The Wisconsin Investor
Each week, we bring you interviews with some of Wisconsin's top real estate investors who share their tips, tricks, and strategies that you can implement right away. This show is dedicated to helping Wisconsin real estate investors elevate their game. Along with interviews, I'll also dive into hot topics in solo episodes and feature experts from various real estate sectors across Wisconsin.
The Wisconsin Investor
The BRRRR Method Explained: How to Build $200K in Equity on One Wisconsin Deal
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Most investors think they need a briefcase full of cash to build a serious rental portfolio. They don't. They just need to understand how to recycle the same dollars over and over again.
In this solo episode, Corey breaks down the BRRRR method from the ground up, with real numbers, real deal examples, and a clear picture of what this strategy actually does to your wealth over time.
What's covered:
- Why buying turnkey on the MLS locks up your capital and slows your growth
- How to force appreciation, pull your money back out, and go do it again
- A $300,000 ARV example with zero appreciation that still produces $206,000 in equity after 15 years
- What 4% annual appreciation does to that same deal: $446,000 in equity
- Why the interest rate difference between 5.5% and 7% barely moves the needle on wealth building
- Why buying today at 7% might be smarter than waiting for rates to drop
- The real math on replacing your W-2: two BRRRR deals per year for five years gets you to $170,000 in tax-free income
- Corey's 16-unit deal where he pulled $240,000 tax-free two years after closing without ever cash flowing a dollar
- What happens when an appraisal comes in low and how to fight it
- How to find contractors as an out-of-state investor using Facebook and the WDP network
Plus real deal walkthroughs including a mobile home on 8.4 acres in Oshkosh nobody else wanted, and a duplex Corey just got a low appraisal on and is actively fighting.
Get off-market deals sent to your inbox every Monday at 6am: WisconsinDiscountProperties.com
Welcome And The Big Promise
What's up, everybody? You are listening to the Wisconsin Investor Podcast. I'm your host, Corey Raymond, and today you guys are stuck with me on a solo episode. So before you turn it off and go somewhere else, hang in there. Because what if I told you that you could buy a property, pull your money back out, and keep building wealth over and over again? That's what we're going to get into today, guys. How to build some massive, massive wealth. So with that, one of the things I always like to plug is Wisconsin Discount Properties, who sponsors this show at Wisconsin Discount Properties. We put off-market deals in your inbox every single Monday morning at 6 a.m. And a lot of those deals that we put in there are deals that you can utilize this strategy we're going to discuss today on the episode. So for those of you guys listening, I'm going to do my best to describe some things. Those of you guys watching on YouTube, I'm going to have some different screen sharing I'm going to do here in a little bit and walk through some different things to illustrate some of the points that I wanted to make today on the episode. So without further ado, let's get into it. And I'm, and if you've been in this game for a while, you can probably guess where I'm going with this episode. It is my favorite strategy in real estate investing, and it is called the Burr method. Um, we've been talking in the last few episodes about a Burr course that I have. We're now giving it away for free. So if you join our buyers list at Wisconsin Discount Properties.com, you can talk to Connor or Reese on our team and they'll get you set up with the course for free. So check that out. But this is one of the most powerful strategies in real estate investing. And here's why it's powerful. A couple things. You can force appreciation through rehabbing these properties. So what we're talking about here is the Burr, and it's an acronym. And so again, for those of you that are experienced, you're like, oh, I know the Burr. This is going to be elementary. I already know all about this stuff. Hang on, tune in. We're going to get into some examples. We're going to hopefully light a fire under your butt today if you're not utilizing this strategy or you've slowed down on it a little bit. Like myself, actually, when I do this episode, I'm like, gosh, I got to get more doing more of these things, right? As I look at the numbers in particular,
What BRRRR Actually Means
