right? My number is very similar. I bought it for like 50. I put 40 into it. So I had 90 into it. It appraised for 130. And so I, because I couldn't sell it because the market was just really,

And I was like, well, I probably could have just kept dropping my price. But instead, I went to the bank and was like, hey, I got this property worth 130. Can I get a loan for 90? And they're like, oh, no problem. And they gave me a nice 30-year fixed mortgage on that property. And I was like, and so I got, like, I used a hard money lender to buy it. And I used a partner to fund the rehab. And so I didn't even have any money in the first place.

But then I got, I get to pay my partner back and I get to pay the hard-main lender back. And so now I could go use their money again. And I was like, oh, this was really awesome. So I just started doing it from there. and then it was, what, 10 years later that we coined it for? Well, you also added $40,000 to your net worth and one fell swoop. Yes, yes. We don't talk about all the time, but that's pretty powerful.

It is, right? In fact, I don't talk about this a whole lot because I don't want my family and friends getting weird around me, but like I hit the million dollar mark in equity when I was 30 years old. I wanted to do it by 30. I was at 30. It was like 30 and a half or something like that. But when I looked at why I did that, I mean, it was entirely because of the Burr strategy. I mean, like entirely, because every single time I had burr, I'd gain $20, $30,000, $50,000 in equity.

And then when I did it on my apartment, I gained $200,000 in equity. And so like every single property I would burr, I just started gaining more equity. And then when the market started climbing up, that equity started increasing because now I got really nice properties in really nice areas, boom. My network just went through the roof. Now granted, yeah, I showed the market might crash and it might drop me. That's fine. But burr works and I love it.

So let's get into some of the benefits of Burr. Can you kind of lay out some of the benefits to doing Burr investing versus others? Well, yeah, the first benefit is that it increases your ROI, the return on investment ratio. So when you look at ROI, too complicated. I'm going to try and Joe Rogan. Where's my Joe Rogan podcast? Let's bring Josh Dorkin in to understand my high level concepts. This is beyond Brandon's capability.

Yeah, clearly. All right. All right. Keep going. Increase your R.O. What do you mean? So there's two ways that you can improve your ROI because there's two metrics that make it up. To calculate your ROI, you take all the money that an investment makes you in a year and you divide it by how much money you invested. So you can increase your ROI either by increasing the amount of money you make in a year or decreasing the amount of money that you invest. Now, if you own rental property, you know it's very difficult to increase the amount of money you make in a year because that's largely done by increasing rents. And you can only increase rents as much as the market will allow, meaning you don't have a lot of control over that. that. What you do have a lot of control over is how much money you leave in a deal. And that's where the Burr method is so important. Because in this deal that you just described, Brandon, if you

had left $85,000 in that deal instead of, or if you've gotten back $85 instead of 90, maybe you got to leave $5,000 of your own money in that deal. But that's such a small number that your ROI would have skyrocketed. So what it does is it makes your money work very, very, very hard for you, as opposed to you working very hard for your money to then invest in a real estate, which is what I was doing as a Yeah, and here's a good way I like to explain ROI to people sometimes if they get a little confused. If I were to ask you, David, hey, 500 bucks a month, is that a good, is that a good return for a rental property? Like, would you like $500 a month? Well, the question is, depends how much you put into it, right?

Right. Yeah. Like, so if you invested $10 million and all you were making was $500 a month, that would suck. Right. But if you invested $1,000 and you're making $500 a month, is that a good investment? It's incredible. All day. Right.

That's all day. That's an amazing investment, right? So ROI is simply saying, like, are you making a good, like, amount of profit based on how much you put into it? And so, I mean, people always want, like, a formula or number. Do you have, like, I mean, what's a reasonable return on a normal rental property? Like, do you have any kind of numbers you can throw out that people? Yeah, I usually get a 12% return when I was just putting a down payment on a house and

adding in the rehab. Yeah, me too. 12% is kind of my minimum. If I just go throw down payment, I can get 12%. I'm like, yeah, that's pretty good. Now, I came up with 12% simply because it's about double the stock. market. That's my like really anti-scientific way. I was like, yeah, double the stock market. But I don't know if there's a better, I don't know if there's a national average that people

shoot for, but. It just sounds exactly like something you do actually as a side note because you think twice as good as every other man. Well, I'll probably get twice what those bozos could get. That's awesome. It's more like if I'm going to put in all the hard work, if I'm going to get six percent, I might as well just give to the stock market. Who cares, right? I want to, I want to, for all the work I do in real estate, I want to get a better return. Now, what I found with, with, with Burr investing, and sometimes I can get a 20, 30, 50, 100 billion percent return, right?

Depends on, because if I'm putting in a dollar, if I have $1 invested in a deal, and at the end of the day, I make $10,000 a year in cash flow, that's a pretty good return right there. Or what if you had no money in the deal? Or what if you got more money than you put in? Like, I don't even know what measure.

I don't know. Yeah. To measure that. You're breaking, you're breaking wealth-building scales with the Burr method when, done well. All right. So we'll talk about how to get that and how to get all your money out. But first, what does it mean? And it's kind of related to, I think, what your second main benefit

of ours is? What's the second benefit? Number two is it increases the velocity of your money. Now, velocity of money is a term that economists use when they're mostly talking about the gross domestic product of the country, the GDP. And what they're saying is like, of the money and circulation, how many times is it changing hands? And the higher that number is, the healthier it is for the economy because obviously every time money changes hands, tax are collected, right? So the government wants money to change hands frequently, a high velocity of money because more taxes are collected, which is a revenue from the government's perspective. Now, we are not the government, so we want to take that same principle and apply it to our own wealth-building philosophy and

our own life, where if I can take a set of amount of capital, invested in a property, get it back and invest it again, the faster I can do that, the higher my velocity of money, the quicker I'll build my wealth. Now, the example that you just gave where you bought a place for, you were all in for 90 and it appraised that 1.30, I believe it was. You just made $40,000 to your net worth, right? That was with $90,000, right? So that was almost 50% of the money that you put out. You then added that to your net worth and then got your money back, which means you could then go do that again. So if you could just do that twice a year, right, that's 100% return on the same 90,000. It's not even 90,000 you're leaving in a deal and not getting back. The faster you can send

out that 90 grand and have it come back with a $40,000 bump to your net worth, the faster you can build wealth. And we call that the velocity of money. And the Burr method lets you do that because you can recover all of or most of your capital when you do it right. Yeah, I love that. And you know, people ask me a lot during webinars or during like meetups is like, you know, Brandon, I only have $30,000. I only have $20,000. I only have $50,000. Yeah, I can go and buy one property with that, maybe, then I'm stuck for another five or 10 years saving up more money because their velocity of money is so slow at that point. And so they always ask, like, what do I do about that? Oh, easy. Just go and burr it. Get your 50 grand, 30 grand, 40 grand, back and then go do it again.

And then do it again and do it again until you build up enough like cash flow coming in that you now have, you can save up, you know, on bigger deals and you can start burying apartments or wherever else. Like, you can get out of, you can get out of a job. You can get financial freedom in less than 20 or 30 years. You can do it in three, five, 10 years if you were right. And if you, you know, yeah. That's, that's actually what they say necessity is a mother of invention. And that was my problem is I looked at my life and said, I'm losing my life doing nothing but working to make this money to invest in real estate. How do I do it differently? That burr was my how. So rather than having to work crazy hours to make this money,

I just made my money work for me instead. There you go. All right. Number three, what do you got? Number three, and this is probably the basic, the foundation of the book is that repetition builds mastery. You want to get good at what you do, and you can't get good at anything if you don't do it very often, right? I have snowboarded a total of probably seven times over a 12-year period. Okay. I never got good at snowboarding. I'm just good enough that I can justify going, but it is not fun. I always end up sore and hurt.

