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0:01 today’s video i’m going to show you how 0:03 to buy your first rental property using 0:05 the burst strategy the burst strategy is 0:07 one of my favorite way to buy long-term 0:09 rental property and let me tell you why 0:11 one i can buy the property and i can add 0:13 value and force value and get sweat 0:15 equity instantly the moment i’m done 0:17 rehabbing the property number two my 0:19 mortgage is usually lower and i usually 0:21 get better cash flow because the 0:22 mortgage is lower and of course when 0:24 owning these property you got i get 0:26 right off i get cash flow and i get to 0:28 have appreciation this is strategy when 0:30 you learn how to master this it is the 0:32 bomb baby let me explain all right you Requirements 0:34 guys i’m going to show you guys how to 0:36 buy your first rental property using the 0:38 burst strategy and the requirement is 0:40 going to take to actually do the burst 0:41 strategy okay one i’m gonna share with 0:43 you what the burst strategy actually 0:45 means two the requirement on what 0:47 actually take to do it right and 0:49 successfully and then three what type of 0:51 people you need to have in your team to 0:52 do this right and then lastly i’m gonna 0:54 share with you a real life example of a 0:56 rental property i use a burst strategy 0:57 on so let’s get started baby so here’s 0:59 the requirement what you’re gonna need 1:01 to do the burst strategy now i’m gonna 1:04 go a lot more in depth okay a little bit 1:06 further down this video on this whole 1:08 requirement but for now here’s what 1:10 you’re gonna need number one you’re 1:11 gonna need good credit so later on when 1:13 you refi into permanent financing you’re 1:16 gonna need good credit and you need at 1:17 least 620 or higher the higher your 1:20 credit score is the better your interest 1:22 rate’s gonna be just remember that okay 1:24 now the other thing you’re gonna need is 1:26 you’re gonna need at least two years of 1:28 work history at the same place you can 1:30 be self-employed with the same place or 1:32 you can work for someone but it has to 1:33 be at least two years on your tax return 1:35 that show you’ve been actually working 1:37 at the same place for at least two years 1:38 okay the third thing you’re gonna need 1:40 is when you do your rehab your purchase 1:43 price and your rehab what i call all in 1:46 number you are in number has to be at 1:48 least 65 1:50 to 70 1:52 of the arv 1:54 set for after repair value so i’m going 1:57 to use an easy example if your arv is a 1:59 million dollar you’re going to need to 2:01 be all in at 650 or 700 000 because you 2:05 need at least 25 to 30 percent equity in 2:09 the deal in order to diverse strategy 2:11 and get your original dolphin back in 2:13 your pocket and all this is gonna make a 2:15 lot more sense once i go through the 2:17 burst strategy with you guys later on 2:19 this video so now you gotta put a team 2:21 together in order for you to do the 2:23 birth strategy the first person on your 2:25 team is you gotta be the person who 2:27 actually had to go find the deal either 2:29 you’re gonna have to find the deal like 2:30 for me i actually go out there and i 2:32 look for deal myself if you got time you 2:34 can find yourself by you driving around 2:37 you see ugly houses how they need a lot 2:38 of work you can actually write letters 2:40 to those people you can do unlock the 2:42 people you can call them ask them do you 2:43 want to sell if you don’t have time to 2:46 do all that you can find a whole seller 2:48 someone who actually go do those and 2:50 then they will tie it up and they’ll 2:51 sell it to you they make a little bit of 2:53 profit on that so you’re not gonna get 2:54 the best best deal if you do it yourself 2:56 versus you hiring you know not you don’t 2:58 hire a wholesaler the whole seller’s 2:59 gonna do it themselves but then they 3:01 they look for investor they can sell the 3:02 deal too now you can find wholesaler by 3:05 if you go on social media you say hey 3:07 i’m looking to buy a deal anyone out 3:09 there is a wholesaler send me these 3:10 deals in this era i’m looking for tell 3:12 them what you want or there’s a lot of 3:14 online investment club or social media 3:17 club where you can actually go and tell 3:18 them hey i’m an investor i’m looking for 3:20 this type of deal this type of condition 3:22 and then you got a wholesaler out