which we're going to get into today. I've got some examples to show you guys that are pretty powerful. Um, but it stands for buy, rehab, rent, refinance, repeat. Okay. And I could get into all the semantics of how we're going to do that. We'll see how long this episode goes and if I get into some of those details. Um, but essentially why that's powerful. If you were to go and buy something on the MLS today, right, and it's turnkey, there's no rehab needed, the rents are at market rent, you're gonna put 20 to 25% down on that property. Okay. So if you've got a limited amount of cash available, you are putting the money down on that property, and then that money is gonna sit there for a while, right? That property now has to appreciate. Your tenants got to pay that debt down far enough that you could refinance that property at some point and pull your capital back out if you wanted to recycle that money. So for most people, they don't have briefcases full of cash just sitting around to go invest. And so when they start plotting out their real estate journey, they look at things and they say, Man, I would love to get to say 100 units, right? But I don't have that kind of cash sitting around, you know, to get to that number. That's a lot of down payment money to put in. Okay, and again, that doesn't count any kind of capex that would come up and other things like that. And so what this strategy allows you to do is utilize a smaller amount of cash. Doesn't have to be your cash, right? You can borrow that money from a friend, family member, um, somebody in your network that's willing to give it to you. HELOCs are a great option to use for this money. You use that for a short period of time, you rehab the property, you get the rents up to where the market rent is, then you refinance that property. And why that's important, when you go to purchase a property, banks are gonna look at it typically. Now, there's commercial lenders in Wisconsin, thankfully, that uh are pretty creative. And so if you have the right connections at some of these banks, you can avoid some of the steps in this process. But traditionally, how it works is they are going to um require 20 or 25% down off of the purchase price or the appraised value, whichever is lower. Okay. So what they're saying is let's say you bought you got a great deal on a property, you bought it for $50,000, right? You know right now it's worth $100,000. Traditionally, banks are gonna make you, they're gonna lend off of the $50,000 mark. They don't care that you have all this equity in the property at purchase. So you have to buy it, then you would have to refinance it anyway if you wanted to pull that money out. Most people just leave it sit. Okay. So what this allows you to do is you're recycling capital. So you buy it, you increase the value, and as quickly as you can do that, you refinance the property. And now, now let's say it appraises at 100,000. Well, now most banks will lend 80% of that number. You now can get $80,000 back, right? So now you can go do another deal and do another deal and do another deal. So it's a very, very powerful, uh, very, very powerful strategy. Okay. It also uh allows you to um to build a lot of uh equity over time, right? So it's not a huge cash flow deal, right? You're not typically gonna do this for cash flow. You're gonna do this to build equity. Okay. Um, there's some tax strategies involved. We did a couple episodes on that, so I'm not gonna get too much into the tax strategy piece of this, but just know that that is another huge benefit to doing this strategy, is some of the tax benefits, especially if you can consider yourself a real estate professional. Um, and and so I overall to build wealth, again, not cash flow, to build to build wealth, this strategy is tough to beat. All right. Now, a lot of people out there, especially outside of Wisconsin, are going to turn and they're gonna say,
Why Recycling Capital Wins
uh, they're gonna say, you can't do this, this strategy anymore. It doesn't work, right? And what are they saying? They're saying you can't find deals that make sense anymore to do this on. They're gonna say that uh, you know, you're gonna have to have money stuck in the deals. There's no way you can get all of your money back out of them. And that's not true, right? We have case study after case study that we've done on deals that we've sold through Wisconsin Discount Properties where people are pulling all or at least the majority of, they might have 5% stuck in the deal versus 25% plus all of their rehab money, right? So there's still a lot of opportunities here. Yeah, I mean, it made like no sense to me at first, right? Because I'm just this is my first go-round buying doing stuff off market, even though I've always wanted to. How they do it is they say, hey, you know, or I'll address it like this for somebody that's maybe never bought a property. Your parents probably bought their the house that you grew up in, your home through a realtor on market. Uh the idea is like you're gonna pay what's called market value, so you're gonna pay a little more, but the conditions should be really good, uh, listing ready, right? Like there really shouldn't be much post-purchase rehab you need to do that aren't improvements, um, which is great. I mean, when I I want a primary residence, I'll probably buy whatever through realtors, fine. Um, but what you're not getting is the discount, right? And how do you get a discount? Well, you remove the middleman and not to be harsh, but there's some you can't list certain properties because the condition is terrible. Like if you know you had a a water line break and there's big holes in your ceiling, no realtor's gonna list that. They they're not crazy. So as a seller, you go, man, I think I'll take a little less to move on. Um, and that's where you can get your discount is