There are two kinds of rehab: The RENOVATION and then there is this thing called “Rent-ovation”.
Watch this short video now to find out more.
Corey Reyment is a full-time real estate investor originally from Green Bay.
Corey and his wife Carrie bought their first duplex at the end of 2016 and parlayed that into 115 doors within three years of that first purchase using the BRRRR Strategy almost exclusively creating a portfolio now worth over $8 Million dollars.
They also run Fox Cities Home Buyers and Wisconsin Discount Properties, the largest real estate wholesaling company in Wisconsin, where they did about $2 million in revenue in 2020.
They teach students across the country who are looking to get their first BRRRR Deal and run a Mastermind Group called Launch, which helps businesses go from working in their real estate business to working on their business.
For more valuable information click on this link and watch the complete episode: https://youtu.be/ZSq-AX2-1PM – “Discover the BRRRR Method with Corey Reyment and Jay Conner, The Private Money Authority”
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Jay Conner:
This strategy is for building long-term wealth, right?
Well, a couple of questions to drill down a little bit. So when we’re fixing up a house, then there’s two kinds of rehabs, at least. There’s renovation, if I’m wanting to pull it in the MLS and get very top value… renovation. Then, there’s this thing called “rent-ovation.”
Corey Reyment:
I love that. That’s right.
Jay Conner:
“Rent-ovation,” Which means I may not put as much money or put as much, like, if I’m want to want to hold this house like forever, I may not want to put granite countertops. I may want to put Lowe’s or Home Depot countertops versus granite. I may not want to put the very top of the line LVP – luxury vinyl plank – if I’m going to be renting it. However, for the long-term, I’ve discovered luxury vinyl plank is going to outlast carpet any day of the week. So my question to you is in your strategy, you know, you’ve, you’ve got a lot of this going now. Do you rehab them quote, unquote, all the way as if you were going for top retail value or how do you approach it?
Corey Reyment:
Yeah, that’s a great question, Jay. Actually, we talk about this and we have a course on the BRRRR strategy as well. And in the course, we talk about number one thing. You can do the same strategy. I mean, really, if you’re going to put it on MLS and do the renovation, as you mentioned, I mean, the process is the same. It’s actually just a little bit quicker because you’re just selling the property and you’re offloading it. You’re not going through the refinance and that thing, or- And you don’t have to do the other “R” of renting it, obviously. You can just throw it on the market and sell it vacant. So you can skip a couple of those. But the idea is you’re creating equity and you’re creating a spread by doing this strategy. And not just going to say, I see this all the time, and this was my problem.
When we started, I didn’t know this strategy, I didn’t know this existed. So I found a real estate agent because that’s what I thought you had to do. And I thought that real estate agent must know everything about real estate investing, right? So, because they’re a real estate professional, I didn’t understand it’s a weekend course. And a lot of times they know how to sell a great Brent house, but they don’t know how to do investing in real estate. And then, and then you go get a conventional loan and you put 25% down and you leave your 25% stuck in this property for the next four years before you can ever get access to that again. Right? And so we went to go buy that first property and we had a deal under contract and we were going to have to put 25% down.
It was a duplex and that would have wiped us out. We had no reserves then. We had nothing left over and I’m like, “This is so depressing. This is going to take me forever to get out.” I wanted to get out of my full-time job. And I’m like, this is going to take me forever to get out of here, right? And then I’m looking at some of my friends that are in real estate investing. I’m like, “How do these guys have like 50 doors or a hundred doors? They must have millions of dollars for down payments, right?” And that’s when I started to dig deeper and understand this BRRRR strategy. But to go back to your original question. In the course, one of the things that I recommend everybody does that wants to get into this is hire good property management from day one. So bad advice I got from one of my good friends was you should manage your own properties when you first start so that you learn.
And yes, thanks, Jay, you’re shaking your head. Terrible advice. I wanted to punch my tenants in the face. I probably was going to end up in jail if I would’ve kept managing people because it wouldn’t have worked out very well. I’m not handy. I always joke these are soft office hands. I don’t know what I’m doing in fixing this stuff. It’s frustrating. And those are typically the people that you’re going to buy these discounted properties from. They’re the ones self-managing. Frustrated with having to collect rents, frustrated with dealing with tenants, evictions, all that stuff. It’s way easier than that if you just hire a good, professional property management company, and we’ve found the property management companies we work with, will handle all the rehab for us. So we don’t have to get in on these value-add projects and hire our own general contractors or do any of that stuff.
They take care of all of that for us. And typically what I’m seeing, at least in our market, is they’re doing this at a much lower cost than what the people who are trying to GC their own projects and know nothing about GC-ing a project. They’re spending because they are over-renovating these properties for what the market’s bearing. You know, they’re in a C-class property and they’re putting A-class finishes in it. And yes, you’re probably going to attract a better tenant, but your ROI is going to be terrible. And you’re going to eat up all that equity that you thought you had in that property. If you just leave it to a good, reputable, professional management company that knows the market and knows what is going to rent for what and what your ROI is going to be, you can be really hands-off. And they’re typically going to be able to keep your costs much lower than what you’re going to be able to do on your own, trying to figure it all out.
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