Turning $60K into $125K in 90 Days

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Hey, what's up guys, it's James here and in today's video, I'm going to talk to you about how we were able to turn $60,000 into $125,000, in 90 days as a really, really cool strategy that we use with our recent Airbnb investing. So I want to share that with you. And before I do, I also want to let you know there's a link in the description down below to a very new free training that we've just put together that talks through all of our strategies for investing in short term rentals, we're going to break down the three crucial components that you need in order to be successful investing in short term rentals. Now this training was put together by myself, I'm an Airbnb expert, who's been managing properties and investing in Airbnb for over five years now and have coached 1000s of hosts and property owners and property managers all over the world to succeed with Airbnb, it was also put together by my business partner and investing partner Riley, he's been a full time real estate investor for about five years now as well. And he's got a ton of experience with the strategies that I'm gonna be talking to you about in this video that we implemented on our most recent Airbnb in order to turn $60,000 into $125,000, in just under 90 days. So again, if you want access to the training that walks through all this in detail, then I highly recommend you check out the free training in the link in the description down below. Just click that link, go ahead and register for the training, it is completely free. It is gonna be taken down pretty soon here though, so I highly recommend you check it out before it's too late. Now, that being said, let's break it down. And this is a video where I'm going to talk to you about a successful implementation of something that I that is called the burr strategy that you may or may not have heard of. And I want to talk about specifically how using this burr strategy has been really effective with us as Airbnb investors as short term rental investors, combining the two strategies of burning and short term rental investing is just absolutely incredible. So I want to talk you through it. So if you're familiar with the channel, then you're familiar with short term rental investing, you're familiar with everything short term rental. In this video, we're going to focus more specifically on birth, and I'm going to talk to you as well at the end. But how we combine the two strategies. If you want other video specifically about investing in short term rentals and how short term rental investing works. There's tons of other resources on this channel, tons of other videos, it'll be really great to watch as well. Now this one is something called the bur method that we use. Now, if you're not familiar, burr is basically just a strategy where you're going to buy a property, you're going to then make sure that the property needs some renovations and specific types of renovations. So you don't want to just find a property that needs just any renovations, but specifically renovations that you know, if you do them are going to drastically increase the value of the property. And so we're going to talk about why that's really important later on the video here, you're going to buy that property, and then you're going to rehab it. So you're going to buy rehab. So already you're seeing where the burrs coming from be our next ours rehab here rehabbing or renovating the property is where you're going to go in there and actually do that renovation work once you own the property. Now after that, you're going to traditionally you would rent the property. So traditionally, you would rent the property out and get a higher rent that you would then use to base your your appraised value off of but for short term rental, you're going to skip that step because obviously, we're not going to be renting it out to someone long term, we're gonna be putting it up on short term rental, and then we're going to refinance the property. And then lastly, we're going to repeat the process. Now the refinance is really where this strategy all comes together. Because right now, all we've done is bought a property that needed renovation, and we went and renovated it. And from what we know, it's increased the value of the property. And what's really cool about the way that mortgage is working, the way that property value works with renovations is that you can actually pull out all of your money if you do this the right way. So I mean by that is let's keep the numbers really simple. And let's look at $100,000 property. So if we look at $100,000 property, and we look at a traditional 8020 loan to value, meaning you have to put 20% of the purchase price down as your down payment, that means that you're putting in $20,000. Okay, now, let's say that you take that $20,000, and you put that into the property. So now the entire amount of money that you have in the property is $20,000. Now again, I'm not saying that these specific numbers are realistic, but just using them, because the simple numbers, the simple math, but just trust me, I say this can be done with the right properties. But let's say that you take that $20,000 And that's the money you have into it. And let's say you put another $20,000 into the renovation of the property. So now you're renovating, you're updating maybe the kitchen maybe the bathrooms, you're doing some stuff and this property was really kind of grungy beforehand so it really wasn't good that $100,000 You got it for was a deal. It was a good deal on the property because you still got a good structure but just cosmetically on the inside. Other people didn't want to buy it because it needed these renovations and people didn't want to take on that project. You took it on no and UN said okay, I'm going to put $20,000 in a downpayment and another $20,000 into the renovation. So now the way that works is you've now got