And as I'm doing it and my legs are burning and I'm falling the whole time, I'm like, why do I do this? especially when that little five-year-old kid goes flying down the mountain next to you and it's just like humiliating, right? The problem isn't snowboarding. The problem isn't me. The problem is that I don't do it enough. There is not enough repetition. If I did it enough to get good at it, I would have fun. So real estate investing is not any different than anything else in life. One workout every year is not going to get you in shape. Buying one house a year, you're never going to get good at real estate investing. You're just not getting the exposure. You're not getting the repetitions. You're not learning from what went wrong. You're not developing the contacts that are going to send you deals first. You're not bringing enough

business to a contractor to where he's going to give you better prices. You're not developing the relationship with the banks. I could go on and on and on, but the point is, we all understand you get good at something by doing it over and over and over, and you need the Burr method if you want to do that with real estate. I love that. People don't talk enough about that, about the mastery and getting really good at something. Like, I mean, like, you and I both make good incomes. You and I both make good incomes from job stuff, like I mean, business-related stuff and from our real estate. And like, when we really boil it down to why we do well, financial, financially. It's because we're both, I don't want to say this to sound cocky, but like, we're

both good at what we do. We both, now I'm not saying we're the best. I'm saying there's a million people smarter and better than we are, but we are better because we chose mastery. We said, how do we get, how do we every day try to improve? How do we ask what went wrong on that deal? How do we do better? How do we read another book, attend another class, whatever, like to get to get better? And I think a lot of people lack that in their life. They lack the desire to become a master or anything, Right? Like we're just in this today's world. It's like, how can I get the bare minimum to get this somewhat done? And maybe I'll be fine enough to scrape by. Right. Like what's some few of hours I can work to get my paycheck to pay my bills. And anyway, that's one thing I like about you, David, is you're very good at the like mastery thing. Thanks, man. That's why you call me the man. One thing I like about you is that you recognize the great things about me. I feel like that's one of your skills. And I just want to call that out for everybody here. They know what you're good at. No. Just kidding. When we interviewed Robert Green, he actually talked about this same concept. And Robert Green's a super smart guy. I don't remember what show that was. I'm sure we could throw it in the show

notes. But mastery is really important. And a lot of investors get very discouraged when things go wrong. And those are things that always go wrong when you're new. The problem is they never move past the new stage, right? They're like me going snowboarding. Every time I go, it's like the first time. Or surfing. I've gone surfing with you twice, I think, right? If I go once a year for the next 10 years, I'm probably never going to get good. Yeah, it's surfing, and there's going to be five-year-olds that are beating me at it. So I have a quote in the book that Bruce Lee says. He says, I don't fear the man who knows 10,000 kicks. I fear the man who has practiced one kick 10,000 times.

And when I would teach defensive tactics to police officers, I was like my favorite quote. I loved it, right? Because the people who are best at something have the best technique because they practiced it so many times. And Burr allows you to do that. And if you're not burying, you better just be independently wealthy and have so much money you can keep buying real estate

because otherwise you're never going to get there. That's fantastic. Hey, so I'm working on a, it reminds me, I'm working on a sort of a book. We're relaunching the journal, The Bigger Pockets, 90 Days of Intention Journal pretty soon. I kind of rebranding it. It's going to be awesome.

But anyway, in there, I'm adding a bunch of written content. And one of those, I actually have a section on how to become world-class of something. And because this is what I do, I created an acronym for it. So you want to hear my acronym on how to achieve mastery? Really badly.

All right. It's called feel, F-E-E-L, right? To get mastery, you have to feel it. Here you go. Number one. You have to focus intently on what you want to be world-class at. Right? Like, if you don't, like, you have to definitively say, I want to be world-class at this.

I'm going to focus on that F. Number two, you have to educate yourself on how top performers in your field became that way. So, like, educate yourself. What are the top burr investors doing? What are the top surfers doing? What are the top racquetball players doing? Whatever it is, right? Like, educate yourself of what they're doing.

Third, you have to execute on what you've learned. And this is where a lot of people drop the ball is they, like, they see what a really world-class person does, they don't execute on what they've just learned. But like, you know, model, find out what other people are doing and then just execute on that. And then number four, L, learn, learn from your attempts. Like, oh, and then repeat the cycle. It's just feel, feel, feel, feel, feel, all day long. And if you do those over and over and over and over, you're going to become world-class or whatever it is. But if you drop any of those four steps, you're going to miss out on becoming world-class. And that's what I love about

Burr investing is that Burr investing gives you the ability to focus on what you want to be world class at, to educate yourself, to execute what you learn, and then to learn from the attempts and repeat it over and over and over through that velocity. So there you go. That's why I love you, Brandon. You just taught me how to feel. I just taught you how to feel. All right, number four, what do you got? Number four is that the Byrd method will decrease risk. Okay. Now, here's what I mean by that. When you buy a property that's like a fixer up or you make it worth more and then you pull your money out, it decreases your risk in several ways. One, you get all your money back out or at least most of your money. So if you don't have any capital left in a deal, it doesn't matter if the

market drops. You're not going to sell if it's cash flowing. You're just going to wait for the market to come back out. If you leave a bunch of money in a deal on the market drops, well, that money is theoretically gone. Two, by fixing up a house a lot before you put a renter in it and refinance it, you improve its value, but you also minimize the amount of work you're going to have to do later. If you buy a fixed rep or property and just throw somebody in it, there's a lot of stuff that's going to go wrong all the time and that like you and I know that eats up your cash flow faster than anything else right and then three you're decreasing your risk using the burn method because of the just pure repetition factor I'm going to get better at what I do so the next deal I'm more likely to do

even better than this deal and the deal after that I'm going to do even better than that when you're operating from a place of ignorance or inexperienced you're operating with a massive amount of risk simply because you don't know what you don't know very good I love that hey I'm funny that you say actually, I was going to bring some up. You ever talk to somebody that got a meetup or whatever? And they say things like, you know, isn't it risky to not have a lot of equity in a property? Or isn't it, well, not, sorry, not. Let me rephrase that.

Isn't it risky to not put a huge down payment on a property? And I get this argument that people make. Like, well, you know, if you're going to do a no money down, when I came out with the book on investing with no and low money down, I got this a lot. If you're going to do a no money down deal, that's way risky. That's way too risky. And I'd always argue, okay, let's just say we have two, you, you're going to buy a hundred thousand dollar property. I'm going to buy a property worth $100,000. We're both buying properties with $100,000.

You paid $100,000 for yours and put 20% down. So now you've got an $80,000 mortgage and you have $20,000 in equity and you got this property. I found that exact same $100,000 property. I put it under contract for $50,000 and then I put $30,000 of work into it. So now I've got $80,000 in as well. We both have $80,000 into a deal. We both have $20,000 of equity.

But I put no money, I mean, I burnt it. So I have no money left in the deal. I have no risk at all of my own capital in that deal. You've got 20 grand in there. At the end of the day, who's riskier at that point, right? And it's the person who put the down payment. So down payment has nothing to do with risk and nothing to do with risk, right? It's all about equity is where your risk is. Yeah, if you buy a $100,000 property and you pay $110,000 for it, yes, that's risky. And if you're losing cash flow every month, that's risky. That's not what Burr investing is about, right? Burr investing about gaining equity magically. Yeah, gaining equity without losing capital. You hit those two things at the same time and you hit a wealth

building like supercharger. Yep. Perfect. Perfect. All right. Well, that leads us to number five. What do you got for number? It does. Number five is it allows you to scale the financial freedom faster. And this is very simple math. In the example you gave, I love your example. You took $90,000 and you added $40,000 to your net worth and then you sent that $90,000 out there to do that for you again. And theoretically, you could do that forever on the same $90,000. And I have an example in the book of the guy who did it in a traditional way and how long it took him to save up money and park it in an investment versus the guy that recycled the same capital, got better deals and did it that way. And at the end of a 10-year period, it was wildly different how many houses one guy had versus the other. That's what this is about. We do not live to be 900 years old like people did a long time ago.

It's Bible, right? Like there's no Olus running around. So you can't waste time. Once you get this thing down, you really need to put your foot on the gas and skisks. it up quicker. And real estate is incredibly powerful, but almost always it's over a long period of time. This is not Bitcoin. This is not buying a marijuana dispensary. This is not a get rich quick type of a thing, right? You're planting a sea that grows into a tree. And that tree will be very powerful, but it takes a while to grow, which means we want to plant a lot of these seeds as fast

as we can, get those seeds back and then replant them again. So this helps you to scale much, much faster because you need less capital to do so. There you go. Perfect. And then number six, the last of the benefits we'll talk about. Yes, we've touched on this one briefly earlier, but it lowers your capital expenditure expenses or your cap-ex. So because you're fixing your house up, like what I'll do is I'll buy these trashed houses. I'll put a new roof, a new H-FAC, new flooring, I'll fix the plumbing because the walls are going to be ripped out a lot of the time, new appliances, pretty much all the main things that break in a home or cause problems. I go in there and I fix before I get the appraisal. And we'll talk about this later in the show why that's the

way to do it because it pumps up the value and gets me more of my money back. But as a little sweet bonus, some icing on the cake here, I then don't have to worry about an air conditioner breaking for the next 15, 20, 25 years where when I don't do this, I think I'm doing great on a property. Three years in, the HVAC goes out and my cash flow for the next year and a half is gone in one mistake. There it is. Yeah, it's so true. And all the properties that I've ever bought that I didn't fix up fully before like renting them, like all of them. Like, all of them. Like, they're unpredictable. And I tend to have a lot more repairs.