that that relationship right there. And that's what WDP excels in. So the idea is like instead of buying it through a realtor, I'm gonna work with an off-market part partner like WDP, um, and to sweeten the deal instead of closing with I end up closing with hard money, then refinancing it because I didn't get an appraisal order soon enough. But what these guys will do, they'll say, okay, you got this property, we've we're investor-friendly, we're looking to grow. Uh, like there are certain banks, like I know from back home, there are a few banks in my hometown that are they love working with investors, and there's other banks that just aren't quite as interested. So this bank said we're investor friendly. Um, we've done this before. We're very comfortable with, you know, let's say you get approved for our financing, we'll actually close on the property and we'll get it appraised before you even before you even close. And so instead of lending you off of, let's just say, let's say it's like 75% down to the purchase price or whatever, the all-in price, whatever, they'll look at the post-construction ARV. So you give them your scope of work, a third-party appraiser walks through, the bank lends off that number. So I'm bringing 40% less to closing. And if you say payments for private money, like that's where again you're all in with if you have a grow good private money lender, you're probably not paying more than $100, $200 a month on that more or less gap. Um, and you haven't even started construction yet, and you you're about to own the assets. This bank will say, send the appraiser in, get the ARV, lend off that, lowers everyone's down payment. You're gonna pay a little more in points, you're gonna pay a little more in interest, but it's like you know, you can either pinch pennies and try to squeeze out a deal later, or you can be Mr. Good and Done, and that's my mantra right now. I'm trying to be good and done. So that's how that deal works. Okay, so what I want to do, guys, I want to go through some examples of this. And again, if you have more questions like how to finance these deals, all that kind of stuff. There's there's the Berg course, you can get that for free now. So, what I'm gonna do, guys, I'm gonna share my screen if I can find it. So, for those of you guys listening to the podcast, I'm gonna do my best. Okay, so we're gonna do an example deal. All right, here's some examples. And what I did, guys, I used Chat GPT. If you've been listening to this show, you know that I'm a huge Chat GPT fan. Okay. But what I'm gonna do is I'm gonna use an example. So what I said is I have a deal that's $300,000 ARV. Now, I actually have a deal that's pretty close to this, and I'm gonna talk about a little bit about that uh that deal, okay? And we're gonna get into a little bit of um what some potential things that can go wrong with these deals, too. Okay, so that is a real possibility here. And I'm trying to get my screen to work so that I can read it and make sure that I'm doing this appropriately. Here we go. All right, so I said, yeah, I want a deal, it's $300,000 ARVs. Our lenders will refinance 80% of the LTV, which means loan to value. And I want to show somewhere
Off Market Discounts And Friendly Banks
we break even every year in cash flow and we're focused on debt pay down. So show an example with a 20-year amortization schedule, break-even cash flow with a 7% interest rate. So 7% is about what I'm getting quoted right now. It depends on the lender. Some are seven and a half, some are 8% at the time we're recording this. But 7% if you're shopping and around, typically you can land somewhere around there. And I use a lot of community banks, commercial financing to do these. Um, a lot of those guys are relationship-based. So you might get quoted a little bit higher rate right now if you're new to the game or you don't have an established relationship with uh some lenders, but that's okay. All right. Uh, so what we're gonna do here, and I I wanted to show 0% equity or 0% appreciation because you know you'll hear people say, ah, you can't bank on appreciation, right? And that's very true. You don't want to bank on appreciation. However, I did an episode, a solo episode, the last one I actually did was talking about like basically why real estate investing. And um what it basically said was you know, you gotta have um you gotta have some some confidence in real estate. Over the last, I wanted to say 76 years of this chart, real estate's only lost value. Okay, and this is across the country, so real estate's very regional, but it's only lost value maybe uh I think it was six years out of 76. So we're saying like worst case scenario is 0% appreciation for five years in a row, 10 years in a row, 15 years in a row. And the reason I wanted to do this was just to show the power of the wealth building part of the debt pay down piece of this. Okay. The other important factor to look at here is we're using 20-year amortization schedules in these examples. Okay. Now, what does that mean if you're new to the game? That means that you're gonna be paying more monthly, so you're paying that loan off in 20 years versus like a 30-year loan. A 30-year loan is gonna spread