Those of us who use rental real estate as a tool to achieve Financial Independence are likely familiar with BiggerPockets and some of the associated personalities. David Greene is the co-host of the BiggerPockets Podcast and author of two real estate investing books. His first book, Long-Distance Real Estate Investing: How to Buy, Rehab, and Manage Out-of-State Rental Properties was published in 2017 and his second book is now available.
I was honored to receive an advance reading copy of his latest book, Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple. In this book, he thoroughly explores this assertive method of real estate investing. I recommend keeping a copy of this book for constant reference.
If you are already investing in real estate or are thinking of investing in real estate, the BRRRR method is worth understanding to determine if it is a strategy you want to incorporate. In addition to the value he provides via his books, David graciously answers a handful of questions I thought the Fiology audience would find useful and interesting. Enjoy.
What motivated you to purchase your first rental property?
I totally backed into it! I had a friend with a house under contract, and he was going to move out of state and lose his deposit. I went to take a look in case I could buy it so that he could keep his earnest money deposit. I liked the house, liked the price, and liked the area. I was able to get the listing agent to negotiate another $20,000 off the price, and boom—before I knew what was going on, I had bought my first property. You can hear more about the details of this story on the BiggerPockets Podcast episode #169.
How can real estate investing expedite a person’s journey to Financial Independence?
In my experience, real estate investing is the most powerful way to build personal wealth I’ve seen. Owning real estate builds wealth in several ways—equity creation at purchase, loan pay down, cash flow, tax incentives, rising rents and values with inflation, etc. Buying a rental property and having your tenant pay it off for you is one of the simplest, easiest, and most surefire ways to build solid, consistent, and reliable wealth over a long period of time.
Real estate also provides people with the ability to own an income-producing asset for no or low money down, especially when using the BRRRR method. I detail this method in my book—Buy, Rehab, Rent, Refinance, Repeat: The BRRRR Rental Property Investment Strategy Made Simple, but the bird’s-eye view is all in the title. You buy a property at a good deal, rehab it to add value, rent it out to tenants, and refinance the deal so that you never run out of liquid cash. Then you can repeat the process. That, of course, is a huge simplification, but I can’t give away all the secrets!
Have you decided, at least for now, what “enough” looks like for you? If so, what effect does reaching “enough” have on your wealth accumulation strategy?
I don’t have a number in place that would equal “enough” when it comes to income, but I do have a number in place when it comes to my time. My goal is to create more wealth than I, my friends, and my family could ever need without having to spend my own time working on it, or doing things I don’t enjoy. This means I work hard now to create wealth, then slowly make that wealth start working for me instead.
What personal characteristics make you good at real estate investing?
This is such a good question! I have several characteristics that lead me towards being a good real estate investor.
- Delayed gratification—I have always been good at putting off today’s rewards for tomorrow’s betterment. This is a crucial ability for real estate investing and wealth building in general.
- Strong analytical skills—I really like understanding the “why” behind a result, and my brain naturally looks to seek out the most important parts of a process. I did this as a basketball player, as a waiter, as a police officer, as a real estate agent, and also as an investor. I am always looking for what makes something work, or the “why” behind a process. Being able to pinpoint the most important strategic points of any process, and make sure I fulfill those parts at a high level, has led to me experiencing more success than the Average Joe who just shows up, does the job, and hopes the result comes in well.
- Strong work ethic—I pride myself on being able to outwork others, and I’ll work harder to make sure I hit my goals than those who are less determined.
- Strong sense of urgency—When a good deal comes my way, I hate to lose it. This helps me land and close deals others may miss.
- Strong systems—I’m a systems guy. This means I like to be responsible for as little in a deal as possible. By building a strong team around me, I can keep real estate investing more fun and exciting than those who are doing all the worst parts of the job themselves. This keeps me motivated and interested.
Can you describe your worst and best real estate investing experience?
My worst real estate investing experience came from a home I bought at an auction. Turns out it had been expanded and no permits were pulled. This led to a year-long process of trying to get the city to approve our plans, then me spending massive amounts of money to TEAR DOWN my house—which made it worth less. It ended up still being a solid deal when it was done, but nowhere near the deal I thought I was getting. Also a huge waste of time.
My best deal was one a wholesaler brought me. I paid $150,000 cash for a house worth $230,000 that needed about $2000 worth of work. I made about $80,000 in equity with no work. Even better, the house pays for itself, since it’s in an area that is appreciating and it has great tenants.
In addition to reading Buy, Rehab, Rent, Refinance, Repeat, what do you recommend as first steps for someone who wants to explore real estate investing as a strategy for Financial Independence?
If you want to learn how to invest in real estate (it’s really simple, or at least more simple than it seems) the first thing you should do is subscribe to the BiggerPockets Real Estate Podcast. It is free, fun, and highly informative when it comes to learning how to invest. Each week we interview a different investor and learn what they did, how they did it, and what they are doing. After that, I would start reading all the books and free blog posts you can get your hands on—there are tons of resources out there, you just have to get out there and find them! BiggerPockets.com has an official blog, member blogs, extensive forums, and books published on a variety of topics. I also run a blog at GreeneIncome.com where you can see the stuff I write and projects I’ve worked on. I would also start watching educational YouTube videos, especially those that cover the fundamentals that go into analyzing a property and what investors look for in a deal.
Once you’ve got that down, start going to meetups to learn from other investors, attending conferences, and making friends with others in the industry. If you’re super committed and want to pay a coach to help you learn faster, there’s nothing wrong with that. But DON’T SIGN UP FOR ANY GURU PROGRAMS! There are a lot of people out there looking to take advantage of eager newbie investors and it’s easy to fall prey to their promises. There are plenty of free resources out there; you don’t have to pay.
One of my favorite ways to learn is to listen to podcasts all day about whatever topic I’m interested in. I do a lot of driving as a real estate agent (I run a real estate team and sell houses in the Bay Area and Sacramento, CA) and when I’m driving, I listen to every podcast I can. Podcasts on being a better agent, better investor, or better leader are all very helpful towards helping me excel at whatever I do. I recommend if you want to learn a new thing, immerse yourself in in it! My book was written to help show the path to mastering real estate investing. There are a ton of other resources to help you on that journey!