But I mean, the properties that I've bird, which are, you know, majority of my portfolio at this point, like most of my bird deals, like they just, they hardly ever break. They hardly ever go down because,

yeah, they got the new floor. And when you're rehabbing them, you're typically doing, like, you're rehabbing it knowing that you're going to own this property for the next 20 years. So like,

when if it's a choice between, hey, I could put this cheap carpet or I can put this better laminet that's going to clean better or tile, you go with the slightly better tenant-proof. tenant proof, to use a term from Darren Sager, to tenant proof your property, you use the slightly better things. That also decreases your maintenance and repairs and CAPEX over the next 10, 15, 20 years of the life of that property, which is another just awesome part of burn investing.

So, very cool. And you don't have to worry about what some other company, like a turnkey company did because you managed your own rehab. So you know what was done. You know what went in there and you know like what wasn't done so you can prepare for it. There you go. Now, we're going to go through now. I'm going to ask David a few questions on each of the Burr method, the buy, the rehab, the rent, the refinance repeat. We're going to move that to that next, but before we get there, I did want to quickly talk about in case you guys are interested in learning more about burr directly in book format. If this is like a long podcast, again, David's got an amazing book. It's called Buy Rehab, Rent, Refinance Repeat. The Burr rental property investment strategy made

simple. And it's literally like, how many pages is this thing? Like 340 pages. It's a, it's a big book. Physical, book, there's an audio, then an e-book, there's an ultimate package. But you can look, get it, you can get more information about it or check it out at biggerpock.com slash burbook. That's burbook with four R's burr book. You could also just go to like Amazon. But I would recommend if you if you want the bonus content that comes with it, there's a much of cool bonus stuff like a Burr Pacific specific PowerPoint presentation David does on how to find private lenders to fund it. There's a 20-page e-book on

long-distance burying. There's a live Q&A with data. He's going to be doing a live Q&A and a bonus video on how to interview and hire a great contractor. If you want those bonuses, you do have to buy it from BiggerPockets and not Amazon. But if you just want the book, Amazon's got it, Barnes & Noble should have it as well. So anyway, go to BiggerPockets.com slash Burr book and check it out. So anyway, anything else you want to say in the book before we move on to the specifics of Burr? Yeah, the main thing that, the reason I think people should read the book and why I wrote it is

that if you master the five, what I call the five elements of birth, buy, the rehab, the rent, refinance, repeat, you are going to master real estate investing by mastering those. If you learn how to buy great deals, if you learn how to rehab house as well, if you learn how to calculate numbers and rent your house, and you learn how to use financing and refinance and how banks work, and then the repeat system, our segment is all about systems, how you make this automated so that it just goes on its own over and over and over. By default, you will have mastered real estate investing. you'll be what I call a black belt investor, right? So it's really simple.

If you just focus on those five things, when you're done, boom, you understand real estate investing at a very, very high level and can build wealth quickly. Sounds like a future book, Black Belt Real estate investing from by David Green. Wow. All right. So check it out again, BiggerPock.com, that's Burr book. And yeah, and when you buy it, do my favor, you guys. Take a picture of yourself when you get the book.

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Terms and conditions apply. Hiring Indeed is all you need. All right. So let's go back to Burr and walk through each segment there. Burr investing. Let's talk about buying a property. So, David, the first question that I get a lot when it comes to like burr investing or is the buy. How do I buy it?

I don't have any money. That's why I want to burr. I don't have much money. So is Burr investing the buy part only for people who have cash? It doesn't have to be. So it doesn't matter where you get your cash from. You just need some cash to buy the house because the seller is going to want money. So the easiest way is to have your own cash.

But if you don't have your own cash, you can buy. borrow money from other people. And that's why in the bonus content, I included a video and a PowerPoint presentation for how to give a presentation to people that you know about why they should partner with you on these burr deals and they can provide the money and you provide the work and find the deal. You can borrow from your 401k. You can borrow from a hard money lender. You can find private money like I mentioned earlier. You can use like traditional financing or untraditional financing. The most important part of a successful burr is that you are buying it under market value, you are rehabbing it to add value, and you are pulling your money out after the house has been

made worth more. If you hit those things, it will go fine. Now, the reason that buying is the most important part of the BIR process is that's the only part in the entire investing cycle where you actually make money. I mean, there could be an argument to be made that you can make money during the rehab. Like if you add extra bedrooms or bathrooms or square footage that are worth more than you spent, you've created some equity there. But the most significant, chunk is when you buy the house. And that's why you need capital. This is really what it comes down to. Capital is so important because you need it to buy a property and buying a property is where you actually make money. Then everything you do after that is just turning it into like a usable asset that

then you can rent out. But you're really not making it worth more at that point. So finding money is really important. But the birth strategy makes it easier to find money because the people who are investing can get their money back. Right. Like that's a really big thing. I don't want to gloss over. If I go to someone and say, hey, let me borrow $50,000, I'll pay you an 8% return on your money, and in 55 years from now, you'll have all your money back. That's not that enticing, right? If I'm like, let me borrow your money, I'm going to go use it to buy this house, and then I'm going to pay you back in six months all of your capital, and you're going to be making interest. That's a much easier proposition for you to the person.

Yeah, that's true. And there's a lot of hard money lenders that will do it. There's a lot of, I mean, like, there are hard mail lenders that very specifically understand the birth strategy. That's what they work inside. of is the birth strategy. Now, granted, hard money is going to be fairly expensive. There's companies that will give you a hard money alone just for a year for a burr. But the danger is that you just pay you pay more for that money. So put it into your numbers when you run the numbers. Make sure you're accounting for it. And there you go. Speaking of accounting for it, BiggerPockets actually has a burr calculator that we built and you can plug in all the numbers, including the purchase amount,

that closing costs, hard money costs, the refinance amount later on, you can play with all those numbers. Anyway, check it out, BiggerPockes.com slash calc. See you A-L-C. But one more question on the buy. A lot of people question and they have, and you kind of touched on earlier, but I want to make sure we nail it here. What's the point of just, what's the point of like buying it and then refinance it later? Why can't I just go to a bank right now and just go borrow all the money needed for the property? Why can't, like what's the big deal? Well, you can do that. Let's say that you're buying a property that's worth $100,000 and you're paying $100,000 and you're going to borrow $75,000 of that from the bank and you're going to

spend your own $25,000. And then once you buy it, you're going to have to paint a property. it, maybe fix a few things. You spend another $5,000 there. The problem is you just left $30,000 in this deal. And like you said earlier, for some people, that takes four, five, six years to be able to make that money back and save it to buy the next deal. Okay. The reason that we want to spend the money up front and then refinance it is we want the bank to give us a loan value or a loan two value of the after repair value once the place is fixed up. So I don't want the bank to be letting me borrow on a $100,000 house. I want to be buying it for much less than $100,000, then make it worth $100,000, then go refinance it once it's worth $100,000 so that I'm not leaving equity in the deal.

I'm taking the same money. So like when Brandon and I calculate our net worth, it doesn't matter whether it's locked up in a property or it's in our bank account. It's the same amount, right? It says it's very same for your own net worth. If you have $25,000 in a savings account or $25,000 in a property, it doesn't change anything. The difference is $25,000 in your savings. account can be used to add equity to your net worth by buying more assets, whereas 25,000 in equity is almost useless unless somehow you can access it from a helix. So that's why you want to be refinancing and getting capital in the bank as opposed to leaving it in the house because it can't do anything for you when it's in the house. There you go. And also, of course, like most banks, like you'll

find don't want to deal with nasty properties. Right. So like, yeah, yeah, if you go find just a real nasty property and you go to a bank, like, yeah, this thing's going to be worth 120, and I don't need 50 for it. And they go there and they look at it and the appraisal comes back and says the rusts falling apart and there's foundation problems or whatever. The bank's going to say, yeah, no, thank you. There are bank programs. I call them bur loans. They don't call them that they'll call them. There are loans that banks can do specifically designed for the burr process. Because again, this isn't like we invented the burr thing. We just put a name on it. But like they're hard to find. They are harder to find. But if you can find a, a Burr bank, in fact, one of my buddies

actually has a, what is it, a 300, I think he's got a $300,000 line of credit. from a local community bank. And he has an agreement with the bank. He actually has a, like they built a loan for him to burr. They gave him a $300,000 line of credit. He goes out and buys properties with that line of credit, fixes them up, rents them out, then goes back to the bank and they convert that line of credit money.

Let's say it's been 100 grand of it immediately into a mortgage for him without having to go redo all paperwork and everything. It's all part of one big thing that he pitched them on. And now he just burrs like that. without any of his own money at all. He just got equity after equity. He just keeps doing deals out this way. And it's a portfolio lender, so there are no limits.