that out further, so your cash flow should be higher, but you're going to pay less in principal. So the wealth building component of that property is not as strong. So you can play with that a little bit. Some lenders, it's hard to find in the commercial space where they'll lend 30-year amortizations on value add properties, but they are out there. A lot of them, uh, especially when you go to like credit unions, they'll go up to like 25 years. Common, very common is a 20-year amortization schedule. Okay, so break-even cash flow, very common in this space. You might even be a little bit negative every year, but let me just show you the numbers of why that still might make sense. Okay. So what we're looking at here, we have a $300,000 after repair value ARV BR deal. We're gonna do 80% loan to value, 7% interest, 20-year amortization, and a break-even cash flow. So on a 30-year, if you're getting this property, you're all into it for $240,000. That's the goal. Okay, again, maybe you're at $250, so you got $10,000 stuck into it. Maybe you're you know a little bit less. We're just gonna run it as if we get a great perfect burr here. We got all of our money back, we got our $240,000 we stuck into the initial purchase back, plus all the rehab and everything else. We were all into it for $240,000. Our initial equity, when we refinance that property, we get our $300,000 appraisal. We have created $60,000 of equity. Day one of that refinance. That's pretty cool. Okay. Now what we look at with a seven-year or seven percent interest, 20-year amortization, equity after five years, we're now to $92,000. And this is with 0% appreciation. Okay, so I didn't include any appreciation of these uh situations here. Okay. Equity after 10 years, we are now $139,000. So a deal that you broke even on, you don't you're not making any money every month on cash flow. You now have $139,000 of equity after 10 years. Okay. Equity after 15 years. Now we're getting real close to paying this thing off. We only got five years left on the loan. We're at $206,000. All right. Now, chat wanted to give me a full amortization schedule and some charts, which I'll show you guys here uh that are watching on YouTube. It's just a cool little chart. It just shows you your equity, everything I just described to you. Thank you, chat, for doing that. All right, very nice. Okay. Give me a little PDF. Very, very nice of chat to do that for me. Now I said, show me that same example, but let's add in 4% annual
A 300K ARV Deal Breakdown
per uh appreciation with the same parameters as the above example. Now, and we I did not check chat's math. Sometimes you have to check chat's math, but it seemed like it lined up pretty good here. So our equity after five years, now that we added 4% annual appreciation in, so the loan is still the same. We're at a $240,000 loan. We have $60,000 of equity day one. We're at a 7% interest rate, 20-year amortization schedule on our loan. Our equity is now $157,000 after five years. That's just adding 4% appreciation to the formula. Equity after 10 years, we're now at $283,000. And our equity after 15 years, remember we we had an ARV on this originally at $300,000, right? Our equity now is $446,000 after 15 years. All right. So now we're gonna see a little chart here for those of you guys looking here, what that appreciation really does. And what you can see is by year 20, when that loan is paid off, that property is now doubled in value. It's over $600,000 in value, which is 4% annual appreciation. Nothing crazy here. We're not talking about slow and steady now. Some years it may go down, some years it may be more than four, but we're gonna say average four percent. And we're gonna get into some numbers. I had deep research do some numbers of Northeast Wisconsin and what is the average annual appreciation over the last couple of years. And so we'll get into some of those numbers here as well. All right. Um, let's go down. I said add in the numbers. Okay, so it did, it showed us the spread here. So you can see now, for those of you guys watching on YouTube, what was the difference in five years? So 92,000 was our our equity after five years with 0% appreciation. We add in just a small amount of appreciation, it's 157,000. So pretty big spread there. You look at the 15-year, you're at 450,000 of equity compared to 200,000. So that 4% annual appreciation makes a big difference. But regardless, even if you have 0% appreciation, 15 years, a deal that you have no money into is now worth $206,000 to you. Well, it's worth more than that, but the equity is $206,000. Pretty, pretty powerful. Okay. Now, another thing I always thought, and until I started messing around with these numbers, I thought, man, that 7% interest rate, if it was like five and a half percent, I wonder what that would do to my equity. It would probably be crazy, right? My thought is like I'm paying more principal every month, less in interest. Now, while that affects my cash flow, and I could have done some cash flow scenarios, but for today's purposes, I didn't really want to get into the cash flow component of it and play around with this whole lot. You guys can do these same things if you have chat, which by now, if