there 3:24 send me deals or you can actually have a 3:26 realtor find you fixer-upper on the mls 3:30 sometimes you will find deal on mls the 3:32 challenge is when there are fictional 3:34 mls there’s a lot of investors looking 3:36 for deals on there and so what happened 3:38 is that they get multiple offer and they 3:40 get albeit and then those deals it don’t 3:42 become deal no more but there’s time 3:44 when you do find them out there okay 3:46 other thing you can do is more advanced 3:48 i’ve seen a lot of investor hire what 3:50 they call virtual assistant and they 3:51 actually these virtual assistants go out 3:53 there and they find a deal by calling 3:55 and marketing two people and then they 3:57 basically bring it back to you like for 3:59 example we have va’s that go find a deal 4:00 for us also so these are just some ways 4:02 how to find deals the second person you 4:04 need on your team is a general 4:06 contractor in order to find a good 4:08 general contractor you gotta talk to 4:10 other investors who hopefully somebody 4:12 you know that have worked with general 4:14 contractor a few projects and they’ve 4:16 been reliable and they’re reasonable in 4:18 price then you get referral from your 4:20 friend or investor friend i’ve done it 4:22 those are the best referrals another way 4:24 to do it is actually again you go to the 4:26 real estate facebook clubs or sometimes 4:28 they’ll do it live you can talk to 4:30 people there and ask them who they use 4:32 for contractor right or sometime 4:34 contractor are in these clubs on social 4:36 media or live and you can meet them but 4:39 if you haven’t seen their work you might 4:40 want to check reference to see how well 4:42 they did how reliable they are or you 4:44 got to go out there and check and look 4:45 at their project and see how they’re 4:46 done the third thing you can do is you 4:48 can find them on angie’s list and read 4:50 the reviews on them if they get a lot of 4:52 reviews and those are the people you 4:53 want to hire a general contractor the 4:56 third person on your team is a hard 4:57 money lender harmony and lender are 5:00 basically private lenders that will lend 5:02 money to rehab houses they don’t really 5:04 care about your credit as long as you 5:06 have typically 10 to 20 down based on 5:09 your experience and you have some 5:11 experience of rehabbing houses or at 5:12 least your contractor have experience we 5:14 have how they’ll lend you the money how 5:16 you find a harmony lender is very 5:18 similar how you find a general contract 5:19 and the fourth person you want on your 5:21 team is a traditional lender traditional 5:23 lender are the typical lender that’s 5:25 going to basically lend you the money so 5:27 you can do a 30-year fix because harmony 5:29 and lender they do short-term lending 5:31 once you refine your house out of 5:33 harmony lending you need to put in 5:35 traditional lending like the 30-year 5:36 loan you need the traditional lender 5:38 these lenders they want at least 620 5:41 credit score and higher than one two 5:42 year of working history at the same job 5:44 if you want most or all of your original 5:48 down payment back in your pocket when 5:50 you refinance your permanent financing 5:52 you’re gonna need to make sure you’re 5:54 all in number is 65 to 70 percent all in 5:58 of your arv arv is after repair value 6:01 you run at least 65 to 70 all in or 25 6:05 to 30 6:06 margin in these deal and that’s how 6:08 you’re gonna be able to get a lot of 6:09 your original down payment or all of it 6:11 back in your pocket when you re-fight 6:12 your permanent financing now that you 6:14 know what you need and who you need on 6:16 your team so let’s go over the burst 6:19 strategy and what it is and how to do it 6:21 the right way so let’s hear what the 6:23 burst strategy actually mean so b stand 6:26 for buy it now the key with doing the 6:29 burst strategy correctly is you want to 6:31 buy it in the condition i need a lot of 6:33 work a lot of people buy the property 6:35 that don’t need a lot of work the key is 6:37 you want to buy the property in a really 6:39 bad condition the worse the condition 6:41 the better the burst strategy is going 6:43 to work okay r stand for renovated the 6:46 second r stand for rent it out then the 6:49 next r stand for refinance it and then 6:52 the last r stand for repeat the process 6:55 and i’m going to explain this whole 6:56 process on a real deal i bought