Now, if you go to like a Bank of America, Wells Fargo, they're going to limit you at 10 residential mortgages on your name. Portfolio lenders, like the small local community bank, they don't care. And so he just keeps doing it over and over and over and over. So there are banks that can do it, but those are a lot harder to find. Typically what I do, and I think, David, I'm not sure which one you do, but I think we'll get private lenders. People I know will fund the deal.

People have met through bigger pockets, networking conversations. and I will buy it with a private money and then refinance it later. Yeah, and I talk about in the book how to actually target properties like that because not only will banks not lend on really trashed houses, but it actually gives you a competitive advantage when you're looking to buy. Your competition doesn't have the cash and you do. So they can't buy that house. You've eliminated 90% of the buyers that are out there

and you're only competing with the other cash buyers. Most of those cash buyers are home flippers, which means they need a bigger margin than you do as a burn investor and you settle into that perfect little area where you can make a deal work that other people can. Yeah, actually, I was just thinking, like, the one thing I love of burn investing is that it's, you can pay more than a flipper and a wholesaler, but you're also like, you know, you're not competing with the homeowners. And so you're, yeah, it's a sweet spot to be for burn investing because you can pay a little bit more. Now, a lot of people, what do you say about

people who are like, well, shoot, you're using these examples of like a $100,000 property that you get under contract for $50,000. I can't find that in my neighborhood. That's impossible. What do you say to things like that? There are no deals like that in my neighborhood. There's no deals out there. I can't buy the initial property. What do you say? That's why we included that bonus content of long distance burring because I take the strategies that I used in my first book, long distance real estate investing, and I combine them with the burr method in that bonus content. So what happens is the burr method allows you to invest extremely efficiently. The long distance method allows you to invest anywhere. And when you combine those two things together, what you're really doing

is removing any excuse you have of why you can't do it. It opens up doors and that's how I was able to scale to as many rental properties as I have over a couple years as I did. Yep. I love that. And I also say this. Anytime somebody tells me that they can't burn their area, I always ask, is there anybody flipping houses in your area? Because if somebody's flipping houses, you can burr. Because again, you can pay more than a house flipper.

So if you tell me, yeah, I can't find any, there are no deals here to burr. And then I can find a single house flipper who's doing it in your area, you're wrong. Like, it's just as simple as that. Because, like, the real thing you should be saying is, I'm not good enough at finding deals like that housefliper is. Right?

If you figured out what that house flipper is doing to get deals, then you can do it, right? Because, again, house flippers operate on what we call like the 70% rule, oftentimes, not always, but like they generally follow something called the 70% rule, which basically means they can pay 70% minus the rehab costs in order to, you know, make a profit on a flip. Well, you're doing basically the same exact thing with Burr investing. but you can typically spend less on the rehab than they are because you're not, you know, fixing up quite as nice as a flipper might be doing. So anyway, absolutely. The reason those margins work better for a burr investor than a flipper is that you don't have your commissions and taxes

and all the closing costs that go into a sale. You don't have capital gains on the money that you make, right? Like those are the two biggest pieces and you're taking advantage of low interest, right? So burr investors can make this work as opposed to when home flippers can't because of the those two very big expenses that we're shaving off. And then we get all of the long-term benefits of owning rental property as opposed to, oh, hey, you hit it out of the park. Great job on your flip. Your short-term capital gains tax is 45%.

Half your profits are gone, but all that risk is still there. Yep. Yeah, that's definitely why I like Burr more than flipping. I mean, flipping's great for some short-term money, but Burr is, I think, far superior for long-term wealth. So, all right, moving on from the buy. So the buy you got there, now moving on to rehab. Are there any tips you can give for rehabing?

Like, what are some of the things that you've done in your burr investing that have added the biggest bank for your buck? Any kind of burr tips or rehab tips on there? Absolutely. You want to understand the concept of highest and best use when you're going to rehab your property. Okay. So there's two ways that I find equity.

One is I find it or I buy it. So the house is worth a lot of money and I'm paying less money. I just bought equity through the deal. The other thing is I make equity through the rehab. So that can be as simple as taking an outdated house and fixing it up. That'll add value if it compares to houses that are worth more and that are nicer, boom, you just made some equity. Another thing I'll do is like knock down walls to make the function of the house actually more appealing and appraisers will give it value that way. So if you've got a kitchen that's closed off from the rest of the house and you can open it up, you just made some value for relatively cheap. The last thing I'll do is I'll actually change the floor plan of the house.

So I'll take a two bedroom, one bathroom home and I'll turn it into a three two. or I'll take a 3-1 and I'll turn it into a 4-2. Or I'll take a 900-square-foot home surrounded by 1,500 square foot home and I'll add 500 square feet to it. So now my 1,400 square foot compares to the 1,500 square feet home. And the equity is much more than the money that I had to spend to do it, right? These are all prudent rehab strategies that I use. And I talk about that in the book, ways to look for quick and easy win.

So like one of the things Brandon talks about all the time and it's great advice is when he's buying a house that's like 11, 12, 1,300 square foot, if it only has two bedrooms, he knows there's another bedroom in there somewhere. Because a two-bedroom house should be like 800 square feet. It shouldn't be 1,100 square feet. So learning to look for things like that and adding that extra bedroom, one of the ways that I'll do it is I'll look for a house

that has a mud room, a utility room, a sun room, something like that, where the infrastructure is actually built out. But that is not included in the square footage of the house. The appraiser won't give it value. then I will go and make that part of the house. So I'll run air conditioning to it. I'll run electrical and plumbing. I'll put up some actual drywall and framing as opposed to just like the windows that they have out there.

And boom, I just added maybe 30%, maybe my house 30% bigger for the cost of like $4,000 worth of construction work. And I just created a lot of equity right there. That's probably the biggest stuff that I look for during a rehab that makes value. It makes it worthwhile to burn best. Perfect. I love it. What about staying on budget? I mean, it's easy to get cost overruns, especially when you're burning from a distance.

But how do you typically stay on budget? So I stay away from anything that has a potential to blow up to be a really big project, right? Things like plumbing and electrical when I'm looking at a deal and I see that like, oh, these pipes are corroded and we don't know how bad it is. I'm probably going to move away from that deal because it's very difficult for me to know how much work this is actually going to take to fix. And putting all new plumbing in a house doesn't necessarily increase its value, like if you put in new countertops, right?

Other things like roofs, if I know I'm going to replace the whole roof, there's only so many things that go wrong with that. I know what it costs to put a new roof on. It's not like there's a bunch of surprises that can come up. So roofs hardly ever go over budget on any of the deals that I'm doing. I try to keep it as cosmetic as possible. So that's a good strategy to have. If you can go in there and take out cabinets and replace counters

and maybe put in appliance or like flooring, there's only so many things that go wrong on a floor. You take out the old flooring, you put in new flooring. Those are some of the ways that I prevent going over budget. The times when something does go over budget are almost always related to electrical or plumbing. It's like the infrastructure that makes up the house that can be very expensive because they have to pull things apart to figure out how stuff was run. Yeah, great tips. One more tip I'll throw out to you for those people who are burying multifamily, if you're going to go into like duplex, triplex, fourplex, 10plex, 20, you know, whatever.

When you're in the middle of the rehab and you're fixing things up anyway, it's a really good time to consider. how do I separate the water meters? And electric, if electric is not, usually electric is separated, but water meters are often, oftentimes all just like master metered. But if you can separate that in the process of rehabbing it, then you can go and sub-meter the water and now the tenants are responsible for their own water, even like a four-plex or an eight-plex or even a duplex, make the tenant responsible for their water and you'll instantly see your cash flow just go through the roof, which on a multifamily means your value goes

to the roof. All right. Number three. So we went through the buy, the rehab. Let's talk about renting. How do you know ahead of time what a problem is going to rent for? Like after six. So I've got, in the book, I talk about a system of like you've got your preliminary stuff

and then you've got your specific stuff. So the most specific way is to actually get a property manager to tell you this is what it would rent for based on what the other houses that they manage are renting for, right? But you don't want to keep going to a property manager every time you're analyzing a deal just to figure out what should I put in the bigger pockets calculator, right, for how much the rent would be. So I use a website called rentometer.com, which is, free and easy and it gives me a very general idea of what the rents are, usually over like a 20%

plus or minus. So it could be anywhere from 800 to 1,200, it's somewhere right around 1,000, right? Once I'm like pretty interested in a property, I'll take the next step and I'll start looking up similar homes in the area that are similar to this one on Craigslist. And I'll see what they're renting for. And then I'll email a couple of the landlords and I'll see how quickly they respond and how long the house has been on the market. So I know if the landlord's like, dude, I don't really have time to talk to you. I've got 17 people interested in this house. That's a very strong rental market and it's a place I want to own a rental property. If he's like, oh my God, thank you for emailing. It's been four months and nobody said anything. That might not be a place where I want to