you don't have chat, you should. Um, you want to get the plus at least membership for it. Anyway, the uh the the as far as it equates to wealth building, the interest rate is very nominal in the figures. Okay, so I've heard now since interest rates have been higher the last couple of years, a lot of people hanging out on the sidelines, right? Burr investors, people who claim to be Burr investors, sitting on the sidelines waiting for rates to go down. What's gonna happen when rates go down, guys? Rates go down, demand is most likely going to go up. Okay, and that means you're gonna have more competition for the same properties. If you guys remember in 2020 and 2021, what happened? We were getting multiple offers, way over asking, everything else. So appreciation is gonna go up even higher, in my opinion. Uh, I'm not an expert, so I could be wrong. Okay. But uh what you're gonna see is if you buy today at a 7 or an 8% interest rate and you can get that thing to break even with the improved rents. Now, when rates go down, your wealth just went up, if if my hypothesis is correct. Okay. So let's take a peek at this. We're gonna look at this chart here. If you guys remember the chart from above, this is equity growth with a 5.5% interest rate. Pretty conservative number. We think we can probably, based on everything I read, next couple years we'll be back to five and a half percent-ish numbers. After five years with 0% appreciation growth, you're only at $97,000 of equity. And I'm gonna show you guys a little side-by-side chart here so you can see the difference between the five and a half percent interest rate and the seven percent interest rate as it relates to how much equity you've built, how much wealth you've created. Okay, so here's a little breakdown. It's gonna give me some numbers on the screen. We're gonna go down to the side-by-side chart here. All right, so what we're looking at equity, 4% appreciation, and 0% appreciation. If you guys see the numbers here, I think I actually had it put the numbers in here for us. Yes, here we go. So when we looked at the chart before, with 7% interest after five years, you have 90, almost 93,000 of equity. After five years, uh at 5.5%, you've got almost 98,000. So only a $5,000 difference in your equity. Scoot way up over here to the 15-year, it really drops off. There's really not a big difference here. You're at 206,000 uh with the 7% interest rate and 213,000 with the five and a half percent rate. So, does the interest rate really affect your wealth ability to create wealth? Not, in my opinion. That
Appreciation Changes Everything
is so nominal in the grand scheme of things that uh if you're sitting on the sidelines waiting for interest rates to go down because you're gonna build more equity, these numbers would probably dispute that. Okay. When we look at the 4% interest rate thing, same thing. It doesn't really change a whole lot. The numbers are just bigger at the 15-year mark. The difference is the same. You've got about an $8,000 difference there in equity uh after 15 years. So it's not really, really a big difference at all. You know, Wisconsin. I know you can get in some areas in Milwaukee, I'm sure, but again, Northeast Wisco's very homogenous, you know, what you're getting, it's great, people are very calm. And for me, I like that. It looks like an appreciation station for me because I've always heard you know, Robert Kiyosaki cash flow, and that's good, but you know what's better is appreciation. Because I've kind of settled like man until Some of these assets are paid off. The cash flow may not be phenomenal, but if you have someone else paying down your debt for you and it's appreciating, I learned that lesson out here: 5% on $550,000, $20,000, man. Or whatever it is. I don't know. You know what I mean? So yeah, that's kind of what I see in Northeast Wisco. Nice, man. That's awesome. Yeah, and I I've kind of coined my little phrase. I'll probably get some t-shirts made up maybe with Wisconsin investor on there, and we're going to create a little trademark called the wealth cone. And that to me is the uh one of the major benefits of investing in real estate in general, especially if you have appreciation in your market. And the beautiful thing with us in Wisconsin, we don't get those really big highs or the really big lows, right? Like we're going to be pretty steady eddies. You're not going to get super rich overnight from appreciation, like some of the you know, western states or the east coast or some of those things. But also when things tank, you're not going to lose really either like big cash. Like in 08, people lost here. Rat Rebellion definitely dipped, but not nearly as much as you know, Seattle or Tampa or Austin or some of the other big markets, right? So it stays pretty consistent, uh up or down. Um, but you're getting, like you said, typically on average, we're four to five percent appreciation here some years, like during COVID. I think we were double digits for like three years in a row of appreciation, which is just phenomenal when you own an asset like that of these big markets. Oh gosh, yeah. And when you didn't have to pay for it necessarily, right? Because you're utilizing the birth strategy. Now you might have some money stuck in some of these, right, after you refinance, but it's not going to be your 20% down plus all the rehab, right? So now your velocity of money, your return on your capital is gonna be much, much higher because you don't have as much capital stuck into these things, right? Well, you said something that that hits on something I had to figure out when I bought this first deal, the Timpy. So it'll be a total of five doors. And I realized like I had a really good realtor, he got me all the full seller concessions
