Interested in finding great investment properties you can use the BRRRR strategy with? We show you how, plus, we show you how to get a vendor take-back mortgage.
The video is located at the bottom of this article.
How to find BRRRR properties and get Vendor Take Back (VTB) | Real Life Example
In this video. I'm going to share my new project.
You know, I purchased this property two months ago for 85% vtb.
If you don't know what sweetie but hold on for a minute, I'm going to talk about that. And also I'm going to talk about what I have done for this project.
You know, what's my cash flow projected cash flow and what's my ARV how much Renovations I put into it.
How did I convince the seller to give me vendor take-back 85 percent loan to value?
So all these details I'm going to cover in this video stay tuned.
Namaskar a diverse a good morning. Good evening. What's up, guys?
Welcome back to my channel if you're new to this channel. Thank you so much for hopping on if you still haven't hit that subscribe button. Please do so right now for an awesome content regarding real estate investing journey, and also, you know my realtor journey and so many other, you know, Financial Freedom tips and so many other interviews so with that I'll stop talking about that today. Day has I said I'm going to talk about my new property.
So first of all, you know, this is the biggest challenge that many investors will come across which is you know after you buy four or five properties, you will be blocked. You cannot buy any more properties.
That's the challenge you come across and that's what happened to me as well.
If you would have seen on my other videos, I quit my job at my nine months ago and I became a self-employed has a realtor so now Challenge comes with it on investing side. I cannot get mortgages because I'm self-employed now Banks would not lend me until I have at least a one to two years of tax returns has a self-employed person. After all, they want to make sure I will be able to make money so that and many people will come across different kinds of roadblocks and that's when the VP becomes a very handy BP b stands for a vendor.
Take back. Back, what does it mean?
If you're looking to buy a property and the seller so this property the seller who was a previous owner.
He is the one holding mortgage for me. That means he's my bank.
So when you apply for the bank for 80 percent loan to value which means you know, you put 20% down and Banks gives you money, right? So in this case, I put 15% down and Give me an 85 percent loan to value which means he is my bank. So that's what vendor take back mins.
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Then the next common question. I got from some of my clients.
Hey, how did you get this vendor take back man? Because it's super hot Market is hot.
Everyone wants their money. How were you able to make it?
First of all, I would say I'm no different I am I'm still new in this game.
All I did is I asked people I ask whoever, you know looking to sell their Properties first thing I would ask. Hey, are you willing to do when to take back only curious people will ask what's when to take back or some people who knows it they say no, but one guy does the seller he said, you know what sweetie be tell me more about it? I said there is what we D be how it can you know profitable for you more fraud profitable and also for me because I don't get mortgages.
So why it's Portable for him. This is what you need to know. If you want to convince someone to give you the vtb. It's profitable for the seller.
Especially look at this point of view.
If the whole property price is 200,000 in my case. I purchased for 480,000.
He holds it eighty-five percent loan to value which is it comes around 150 seven-ish.
So if he takes that as his, you know if he sells the property has He has to pay some taxes for that.
He whatever the 50% of the returns he makes on the property. He asked to pay taxes if he's already making some other active income or if he's selling some other properties.
So now he has to pay taxes on all the amount that he makes in that ear. That means his tax. He is on a higher tax bracket.
So I told him, hey, you know, why defer you always ask them to To conform with the accountant but I said, you know what this is, but I know that you can defer your taxes for next five years so I can pay you off when you need in next 5 years, or I can pay you in chunks so you don't have to pay so much taxes this year.
You said you know what? Let me check with my accountant and he went back and today's back to rest after I called him up asking. Hey, did you check with your accountant? And he said yes, I think you know that you're right.
I was able to differ then I said, you know what then let's talk numbers. Let's get the property on contract.
So technically he tried to sell this property on Market, but he didn't get what he was looking for. So he's selling off Market to save that realtor fee, even though I'm a realtor I said, you know what I won't take my realtor fees. No other realtor fees. I'll give you straight what you're asking and give me an 85 percent loan to value.
So that's how I got the vtb.
If you have any other questions regarding vtb leave in the comment below I will let you know more but let me get more in detail into this why I purchased this property again. I'm going to make some other videos celebrating those topics because I don't want to drag too much in one video.
But in short, this is also my bird project because I will talk I will tell you this I purchased the property 480,000.
I put in a new kitchen you see here. This is a brand new kitchen new flooring new painting added a new half washroom in the common area where I had some space because this is the four-bedroom one-bath house.
I add in an extra Buck because for four bedrooms, it doesn't make sense for me to have one bath. So I added some more value there by adding an extra half bath.
I read renovated the whole existing washroom as well. So now it's a new washroom.
Kitchen New flooring painted nicely fixed up some decks outside painted the doors did a lot of things now. Guess what my property value has increased my after repair value of this property will be at least right now 240,000 to 250,000.
So it's going to be I pushed the value. I forcibly appreciated the value and guess what right now, I'm not gonna free finance it at this moment because I promised the seller I won't do it until next year just for his tax advantages purpose.
But what I'm going to do next year when I'm when we are done with his tax year, we will go and refinance and get all our money back pretty much if it's different set a value 250,000 will get pretty much hundred and sorry 200,000 will be a new mortgage.
This means My Renovations after my down payment pretty much we will have like only 12,000 left into the project renovation cost the whole renovation cost me 28,000 including the material and labour.
So it's pretty much a pretty standard number that I take if you're looking to renovate a whole washroom.
Probably somewhere between 5,000 to 6,000 7,000 for a washroom for a kitchen somewhere between 7,000 to 10,000 for flooring per square footage I would take around four to five.
So, overall I was able to pull the trigger with this project because of the right people.
So that's about this project.
And if you have any more questions, let me know what you want me to elaborate on from all these topics so I can make another video extending the topic on this project until then watch out. Our videos and catch you in the next video. Thank you very much for watching. Have a good day.
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