be investing, right? So that's kind of how I'll verify what I just found on rentometer. And then once I'm actually going to buy it, I want as many people's opinions in on this deal as I can get. So that's when I loop my property manager in and I say, hey, here's what I'm thinking. This is what I'm thinking I'm going to get. Can you tell me if you agree? And by the way, here's what the agent thinks it's going to be worth. Here's what the contractor says I need to do. Can you look this over and let me know if you think that either of those people are being a little too ambitious and it will be worth less or we don't need to fix it up as much. And I get another counselorian on the deal. Cool. I love that. Great advice. What about property managers? Are you always recommending

to use a property manager on a bird deal? Is there any a case where you might recommend somebody manages themselves. There's people that can manage themselves if they really love managing and they're going to learn a lot from it. So if you like dealing with people, if you like managing your own property, if it's fun for you, then I say go for it, right? Not because it makes financial sense, but just because it makes like emotional sense. But for most people, if you're running a business, it makes more sense for you not to be there. So if I owned a subway restaurant where we make sandwiches and I knew it was going to make 150 grand a year, I'd rather pay a manager 70 grand a year and only make 80,000. And and let them run it so that I have a completely passive business and I can go earn money in other ways, right?

Some people want that full 150 and they're happy to work there all year long. I think the trick is they start to tell themselves that they're making 150 grand a year when they're not. They're really making 70 grand a year. The investments making them the other $80,000 because they make that $80,000 whether they work there or whether they didn't, right? So if you're somebody who has other opportunities, a job that you like, new job opportunities, like me, I have the ability to earn commissions as a real estate agent, that is a lot more money than I would make if I put that same time towards managing the properties I have. The other reason I love property managers is what I said earlier is I don't just use them to collect rent. I use them as like an

advisor on my team. I'm a very big proponent of having as many smart people in your world as you possibly can have giving you advice and learning to see the world from their perspective. They're going to pick up on things that you miss. They're going to have seen things you haven't seen. They're going to be looking at like, hey, when I'm looking at, at this house and thinking this is great, they're looking at this house and thinking, no way, that's way too small. We're going to have a new tenant every single year because there's not enough bedrooms or whatever the case may be, right? Or it's on the wrong side of the street. So I get a lot more value out of my property manager than just collecting rent, which is why I like using them. But some

people, they buy where they live and they know the area really, really well and they enjoy the relationship they have with the tenants. So I say, hey, knock yourself out if that's what you like to do. There you go. That's fantastic. Well, what about refurb? financing the property. One of the biggest concerns when it comes to the burr investing, and this is rightfully so, the biggest danger is what if you buy the property for 50 grand? You put in 30 grand to fix it up. You got 80 grand into it. You go to the bank and you're like, hey, this is worth 120. Can I get a nice loan for a call it 80 or 90,000? It's the perfect bur. The bank says, sure, we can refinance that if it's worth 120. They send out the appraiser.

The appraiser comes back and says, yep, property's worth 75. And all of a sudden, you're like, Oh, shoot, I got 80 into it. The bank's only going to give me 50. Now I'm going to be all this money left in the deal. And that is a fear that people have going into Burr. And rightfully sell, right? If they screw up that value, that's a problem. So I'm wondering, is that a fear?

Should they be afraid of that? Or should they, like, how do you overcome that? How do you know what a property is worth at the end? And how do you deal with that risk? That is your biggest, like, risk that you're taking when you use the Burr method. Is that appraisal, which you don't have any control over can come in low, right? Now, it can also come in higher than you thought. That happens to me all the time, and we never complain about that. But we always complain if it comes in less than what we thought. Here's some

ways that you can minimize your risk when it comes to that. Number one, you can make sure that you're getting your comps from a credible source. Don't just get them from the real estate agent. Get them from the agent, have another agent look at them, have your property manager look at them, have another investor look at them. Let people tell you, no, this is not a good comp, man. This isn't a much better school district. Or, yeah, this house is the same size, but it's in, this is actually like a border like that's a different neighborhood. This street is what differentiates. Even though it's only two blocks away, it's in a different neighborhood.

There's things that either people don't know or don't want you to know. And that's usually when you get the case of a low appraisal is the agent provided comps that were different than what the appraiser looked at. Another thing that you can do if you're really, really worried about this is you can order an appraisal and pay for it yourself. There's nothing that prohibits you from doing that. Now, if you're paying cash to the place, you don't have to get an appraisal. But at the same time, it's not like you're not allowed to get one.

You can pay for an appraisal if you want, pay three, four, maybe 500 bucks depending where you live. And if that comes in at $85,000 before you buy the house or before you drop all this money into the rehab, you can say, whoa, whoa, whoa, we need to stop here and get out of that deal, right? I don't know why more people don't do that because this question does come up all the time. It's an excuse for why people don't buy. But there's no law that says you're not allowed to get an appraisal unless you're

getting a loan, right? And then the other thing you can do is you can actually challenge the appraisal if you think it was unfairly low. And there's a lot of people, I believe you and I interviewed on Drace and Goodellie. And she said like two or three different times just in Philadelphia alone, she challenged an appraisal and she won. And they came back and awarded it much higher. Now here's a point I want to make, even if all that stuff you try still doesn't work, why I love Burr. Okay. Let's say that you spend 90,000 on this house and you think it's going to be worth 120 to 1.30 to 1.30.

and it comes back 105, okay? So you get absolutely hammered. I mean, that's a pretty big difference. Like, it's a big chunk, like you're 20% off of what you thought it would be worth, right? I would call that a huge loss. In that case, you're going to get 75% of that 105, which is $78,750. Now, if we take our 90,000 and we subtract $78,750, that means we left $11,250 in that deal. This is on a huge loss and you've left $11,000 in a deal. Okay. If that property were to cash flow 200 a month, which is not ridiculous, right? That's probably around like when I'm averaging on the houses that don't cash flow super great. That is $2,400 a year. If we take that number, we divide it by the 11,250 we left in the deal, that comes out to an ROI of 21.3%. Okay. So the point I'm looking to make here is even if the appraisal comes in super low, you screwed up, everything went

against you, your consolation prize on a bad deal is a 21% ROI year one. Yep, right? So that's why I tell people like, Burr investing is like investing with training wheels. Like it's, it's very hard to completely screw it up. Like, you would have had to have an appraisal 50% below what it should have been before. You're like, oh, this is terrible, right? It's much safer. You get a much higher ROI in a bad deal than if you had done the same thing, if you paid for a house and did the traditional method and had the same problem, well, dude, you just left a lot of money in that house. This means your ROI goes very, very low. Yeah, that's a good explanation of it.

And I would also say, like, you know, if you are concerned about this, like, burn investing might not be perfect for you alone if you are flat broke and you are buried in credit card debt and you couldn't handle a problem like that. The same way flipping's not for you and probably rentals aren't for you, right? if you're completely broke. So, like, yeah, things do go wrong. I did a burr a couple years ago where I mean, ARV is there.

It was worth it, but the bank at the end refused to give me 70% of what it was worth. They just said, oh, we're only going to give you what you have into it, what you can document. And so, like, anyway, it ended up being like an annoying thing where I ended up leaving like 20 grand of my own money into the deal. That was fine. I mean, I left 20 grand in there. You know, I make $1,000 a month on that property.

So I'm making $12,000 a year. on a $20,000 investment. You know, that's okay for me. That's like what, 60% return on my money? Like it happens, right? But I still had a 20 grand to do it. Now, that said, if you are flat broke doesn't mean you can't do it, but you might need to find a partner who has a better financial foundation to be able to handle those kind of things. Maybe you do the boots on the ground part and they're more of the risk. So again, it doesn't mean you can't do things. It just means you start, you have to start asking how. Well, and that would only happen to you one time because now you've learned, right? What that bank basically said is we will,

we will lend to you on a loan to cost ratio, not loan to value. That's what that is, right? Loan to value is, we will give you a percentage of the loan that is a percentage of what it's worth at the end, like the appraised value. What your bank said is, we'll let you borrow a percentage of the money you actually spent, which would be the cost, right? Which is a rip off to the investors. Now, the next time, you wouldn't do business with that bank. Correct. To a different bank, you'd say, hey, can you do loan to value? What percentage can you do on this, right? Like you, knowing you, Brandon, and I know you pretty well, you found a deal. You jumped into it. He said, hey, I'll figure this out as I go, because that's what you do.