Stop Waiting For Lower Rates
or whatever it is. I got all my I had no closing costs, which is huge. Yeah. And I end up buying it for let's just call it right. It was already like $550. And in hindsight, it's like, oh, probably could have gone $20K less, but you look at what that does to your monthly payment versus what $20K does to your cash reserve. Yeah. And so you I started to relearn quickly, man, if I can figure out a way to keep myself light in terms of how much cash I have out, I can cut I can plug a lot of gaps pretty quickly if something goes wrong. In examples like you mentioned, um, or if it jogs something for me, I would rather pay a little more interest right now on private money or even hard money if necessary, because if I were to fund that, it might be 30% of my account. But if a private money brings it up, I may pay a few grand. Yeah. So that's something that I'm realizing is like I have this great you know, cash just you know reserve in a high yield savings account that sits there. Um I can dip into it when needed, but better for now because I want to grow. Um better for now to leverage other people's money as much as possible and you know keep that cash on hand for rehab to stay liquid because I'm being I can I'm being reimbursed by some of these banks. So as long as I have the the cheddar on hand, I'm constantly getting it back. It might take two weeks. Uh, but we have four flips going at once, which is gonna be the case probably here in about a month and a half. I should all have some of these done. Um I think I'm gonna want that cash on hand, if that makes sense. Now I said, hey, I've talked to some of you guys out there, and you know, I like to talk about your goals. So if you and I have a call and it's you know you're looking to either get started in real estate or you're you're get you're stuck or something like that. Typically I'm gonna want to find out what is your goal? Why are you even doing real estate? Because that the why, as we all know, it's the thing that's gonna push you when times are tough, right? And sometimes I talk to you guys, and there's been some goals. This has been a common theme. Man, I want to make a hundred G's a year. I just want to make a hundred G's a year, then I can quit my job. Sweet. Very doable, okay. But if you're not making anything from real estate right now, it can be a challenge, right? And I'll share an experience with you. I bought my first um commercial building or apartment uh in 2019, I believe. I closed on a 16 unit. I was going from duplexes up to a 16 unit. So it's a pretty big jump, right? And when I ran my numbers, my bird calculator, I was $300,000 higher than another guy who'd been in the game for a long time, right? And I was I actually reached out to him about maybe partnering with me on it because I just didn't have the confidence to own, operate, and run a 16-unit apartment building. And his number was for the 16 at the time, he was in the $300,000 range with how he ran his number. I'm like, man, this guy is so smart. He knows way more than I do, and that is still true to this day. Uh very successful real estate investor. He just happened to run his numbers differently than I did. So I had my little bird calculator and I put it in my bird calculator, and it came out that I could pay, I think it was around $600,000 for this thing and still build some equity with raising rents. I had to raise all the rents. I was gonna have to redo all the units because, well, not all of them. There was one building that was pretty new. Uh, it was four or four units on the property. Um, but I was gonna have to raise all the rents and do a lot of the heavy lifting. It was probably gonna be, I figured, about a 12-month, you know, kind of intense with my property manager turnaround. Okay. Turns out I really underestimated the cost of rehabbing 16 or 12 units. Uh still got a few legacy people there that we've raised rents on and have not had to spend the money on doing it, but it was pretty capital intensive. So that is one thing I've learned uh over time is that you know you may end up being capital intensive on some of these things, and you might we want you might just want to plan for that to have some extra laying around on these burrs. Point is I didn't cash flow anything. Every month for two years took anything I made, ended up the next month, it'd be like, oh, we raised rents on this guy, doesn't want to pay it, he's moving out, we're gonna have to do a full turn on it. Like, shoot. Well, there goes all my quote unquote cash flow from this month, right? Same thing. It'd be, you know, maybe I'd get a month off, save up a little cash, build up a little