recently 6:59 using the burst strategy let me explain BRRRR Explained 7:01 the burst strategy in detail because 7:03 when i watch people that watch my video 7:06 they explain burr totally different and 7:08 then sometimes they buy property and 7:10 they go that i just did a burr and i say 7:12 to myself they didn’t burr you just 7:14 bought a rental property and you just 7:16 actually rented it you didn’t even rehab 7:18 the property so let me explain to you in 7:20 detail how it works so the bees stand 7:23 for again buy it and the key here is you 7:25 gotta buy the property in a fixer 7:28 condition form you can buy a property in 7:31 what i call a good condition move in 7:33 ready to go or you can buy a fixer to me 7:35 when you buy a property already clean 7:38 move in then you just buy it and you 7:40 don’t do nothing to it you rent it out 7:42 you can do that all that is you’re just 7:44 buying what i call a rental property but 7:46 when you hear somebody use the word burr 7:48 the biggest reason why they use it with 7:50 burr is this they buy the property as a 7:53 fixer and then they rehab the property 7:55 and after they rehab the property they 7:57 make our property worth as much as a 7:59 property that’s already cleaned that way 8:01 we have instant equity so the key when 8:04 you hear people say the burst strategy 8:06 you know they actually bought as a fixer 8:08 and they rehabbed it and they got 8:09 instant sweat equity in the deal make 8:11 sense the first r is renovation when you Renovation 8:14 buy the property especially the burst 8:15 strategy you gotta renovate that’s the 8:17 difference some people buy properties 8:18 already in good condition they don’t 8:19 have to renovate they buy it and turn it 8:21 into rental right away the only 8:22 difference is they don’t have sweat 8:23 equity why i like to do the burst 8:25 strategy is i don’t mind going in 8:27 rehabbing it and then actually build 8:29 sweat equity through the house redone 8:31 the house is worth more than i actually 8:33 bought it for key with doing the burst 8:34 strategy is you gotta learn how to add 8:37 value and force value what does that 8:38 mean add value is you rehab what’s 8:41 already existing so let’s say it’s a 8:42 three bedroom two bath one level house 8:44 and it’s super dated or near it’s a 8:45 major fixer adam bay you just three 8:47 bedroom two bath what’s already there 8:49 forcing value is you actually finish out 8:52 something for example forcing by you is 8:53 buying a house a three bedroom two bath 8:55 and there’s an unfinished basement what 8:56 you do is you finish up the basement so 8:58 you get more square footage more better 8:59 bathroom now you’re gonna make the house 9:01 worth a lot more money especially if the 9:02 upstair is a fixer so i like to buy a 9:05 property where i like to add value we 9:07 have upstairs for example and then force 9:10 vibe which is adding a little better 9:11 back downstairs make it look new it’s 9:12 about the end of the day all right i 9:14 have a whole new house that’ll be my 9:16 upstairs and adam will bend down 9:18 downstairs that means that thing is 9:19 worth a lot more money when i’m done 9:21 with it and that’s how you can actually 9:23 do the burst strategy and you can get 20 9:25 25 30 margin you can’t get no margin if 9:28 you buy the property already in good 9:29 condition that’s the between a burst 9:31 strategy property versus buying 9:32 something already done and clean rental 9:34 property second r stand for rent all Rent 9:37 right the second r stand for rent after 9:39 you renovate the property they look all 9:41 nice then you got to go out there and 9:43 find a renter for it now for me i 9:45 actually have a property manager to 9:47 actually manage it for me now before i 9:50 had 15 property my wife and i we 9:53 actually manage it ourself so we 9:55 actually went out there and learned how 9:56 to do at the beginning i think it’s good 9:58 that anyone who actually owned rental 9:59 they should at least try to rent it 10:01 themselves for the first one or two 10:02 property maybe three that way you 10:03 understand how to actually you know run 10:06 ads how to screen your tenants how to 10:08 manage the property how to pay the bills 10:10 you need to know that the ins and out of 10:12 being a property manager and that way by 10:14 the time you turn it over to the 10:16 property manager they can’t really sell 10:18 you on something they do or don’t do 