You're the guy that jumps out of the airplane and puts your parachute together on the way down, right? And in this case, like, the parachute opened halfway and you hit the ground kind of hard, but it didn't kill you, right? Next time you're like, well, now I'm going to make my parachute before I jump out of the plane. It's a very subtle change. It doesn't ruin your entire investing career. But people hear that and they're like, oh, see, that's why I can't invest, because what if the bank comes and tells me this? Well, you can solve that question by asking them up front. In fact, what I tell people to do is get pre-approved with the bank before even buy the house. Yep.

You pre-approved on a hypothetical basis. Know your target numbers going into it and then try to beat those. And even if it goes bad, you're still very close to what you thought you were going to get so these surprises don't happen. Yeah, there you go. And again, like so much of real estate success, both from flipping, wholesaling, and burn investing comes out of just knowing how to determine that ARV. And if you need more help with that, guess what? There's a website that. They just got invented.

It's called BiggerPockets.com, and it's free. And you can find out so much information about figuring that out. Just go to the search bar and type in how to determine your ARV or listen to a podcast, webinar, blog posts, like forum conversation. There's so much information if you're willing to learn it. And again, mastering ARV is very important. And burn investing to go back to what you said way earlier, David. The repetition builds mastery.

The more you do this, the better you're going to be at figuring out what that ARV after repair value is. All right. So moving on to number the last of the bur, the buy the rehab, the rent refinance. What about repeating the process? Yeah, talk about that. This is probably my favorite section of the book as well as the process in general, right? So buying is where you're going to make your money. Rehabing is where you're going to keep your money. Renting is how you're going to protect your money because you're getting a return on it. You're getting rent that covers your expenses.

Refinancing is how you're going to recapture your money. And then repeating is how you're going to supercharge this. entire thing, right? So people ask me all the time like, hey, can I come be an intern and help you with your investing? And while I do appreciate that, the reality is my systems have become so tight with buying rental property that I don't even need an intern. When I buy a deal, it looks like I get a text from a deal finder, which is usually an agent, and they say, hey, here's a house you should buy, one, two, three, main street. The ARV is 120. I think we can get it for 45. It needs $45,000 in rehab, what do you want to do? Right. I will hover my thumb over that text message,

hit copy, and then open up a text thread to my property manager, another investor in the area, and a lender, and then I will hit paste, and I will send that address to those people. I don't even need to tell them what I want them to do because I've already given them a checklist of all the stuff that I want, right? So when my property manager gets that text, he forwards it to the guy on his team that does his administrative work. And that guy has my little checklist of stuff I want. He immediately pulls up the address. He sees, is this in a good part of town where David wants to buy? Does that ARV look accurate? What would the rents be for a house in this neighborhood? Is this a neighborhood that our company, as a property manager company, even wants to manage it in, right? What, are there any

tax liens on this house? Like, I have them kind of do a lot of my due diligence for me. And I'll usually get back and a thumbs up emoji from them, meaning, yes, this is a house that you should look further into. It's a good deal. Or a thumbs down with the reasons why. I don't think your area of you is that high. This is a bad neighborhood. Those are bad comps, whatever the case may be, right? The other people do this same thing. If I get three thumbs up, I will go back to the agent and say, write up the offer. They will write the offer. I will sign it on DocuSign on my phone, which takes me all of four seconds. I've gotten an offer in. When the agent comes back, it's usually, hey, they counter it at this or you're accepted, right? That's very, very fast because

there's systems that are in place. But I'm not cutting any corners. Just because I'm going fast does not mean I'm being reckless. I still have contingencies in this contract to back out of this deal if I don't like what I find. If it gets accepted, my agent knows she immediately calls my contractor and says, when can you go see the house? David wants you to walk it. And she calls a home inspector and says the same thing to him. My home inspector shows up. It takes him about two hours, hours to do an inspection, okay? An hour and a half into it, my contractor shows up to do his walkthrough. My contractor does 30 minutes of a walkthrough. He gets a list of all the stuff he thinks we need to do. He then meets up with the home inspector who just finished. And he says, what did you see that I missed?

And the home inspector points out, well, we got a problem with the duct work up here. This outlet's not working. All the stuff that a home is that a contractor can't see visually, right? The contractor then works in those significant items into a bid that he gives me that's in an itemized fashion, right? He knows exactly how I want that bid to look because it takes me all of five minutes to look it over and have all the information that I need to make up my mind on is this a deal I want to move forward with. Now, if all the numbers line up with the 45,000 that my agent recommended, we're good to go. We're going to buy the house, right? If it turns out that they don't and the rehab's actually going to be 55,000, I look and I see is there anything we don't need. on here that he just tacked on there because it would be nice, but like this house in this area

really doesn't need that nice of something, right? And if everything is essential and we can't come down, maybe I get the contractor to lower the price by two grand and I go back to the seller and say, hey, I can only, I can pay you $8 grand less than what I said. The repairs are more than I thought. If the seller says, yes, we got a deal. If the seller says, no, we don't have a deal and I move on. But I've invested less than an hour of my own time, probably significantly less than that in this transaction. In fact, the stuff that takes the stuff that takes. up almost all of my time is the phone calls with the people where we have to go through all these subtle oh how are you how's the kids how's everything how's your car doing how's your dog i saw your

instagram post little jason was so cute right like all that stuff is what takes up all your time yeah um that's what happens when you get a system in place is i can be doing that with 20 houses at a time and theoretically that's only taking up 10 to 20 hours of my actual time which is like a quarter to a half of a work week. Not that much time at all, right? And when you get these systems down and you do the same thing all the time and the people that are in your sphere know what you expect and you know how they work and they know how to give you the information you want, your stress levels come down all the time. I mean, I have people that come talk to me. They're like, I'm so stressed. I'm analyzing this deal and everything's going wrong and they tell me what it is. And I'm like, dude, this is such an easy problem for you to fit.

That's just you doing this in a way that's really inefficient and stressing you out. And sometimes I wonder if they just like it. Like the drama makes them feel like they're doing something cool or they're part of something important. Because the actual analysis of rental probably is probably one of the simplest things. There's no way you can analyze any other business as easily as we can analyze a rental. I could never look at that subway sandwich restaurant and analyze all the data that goes into their income expenses and profit and loss and everything that's in there nearly as fast as I can with the rental. Nor could I have somebody else do it for me for free like I can in real estate investing because all those people. people want to get paid.

Makes perfect sense. All right. So now we've got this repeating process going. We've got systems that are set up to help us out. You know, do we just scale up indefinitely? Is there a, do we shift into larger properties? I mean, we kind of talked about that later, but what's the next level? That's kind of where I am, right?

Like, I'm not buying a ton of properties right now because I don't want to have a portfolio of a bazillion single family homes, right? It's not a bad thing, but it's definitely. not an efficient thing, right? Like, once you've got it, now there's a little bit of time that goes into managing it. And when you've got one, two, seven, eight of them, it's not that bad. When you get into like 30, 40 or 50 houses, it starts to be a significant period of your time just because you've got 30 or 40 houses where something's going to go wrong. Like every month, one or two or three of them is going to have something, right? So what happens at that point is now I have to pay somebody to manage my portfolio.

I've planted a lot of trees or seeds. They've grown into trees. It's become an orchard. And I have to hire like a ranch hand. It's probably not a ranch hand, but whatever you call the person that manages an orchard to go manage my orchard for me, right? Well, now that's taking a big cut of my cash flow. Whereas if you get it into multifamily investing at a certain point, which is a pretty easy transition for someone like me because I've got this really big portfolio of single family homes, I can like take the person who's managing it and write them into the expenses of the deal, right? Like they're not an outside expense that's eating into the profit. They were literally underwritten into it because they're an on-site property manager or something like that.

So yes, you can scale infinitely, but you probably wouldn't, right? I look at single family burr investing, like the thing that connects the novice investor from the experience like Grant Cardones of the world that are buying huge, huge deals, these big syndicators, right? You can try to start there. And for certain people, they can make that happen. Some guys can go from being in terrible shape to jump it into a CrossFit gym and they can just catch up to everybody and do fine. The vast majority of people will not. They will pull a muscle. They'll break something. They'll strain something and they'll never go back to work out again, right? It's better for them to start walking around the block and then jogging around the block and then lifting a little bit of weights

and then doing some exercises in the pool and some swimming and some bike riding. And as they get in better shape, they slowly start increasing the intensity and the complexity of what they're doing investing. This is why I love Burr investing, right? It is not a complex system to try to learn. It's very simple. It forces you to master single family investing. You build these fundamentals that will be very, very beneficial to you when you step into what I call like the big boy category. We've got these multi-million dollar assets that are moving around. But like you said, Brandon, the Burr strategy came from multifamily investors that are doing this at a huge level. Some of these are deals that you and I invest in where we're using the Burr strategy on really big deals. I've just applied that system to single

family houses and made it really, really efficient. So you can scale. and if you really love single family houses, then you probably should. At a certain point, you won't be able to get Fannie Mae, Freddie Mac financing. Once you've got 10 finance properties, you won't be eligible. Well, then you look for portfolio lenders.