money with the property management company. But the next month, same thing. Guys moving out, 10 grand. Okay, shoot, keep returning them, right? What ended up happening though is I didn't really like, I don't think I really ever had to come out of pocket for anything. I didn't, I don't think I ever had to fund anything as far as like out of pocket for this property. Um, but what happened was two years later, interest rates were at all-time lower in like 2021, right? Interest rates are down, and I ended up refinancing that property with a better rate. My value came in, I don't remember exactly where it was, but I do remember I pulled out about $230,000 to $240,000 tax-free from that property, right? Now, if I sell it, of course, I'll have to pay tax and blah, blah, blah. But it was loan proceeds. So it's considered at that time not a taxable event. So in that moment, it's tax-free. So I have $240,000. And I did the math, and I'm like, man, I had this thing about two years. I didn't quote unquote cash flow anything, but two years later, I pulled $240,000 out of this thing tax-free. That's like $10,000 a month tax-free that of cash flow. I just had to wait two years to collect my check. But doing the math on that, that's basically what it equated to. And so I think about cash flow differently now a little bit, right? If you don't need, if you have a W-2, you're you're getting paid a good amount of money, and you don't need the cash flow today to live off of, this is this is hands down an amazing strategy. You should be doing everything in your power, in my opinion, to get as many of these Burr deals as possible. Because watch what happens. If you wanted to just make $100,000 a year, I asked chat, show some examples of how someone could be able to buy properties using the Burr and those examples we used above to refinance
The 16 Unit Lesson On Wealth
in five years and be living this lifestyle that they wanted, right? So give yourself five-year runway. Say, hey man, I'm gonna stick this W-2 out five years. How many deals would you then need to buy to pull out a hundred thousand dollars per year and refinance loan proceeds? All right. So we ran the same example: $300,000 ARV Burr. Okay. Uh, we're gonna buy the same type of deal every year for five years. We're gonna hold for the full five years, then do a cash out on each property after it hits the five-year mark. And we're gonna treat the net cash out proceeds, tax-free loan dollars, as quote unquote income. So this is gonna replace us. Now, chat gave us five-year equity and cash out per property uh scenarios. Okay, so they have a conservative scenario. This is very, very conservative. 7% interest rate, 0% appreciation. Okay, then they gave us moderate. They're gonna say, okay, if that interest rate comes down to 5.5%, 0% interest rate or 0% appreciation, we're gonna call that moderate. Growth, which is where I would anticipate the realistic outcome of this to be. I'm not gonna bank on the uh interest rate going down or anything like that. Even if it does, we saw it doesn't make that big of a difference. Okay. But your growth, this is where I would probably say we're gonna look at some of these scenarios uh as we dive into this a little bit. 7% interest rate, annual appreciation average of 4%. Okay. And then optimistic, the only difference there is a 5.5% interest rate, same appreciation. Okay. So how many properties would you need to buy each year to start collecting at least 100K a year in cash out revis once the first batch reaches five years? So I'm looking again, I'm gonna go down to the growth model here. The growth model, if you did this, you would only need to buy two deals a year to be able to refinance every five or in five years and have over 100k. You're gonna actually be able to pull out eighty-five thousand dollars of cash from each of those three hundred thousand dollar properties that you bought today, okay? And you could start this process now, which is insane. So that's $170,000 a year of tax-free income from buying two of these types of deals every single year. Isn't that crazy? I ran this. I'm like, come on. It can't be it. And it's true. So in year six, this is what they're saying property batch one hit that five-year mark, so you cash out refi. Year seven, again, you're gonna buy two a year, two a year, two or a year. Okay. So uh if appreciation goes up higher, you need even less doors or less deals to do. Um, again, some factors here though, longer amortization. So if you do the 25-year loan or the 30-year loan, you're gonna have to have higher appreciation to hit the same number, or you're just gonna have to delay a little bit. Or again, we're at $170,000 on these two. So even if you had 25 years, you'd probably still have enough equity there to be able to uh do the same scenario with just those two properties. Could run that again here in chat, but for today's purposes, um, we're just gonna assume that. All right. So uh this is this is a very, very powerful thing. And you can get really set on this then too, right? If you just said, hey, I need two deals a year, I need two deals that I can burr that are gonna give me 60 grand of equity up front, right? Or however you wanted to do that, you