10:20 because you know oh that don’t work oh 10:22 that worked so for us when we had 15 10:24 rental property we knew certain things 10:26 we did as effective and then certain 10:27 time we handled the property manager 10:29 they were trying to tell me they’re 10:30 going to do this and this this i 10:31 actually said to them why that’s just a 10:33 waste of time and money why should i pay 10:34 spent money on that and they couldn’t 10:36 argue with that i ran it we managed the 10:38 first 15 property ourself okay now today 10:41 i have a property manager they manage it 10:42 for us where they rent the and where 10:44 they run the ad we run ads in craigslist 10:47 craigslist is actually a great place to 10:49 run ads literally 10:51 most people own uh rental property even 10:53 apart building they rent it on 10:55 craigslist the other place we put it on 10:57 mls and we also put on trulia okay and 10:59 of course my social media page so 11:02 craigslist probably does the most the 11:04 rest of the stuff is bonus we rent it 11:06 out that way that’s how we find a tenant 11:07 now for me my property manager they 11:09 screen everybody what they do is they 11:11 try to get at least 18 month lease we 11:14 used to do 12 months but we realized 11:16 it’s actually better to do 18 months 11:18 because if you ran it let’s say in 11:20 january it comes around january and 11:22 hopefully you don’t rent it on the bad 11:24 time you read in december coming around 11:25 december and you’re going to go vacant 11:26 then you’re vacant in december which is 11:28 the worst time to rent your property out 11:29 so it’s always better to do 18 months 11:31 you can get it we charge first last and 11:33 deposit the biggest thing i’m gonna tell 11:35 you right now and i told this to 11:36 somebody the other day if you’re gonna 11:38 rent the house out you don’t do nobody a 11:40 favor if they can’t come over first last 11:42 in deposit and they get really really 11:44 bad history of being a renter as much as 11:47 they give you the sad story if you don’t 11:49 want to have bad experience being a 11:50 landlord just don’t rent to them because 11:52 the moment you do my favorite and the 11:54 don’t turn out well you guys you 11:56 guys gonna get very disappointed mad at 11:58 them imagine yourself actually doing it 12:00 i got a problematic to do all that but 12:02 if you’re gonna manage yourself do the 12:04 same thing and that’s where i have a 12:06 property manager i let them deal with it 12:08 and then that’s where we rent and find 12:09 tenant the next r is refinance for a lot Refinance 12:12 of you don’t know when you do the burst 12:14 strategy a lot of traditional lender 12:16 will not finance this home because they 12:17 have way too much work order the only 12:19 person that can lend on these homes are 12:20 harming lending and harmony lending what 12:23 they require when you buy a fixer-upper 12:25 is that if they’re gonna land on it they 12:27 want you to put at least 20 down unless 12:29 you get a lot of experience like me okay 12:31 what they will do is this let’s say you 12:33 buy a property four hundred thousand and 12:34 it costs fifty thousand dollar rehab 12:36 that’s 450 they want you to put 20 down 12:39 which is 90 000 and then they will lend 12:41 you the rest of the money to closing the 12:42 deal and to rehab the property after you 12:45 basically finish renovating and finding 12:47 a renter then when you get done then you 12:50 want to refinance out of this short term 12:52 high interest rate hardware lender 12:54 lending into permanent financing you 12:56 want the 30-year fix you want to refi 12:59 get the 30-year parking and write it out 13:01 in order for you to do that you got to 13:02 go talk to a regular lender and then 13:04 they would refinance you out of hard 13:06 money and put you into a 30-year fix in 13:08 a moment i’m gonna show you a real deal 13:10 where i bought a property using the 13:12 burst strategy am i doing it right you 13:14 guys i got my original down payment with 13:17 that ninety thousand i’m talking about 13:18 in this example back in my pocket so i 13:20 have no money vested in this deal and 13:22 the last r is repeat the process the 13:25 last r is repeat the process everything 13:28 i explained to you and you do it right 13:30 you get the original down payment you 13:32 take that money and you go do this whole 13:33 thing all over again and if you do this 13:35 right and you can get a