Or if you're me, you look for actually commercial lenders. So I'll get similar to what your friend does. I have a line of credit with a bank of half a million. I'll take my money or private money. I will buy the house and fix it up. Then I will borrow from that line of credit against the house that's picked up

and they'll let me borrow 75% of the appraised value the minute I have an appraisal in hand, there's no seasoning, okay? I pay back myself or I pay back my private money investor, and now I have this line of credit of, let's say the house appraised at 100 grand of 75,000 against the house. When I've used up the full 500, I'll buy a couple more houses with cash, then I will go to a commercial lender and say, I've got eight cash-loing properties. I want to borrow this much money against them. They'll make me get another round of appraisals on everything, and then they'll let me borrow 70 or 75% of what they appraise I've cleared off my line of credit. I've got all my money back and I can really start over again,

right? That system is infinitely scalable. I can keep going and going and going if I want and just hiring more orchard hands or whatever we want to call them to manage those rentals, right? And for some people, that's what they should do. For other people, once you've got a base, you're going to take all that equity that you just made in your portfolio, which should be worth several millions of dollars, and convert that into something like one multifamily property that's super easy to manage. is very, very, like, scalable. Like, you've got, like, one guy that can do everything as opposed to me where I'm spread out over five or six different markets, right?

And what I would recommend is, like, that's what I'm going to do. I'm going to take the saw. I'm going to put it into one or two really big multifamily buildings. I'm going to have all of my table wiped clean. Like, now I've got property, two property managers that manage my entire portfolio because they're into two properties, right? And then I just start building it again the same way I did the first time, but way faster, way more efficient, way more simple because now I've got all these systems, right?

And once I've got another 30, 35 houses worth a couple million in equity, I'll convert it into multifamily again, right? And I'll be having multifamily for cash flow, single family for equity, building the equity, moving in into cash flow. And at a certain point, I can refinance these multifamily properties, put that back into the single family thing to scale it faster. And I've got both sides that are kind of synergistically working with each other. And it should be building my wealth for me as opposed to me having to do it like I did as a cop.

just by the sweat of my brow and the cut of my jaw. Yeah, that's genius, actually. I really like that. I've never heard you explain it quite like that before, but I really like that a lot. But I want to go even a little bit more deeper into the birth strategy here in the next segment of the show

to make it just really like drive at home. And that isn't a deal deep time. Wouldn't it be great if your houseplants paid rent while you were out of town? I mean, they've got the whole place to themselves, lots of sunlight, zero responsibility. But no, they just sit there waiting for someone to spray them with some cool mist like a bunch of leafy loafers. But guess what? Your home actually could be earning you money while you're not there.

Airbnb has a great feature called the co-host network, which makes hosting your home so easy. If you live far from your property or are away for extended periods, you can hire a local co-host to take care of the hosting for you. These co-hosts are vetted locals who already have experience hosting on Airbnb. A co-host can handle all the details like messaging guests, creating your host space, and managing reservations. So everything runs smoothly. It's a practical way to earn a little extra money, maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area

while you're off making memories somewhere else. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate depreciation on your properties,

which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost Segregation Guys is the go-to firm, having done over 12,000 of these studies, with $500 million in total depreciation identified. Head to Costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. All right, let's get to the deal deep dive. the part of the show where we dive deep into one particular deal that our guest is done. Today's guest, of course, is David Green. So, David, let's go through the deep dive.

Number one, what kind of property is this? So this is a property that actually my good friend Derek Clifford bought using the same strategies that I talk about in long distance real estate investing and the Burr method. And I'm using his because I don't want people to think that I'm like cooking up my own numbers here talking about my own deal. So this was a duplex that he bought in Indiana. Okay. where did you guys find it?

And you guys kind of worked together and I thought it's all that you, but you and Derek. So he found this through a wholesaler in Indiana. Okay. And how much was it? He paid $27,500. Okay. Negotiation. What went into that?

So he put it under contract, I believe for about $34,000. And then after the inspections came back, there was some significant problems. And because the seller was like pretty motivated to get this thing sold and really just needed the cash, he was able to negotiate the price down. And there's something to be said for buying houses in this price range where the people who own these assets are usually not that financially savvy. And just that quick cash that they really need is more important to them than as much money as they could get.

All right. So what was the final price then? So he ended up being all in after the rehab for 64,500. But the appraisal came in at $80,000. Okay. What about funding? What about funding? How do you initially bought this with private money and then he refinanced out of that private money with a bank loan.

Okay. Do you know, was it like a Wells Fargo, like traditional like, you know, Bank of America, Wells Fargo? Yes, like one of the big banks, exactly. Okay. And then of course he birded it. So not if there's what he did with it. Outcome of the thing ended up. How much do you have invested in at the end then? So he had a total of 64,500 into it. When he refinanced, he got 75% of the 80,000, which means he got to pull out 60 grand. So he left. $4,500 in this deal. Now, he was expecting his rehab to be a lot less. It was like around $30,000, he thought. So he spent $7,500 more on the rehab than he was anticipating because he was a little bit newer as an investor and he didn't have a solid core for. He kind of jumped in before he had all those pieces together. So even on a deal that he did not feel he did well on, he only left $4,500 in the deal. The house rented for almost $700 aside, who was $6.95 aside, for a total of $1,000,

month. And then after his financing, he cash flowed 450 total on this duplex where he left $4,500 in the deal. That's great. Yeah. Wow. That's a deal that went bad. That's the point. The thing I wanted to point out. Yeah. Okay. So what lessons learn? I mean, from what you know of Derek or anything you want to pull out there is a lesson. You kind of mentioned it with the. Oh, yeah. He and I debrief this one quite a bit. That's why I know it pretty well. And I actually put that example in the book because I thought it was so good. The first lesson to learn here is that your contractor can make a break a deal. In my opinion, in real estate investing, single families, there's two things that go wrong consistently. And if you avoid those two things, it's like your 80-20 rule, like you've avoided 80% of your problems.

Sure. The ARV can come in lower than you thought and often does. And your contractor can screw up your rehab budget or not finish on time or just completely disappear off the face of the earth. Right. So Derek did the thing that almost everybody does. And he paid the person as, an honest and trustworthy contractor should get paid up front. And then the contractor didn't finish the work on time, right? And then as they opened things up, they saw that more and more stuff was wrong. And at that point, you're kind of pot committed at that point.

Like you've bluffed or maybe that's poker's about analogy here, especially when I'm talking to you and you just, there's no rhyme or reason to how you play poker. But I just win. That's what I do, David. That's what you do. All I do is win. All I do is win.

Tim Tebow at Bigger Pockets over here. Hey, what's your strategy? I win. I win. And I win dominantly. Yeah. So he just, he didn't have a great contractor, right?

Now, were he to do the very same deal in the very same market a second time, he'd get a better contractor, right? This is how repetition builds mastery is we're pointing out all the things that went wrong, but it was the first freaking deal. Like you're supposed to have things go wrong, right? But if that's the only deal you do for the next two years, guess what's going to happen on the next deal? You're going to make all the same mistakes all over again.

You go and you invest that money again. You get better contractors. you get better deal finders, you get better referrals. The whole thing starts to pick up steep. Perfect. It's time for the fire round. All right, time for the world famous fire round. Of course, these questions come direct out of the Bigger Pockets forums,

which you can visit at BiggerPockets.com slash forums. So let's do this. Number one from Tyler, does anyone else see this major flaw in the mystical burr strategy? At the end of the day, arguably the most important element is the refinance. And the appraiser from the lender of your choice is a single event that tells you whether you successfully complete the burr. These appraisers are not investors.

They don't understand the concept of buying discounted properties. So while I prepare a nice packet for them with my rehab, I acquired it, blah, blah, blah. You're still, how are you going to get that? He's basically saying you're hoping that they're going to agree with your ARV and you're just living on hopium. Is that true? That's our favorite line right there. Yeah, you definitely don't want to be relying on opium.

So the first thing I'd say to make sure that this doesn't happen to you, is you have to understand the way appraisers think. So Tyler here, while he's making a strong effort, is actually trying to convince an appraiser to think the way that he thinks, right? He's saying, I prepared a nice packet with my rehab. I explained myself and how I got it discounted. I told them why I think what's worth, what it's worth.