$40,000 into this property that as far as the bank's concerned, as far as I was concerned, it's worth $100,000, right, you've got $40,000 into it, it's worth 100k, because that's what it last sold for. And value is ultimately just what someone's willing to pay for a place. But now what we can do is we can do this thing called refinancing. And that's where you go to the bank and you say, Hey, I've got this property that I've got a mortgage with, with you guys. And I've done some renovation work. And I think it's actually worth more than what I bought it for. So I'd like to have you guys send out an appraiser to the property and like you guys to have that appraiser tell you what the property's worth. And then I'd like to refinance, I like to get a new mortgage and have the loan that your guys give me right now you're giving me that $80,000 loan, right? Because it was $100,000 property, you paid 20%, the bank loaned you the other $80,000 80% of the value of the property, and you're saying, Hey, I think the property's worth more, I would just like 80% of the new value of the property as a loan instead of 80% of what I bought it for 80% of the new value is what I want. And so the bank says, Okay, well, we'll do that. And you're going to have to pay some penalties in order to refinance the property. So again, it's going to be maybe 1000 $2,000. In penalties, you'll pay to break that loan, break that mortgage and get a new mortgage. But if everything works out, and you've got the numbers, right, it's going to be well worth it. Because watch how the math works out here. So let's say that you've got this property that's worth 100k. As far as anyone's concerned, we don't have the new appraisal yet. And you've got $40,000 into it, and you've got an $80,000 loan on the property. Well, if the bank comes back, and says that they're going to give you a loan for $120,000, right, because that's 80% of the value of the new value of the property, then suddenly, they're going to give you a loan for 120, they already gave you 80. So there's an additional $40,000 of a loan that they're going to give you, right. So that's how it makes sense. That means that they're going to give you that $40,000 that you put into the downpayment in the renovation costs, and they're going to give it to you that you're still going to own this property, and you're still going to have 20% equity, because they're saying, okay, that 120k represents 80% of the new value of the property, meaning the property be worth roughly, what would that work out to think about 160 to $180,000, I haven't done the math in advance. So forgive me if I'm wrong on that. But that's about what the property be worth now. And so that means that you're going to get all of your money back and you're not going to own this property, you're gonna be able to control it, you have, as far as the bank's concerned, 20% equity in it mean that you own 20% of it, and they've loaned you the other 80%. And then B, you now don't have any money and you got your $40,000 back. And that's where the repeat comes in is now you can take that 40,000 and go and buy another property with it, you can do the same thing over and over and over and over again. And that's how you can build your portfolio up really quickly. And owned properties. Basically, for free. You know, you have to put the money in there in the interim between when you buy the property and when you get that refinance when you get that new mortgage. But ultimately, you're buying these properties, and you get to own them long term without having any money sunk into the deal. That's where it gets really, really crazy powerful. And that's what Riley and I did, where we took a $60,000 investment that we put into, you know, the downpayment and the renovation, and we turn that into $125,000 worth of additional value in the property, we took the you know, $60,000 worth of renovation, we added $125,000 worth of value to the property. And that allowed us to pull out the money that we had in the deal. So that's really, really cool, because it man just allows us to grow our portfolio more quickly allows us to compound our growth and hit that compound growth curve a lot more quickly. Because we can grow and bring on more properties without having to constantly just be waiting and saving up money for the next downpayment. The next renovation expense. Again, if you want the whole details on exactly how to do this, and I highly recommend you check out the link in the train down below, we're going to walk you through the three crucial components you absolutely need in order to invest in short term rental properties. And if you decide to work with Riley Knight, then we're going to be able to show you how to implement even this strategy is more advanced burr strategy into investing in short term rentals. If you combine the two it means that you're building incredible equity in your portfolio, but you're also getting amazing cash flow from the property as well, because short term rentals just provide such incredible cash flow. Now, the question is come before people have asked me Well, James, I don't understand if you bought a property for $100,000. And then you put $20,000 into it. Isn't the property just worth $120,000? And the answer to that is a big resounding no. Because ultimately what you've done if you got the right property and focus on the right renovations, then you did renovations that everyone else all the other buyers out there are interested now if you do that $20,000 goes to painting the whole house green, then it's probably going to be worth less than $100,000 Probably your work be worth less than you actually bought it for. So not every renovation is created equal. But if you do renovation work that everyone else all they ever the other potential buyers see value in the knot means that you're increasing the value of the property disproportionate to the amount of money that you spent. Have you just think about this in the simplest terms possible? Imagine if you could buy a property
Pre renovation for $100,000 that needed 20k worth of work. Or you could buy that same property after renovation for 120k. Literally, no one on earth would have to buy the property at $100,000 and do the renovation work themselves because there'd be no value in doing that the market rewards you for the value that you put into actually facilitating and going through and doing that renovation work. So it's actually worth more people are more willing to spend more money on a property that's already renovated, they don't have to do the work on they don't have to go and take all the money, figure it all out, you know, organize it, all that stuff. So that's why the amount of value that you add to the property is disproportionate to the amount of money that you actually just put into the property. Again, if you want to learn more about the details of all that how all the numbers break down how this works, and how to invest successfully in short term rental properties that I do highly recommend you check out the link in the description down below to that free training. It's going to give you all the different insights all the different tips and tricks that you can actually go and implement this for yourself and start investing in properties for short term rental so that I thank you for taking the time to watch this video. If you got value from it, please give me a quick thumbs up hit that like button because it really does help me out tremendously with growing this channel. Hit the subscribe button if you haven't already to stay up to date with the two new videos we post every single week on this channel. And until next time, I'll see you in the next video