house done 13:37 within six months for example you can do 13:39 two bur in one year with the exact same 13:43 down payment let me show you a real live Example 13:45 example let me break down the number 13:47 when i pay for this property how i 13:48 finance this deal i paid 365 for this 13:51 deal causing the 85 to rehab this house 13:53 when i bought this deal three bedroom 13:54 two bath upstairs and downstairs was a 13:57 unfinished basement in order to actually 13:59 get the most arv you gotta find property 14:02 where you can add value in force value 14:04 since there was nothing in the basement 14:06 we added a one bedroom a full bath and a 14:09 kitchenette downstairs so this house 14:10 became a four bedroom three bath house 14:13 with a second kitchen downstairs for the 14:14 mother-in-law and that’s why right they 14:17 caught 85 000 to rehab i’m all in for 14:19 450 and this is why this bank they 14:22 appraised for 7.25 so after i rehab this 14:25 property i wanted to basically refi out 14:27 of the harmony lending and basically get 14:30 permanent financing 30 years fixed so 14:31 harvard lender wanted 20 down which is 14:34 90 grand okay and then they’ll lend you 14:36 the rest of the money to close in the 14:38 deal and rehab the deal so out of pocket 14:40 is only 90 grand to do this deal edition 14:42 lender says 70 14:44 i’ll give you 70 ltv of 725 which is 507 14:48 and some change i didn’t need all that 14:50 money i just told the bank just give me 14:52 450. if i get 450 if i get a new low for 14:55 450 i can get back my 20 percent which 14:58 is 90 grand and harvard land will get 15:00 back there 80 grand like 80 i mean and 15:03 then everybody’s home i’ll be i’ll be 15:05 i’ll get all my original down payment so 15:07 i got a new loan for 450 dollar which is 15:09 down here i’m going to show you her my 15:11 new lowest 450. the bank appraised for 15:12 7.25 i’m all in for 450 that mean my 15:15 equity in this deal was 275 000 15:19 instant equity that’s 38 margin deal 15:22 that’s a big margin just to give you an 15:24 idea most flipper they do between 10 and 15:27 15 15:28 margin most people do burr they might 15:31 get 15 margin when you have a 30 plus 15:34 percent margin that is rare now it’s not 15:36 rare for me because i know when i do a 15:38 bird i gotta add value and force value 15:41 when i bought this property i said it 15:42 was a three bedroom two bath when i 15:43 finished the basement up it became a 15:45 four bedroom three bath hour with a 15:46 second kitchen you guys see that that’s 15:48 how you get this kind of margin so my 15:50 new loan i only took a level 450 i just 15:53 wanted to be whole okay even though they 15:54 gave me more money i didn’t want more 15:56 money my loan is 450 my mortgage with 15:58 principal tax insurance property manager 16:01 is about 2800 bucks at all including i 16:04 rent the top half of the house out for 16:05 24.25 i rent the mother-in-law 16:08 downstairs for 14.25 so my rent is 38.50 16:12 my mortgage is 2800 that mean i get a 16:14 thousand fifty dollars a month in 16:16 positive cash flow which is twelve 16:17 thousand dollars a year so at the end of 16:20 the day since the bank was willing to 16:22 finance up to seventy percent of the 16:24 number five hundred seven thousand i 16:26 didn’t need all that money i want 450 to 16:27 be whole so i got a little for 450 that 16:30 mean i got my 20 back and hard money got 16:33 there 80 back so when i get my 90 000 16:36 buck you guys i mean i have no money 16:38 invested in this deal i didn’t take any 16:40 of my equity out so i mean i still got 16:41 my 275 with the equity and i get 12 000 16:44 a year in positive cash flow this 16:47 is a full 16:49 burn so when anybody talking about burr 16:51 you guys if you don’t get over 30 you’re 16:53 not going to be basically have no money 16:54 invested so this deal with no money 16:56 vested 275 000 in equity you repeat the 17:00 process you take the 90 grand you do it 17:01 again if it takes you six months to 17:03 rehab let’s say four to six months i 17:05 mean in one year you can do two deal 17:07 with the same 90 000 17:09 that right there is how you grow your 17:11 portfolio okay using the birth strategy 17:13 also so you guys this right here is how 17:16 you do the bird successfully okay that’s 17:18 a wrap for this bird video do me a favor 17:21 like comment and subscribe to the 17:23 channel and i will see you guys next 17:24 video peace out