But really, you're better off to look at it from their perspective. In fact, that's really the case in life, right? The appraiser is supposed to be as objective as possible, and they don't really care what you think. you need to look at the comps in the area and say, what would an appraiser think, right? And if your agent's giving you comps that are 150, but there's other comps that are 60 or 70,000,

if the 60 or 70 compare close to your house, it doesn't matter what you do. They're going to use those and it's going to drag your value down. Sometimes you just got to pass up on a deal if you're going to be relying on an appraisal because the comps are just like two all over the place. Right? Your ideal market's like where we see investors do this really,

really well at a high level are markets like Kansas City, Phoenix, Arizona, to a smaller degree, like Las Vegas, areas where there's a lot of track homes, right? It's just like the same thing all the time. And all the houses around there have a very small margin for air as far as the appraised value. And I see this as a real estate agent all the time. When someone comes to me and says, David, I want to sell my house, if I pull comps and there's comps at 900,000 and there's comps at 500,000, that's tough. It's very tough to get a buyer to be comfortable. will pay in 800 grand when their neighbor paid 500, right? When I'm like, man, everything is right here in between 600 and 650,

that's a very easy way to value at that house is worth. So because I know that working as an agent, I apply it into my investing world. And when an agent sends me comps that are 125 and I have a property manager or somebody else look at it and they're like, well, look at this house. This one sold for 60. I'm like, oh, that's like right down the street. And it's pretty much the same thing, right? I would just avoid buying that deal.

I don't want to give an appraiser any ammunition. to find a way to give me a lower value and then spend my effort trying to change his mind. I'd rather put the effort in up front looking at what he's going to be looking at and making my decision based on that. Perfect. Perfect. All right. Next one. It's perfect. It's perfect.

Ryan said, hello, BP. I'm looking for insight on the Burr method with regards to purchasing the property. If you don't have enough cash to purchase the property all right, can you use other alternatives like a HELOC or a 401K or something like that? And then if you did that, wouldn't that just hurt your debt to income ratio when you're trying to cash out refi? Ryan, great question, man. You're thinking the right way. I really like this a lot. So you can use things like a HELOC or 401k or cash advantage.

I don't know a lot about the 401k world to be honest with you because I never had one. I worked as a cop. We have a pension. And then all my money, I just put in a savings account to buy real estate with. So I know people do it. I don't know the rules of how that works. So you got to talk to one of those experts to find. out. My understanding, though, I'm not a lender yet. I'm working on that is that it won't hurt

your debt to income because you're not actually taking on, I mean, the HELOC might be adding a little bit of debt, right? Like if you borrow $50,000 on a HELOC and the bank says, well, if you borrow the full $50,000, you may have to pay $400 a month or something. That could affect your debt to income, but it really shouldn't be so much that it prevents you from being a loan unless you're already living on like a razor-thin margin. And I mean, if you're going to refinance anyway and pay off that he-lock, then they won't, the lender won't count that anyway, right? Like, unless you're going to hold on to that he-lock after the refi. But like refis, when they're calculating your number, this is the way I did it when I was a lender, like a banker, like you'd say, oh, they're paying

off that credit card with the refinance. Okay, then we don't have to count that payment because it won't be there. Right. Like, when we pay it off, that will no longer exist. Good question. Did you guys make them sign a statement saying that they would be repaying it off with the funds? Yes. Yeah. And we'd actually pay it off. Now, they granted, they'd go. and just drive that credit card right back up. Sure. Of course. But or take out that heat lock, but they don't, like, that's not the point. The point is, like, what do you actually have debt and you've paid off?

So, yeah. Yeah, it should, and it shouldn't be a ton of money, right? It's not like you're going out and buying a Ferrari and now you just set yourself up for $2,200 a month of debt. Yeah, if it's a helonk, you're looking at a couple hundred dollars a month. That's exactly. That's why we, I recommend at least using helox prudently. Yeah.

It's like the cheapest loan you can ever get. It's a loan you give to yourself based on your own equity. It's interest only and it's usually at a really low rate. Yep. So the question was, is it possible to burr with a conventional loan? It is, but it's not efficient. And that's why we don't like to do it. A, if you can get a conventional loan, the house is not in that bad of shape.

So the odds are you're not getting that good of a deal. B, you're paying closing costs, which are probably like your most expensive cost in this entire thing twice. You're paying closing costs once when you buy it. And then again, when you refinance it, which means you might have just taken $8 to $10,000 that you have to add in value to that home just to break even from the closing cost. So you can do it with a conventional loan. In my experience, people only do that because it's convenient, not because it's smart. All right. Good answer.

Next one. Brian from St. George, Utah said, I've been listening to the podcast, learned about the Burr Method. It makes sense. I get it, but I had a clarification question. When you refi, I'm assuming that is a cash out refi, right? Are there greater restrictions on a cash out refi? Like, could you maybe go to 80% LTV on a cash out refi for an investment property?

Like, is it different or is that pretty much the same? And obviously you're not a lender here, but based on your experience, David. On my experience, yes, it would be a cash out refi and there are bigger restrictions. The biggest restriction is usually the loan to value will be a little bit less, not a lot, but like you may not get a full 80%, you may get 75, and your interest rate will be a little bit higher, right? But these questions are actually incredibly easy to answer if you do what we said earlier and you go to a bank ahead of time and you say, I want to get pre-approved for a loan, here's what they want to do.

Because they immediately hear that and say, oh, this is a cash-a-old. out refi. So here's your rate and here's your loans of value. You're not going to be hit by the surprise if you line your dominoes up before you actually step into the arena. All right. I like it. All right. Well, that was the end of the fire round. Before we get out of here today, though, let's get to today's. Famous four. These are the same four questions we ask every guest every week. Let's throw them at you right now, David. Any current favorite real estate books? Anything you've been consuming lately, real estate related wise. It's a long break, long pause here. Look at David thinking. He's looking

up into the right. It's like he didn't notice what's coming. I know. I think that I've just answered this question so many times. I'm trying to think of a new book. A lot of the stuff that I'm reading right now is like real estate agent stuff when it comes to sales like that, not quite as much investing. I still really think that like the millionaire real estate agent is one of the best books that's ever been written, even if you're not an agent just to understand like the concept of taking models and applying him to a business. All right. I still need to read that one.

Number two, favorite business book. So good, they can't ignore you by Cal Newport. Love that stinking book. I recommend everybody read it. Did you read his new one yet?

Digital Minimalism? No, but I've heard you talk about it so much. I might not have to read it. You're like my own personal, what is it, Blinkist? The company that, yeah, by Blankist.

I'm your blinkest. Brennan Blinkist Turner. Beardie Blakist. Bairdy Blankist. Number three, hobbies. I love sports. I love learning. learning. I have a lot of fun like playing video games. I probably should admit that as a

growing thing I really like to do. And then like anything that pushes me and challenges me to do better, I'm probably being interested in. All right. I like that. Last one. What do you believe sets apart successful burr investors from those who give up fail or never get started? Yeah. If you want to be good at burr investing, it's really a matter of educating yourself on what you're going to be doing. the more educated you are, the lower fear you have, right? And like, fear is what stops most people from moving forward. So when you go out there and you take the emotion of fear and you turn it into a question, which is fear is almost always based on the uncertainty,

I don't know what's going to happen, right? The more you get those questions answered so you feel like you do know what's going to happen, something as simple as getting a pre-approval from a bank before you go buy a house, like that just removes so much anxiety right there, the more likely you are to be successful. So I feel like the successful investors are the ones that take proactive steps to remove the negative emotions that they have, as opposed to just waiting to get started for those things to go away on their own. All right. All right. I like that. Fantastic. Well, David, it's the end of the show. It's been a good one.

I got to talk about Burr for the entire time. Yeah, it was like six hours of Burr investing talking. It's great. Let me ask you again. Well, first of all, say, where can people find out more about you and then where can they get the book? They can find out more about me on Instagram. I'm David Green 24 or Facebook, pretty much all social media, LinkedIn, everything. I'm always David Green 24. And then if you want to get the book, I would recommend you go to biggerpockets.com slash burr book.

That's Burr with four R's. You get all the bonus content and you really get like, you can see the endorsements of the people who liked it. There's actually quite a few people on there. I respect a lot that really gave me a good review on the book. So in my opinion, if you want to be a black belt real estate investor, You have to understand the Burr method. If you can get that down, you'll understand everything that we talk about at a much deeper level.

Perfect. Perfect. All right. Then lastly, David Green, do you want to end this show? You want to take us out even though you're the guest today, but I'll let you take it out if you want. You know, I knew you were going to do this to me because you just don't like being on the hot seat of having to come up with a clever nickname. I know. I call you David Blinkist Green, but.

But I already called you that, right? I know. So that's kind of. I'm not clever. At this point. All right. This is David Green for Brandon, Not Clever Turner. Signing off. Not Clever. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the height, you're in the right place.

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