can get very, very clear on your buy box with this. Well, in two months, well, man, I'll be honest, like I was able to run numbers and figure out how much I'd have to have out of pocket to buy the deal with a realtor. But once I did the deal, I I understood it front to back. And you know, maybe I'm just not studious enough, but I I had to execute a deal. And once I closed on Winford and honestly, like walked through it for the first time, I was like, wait, this makes sense. There's a way I can do this without using all my money, you know. And um, I think the light bulb, once I figured out I I think refinancing is important. Once you get it, it's understood, you don't have to think about it again. But until you actually get a banker on the phone, let's say you're working with your bank, and dude, Andy Key is the man. I mean, he I told him up front, hey man, I'm a new investor, you're gonna have to answer a lot of questions. He's been phenomenal to work with, but I had to get him, and Aaron Kramer was another guest at your podcast who's phenomenal as well. He's a mortgage broker, I think. Um, I had to like say, hey man, I'm going to walk through what refinancing looks like, and you need to tell me where I'm wrong. And these guys, I mean, they're great guys, they help you out. But one day I was like, Yeah, man, but I can't refi until I'm you know, whatever. Um, I forgot what it was, until six months in. And Andy's like, you can refinance whenever. And I was like, that done. This makes total sense. Like I the money isn't contracted to stay working, it's a it's a it's lending, it's financing. So I think that was it. Is when that light bulb clicked of click for Aaron and Andy separately telling me, well, you can re-and I there's certain like some there is like a maturation or seasoning, so talk to your lender. But to the deal I've worked out, it's like as long as I execute the scope of work, like I can refinance instantly. And that is what clicked for me is like, oh, I get it now, stay in a little bit more expensive money in the short term to get the deal done, maybe even get it all reimbursed in private, um, and then refinance out. And you're what do you call something that you have zero dollars in, but it makes you money? We call that an infinite return.
The Two Deals Per Year Plan
It's an infinite return. Yeah. So you know, I love my financial advisor friends, but uh, when I break this down to them, their their heads explode when they see the math on it. They go, Well, wait a minute, what you're getting a return on nothing? You have no money into it of your own, and it's producing income for you. How is this possible? Right? It's yeah, it's fascinating. All right. Then I said, okay, hey, appreciation is kind of like I'm just throwing out four percent. I think that's been historically pretty accurate in northeast Wisconsin, at least. I can't speak for the other parts of Wisconsin. It varies all over the place, but I would say generally speaking, we could assume four percent is probably pretty good. 2020 to 2022, probably way higher. We had some massive growth and prices in those couple of years when rates were really far down. So I said, just give me two years, go back two years. This seems to be from all the agents I talked to, from everybody else, this seems to be a more quote unquote normalized market. Okay. And so I want to look, I said, just give me Green Bay, Appleton, Oshkosh, and Manitowak areas for what has been the actual um average of appreciation and just focus on one to four unit rental properties. I don't want to focus, I don't want to get into like commercial stuff or anything else, just one to four units. And I had it do it. It took 29 minutes for chat to do its deep research. And what we came up with was over the last two years, Green Bay has averaged 5% a year on these rental properties. So uh it's over 10% over the last two years. Okay. Appleton was about 3% a year on average. So one year it was seven percent, and then the market leveled off and was actually down just a hair year over year. So uh it averaged out to six percent in those two years, so three percent annually. All right. Um, Oshgosh, high mid to high single digit rates each year. So median sale price was seven and a half percent higher in June of 2025 than the year prior. Uh, and uh they're saying an estimate of six percent annual appreciation over the last two years is pretty reasonable. Manitowak area, I did not realize this. Manitowak has been blowing up so um about 13 to 14 percent per year average over the last two years, which is insane. All right. I don't know, I didn't dive into why that is, I didn't get into some of the numbers in here exactly to figure out if there was some other factor that we didn't consider, but um, I would not bank on 13 to 14 percent per year on average, but that just goes to show that does happen here in Wisconsin. Um so that gave us some scenarios, right? Now I ran through back down here to see some of the charts now. If we applied those updated figures to each of the marks. Now, Manitowac, they just ran this scenario uh pretty pretty crazy here. And I don't even think it gave me some numbers, but if you look at the chart, you'll see Manitowak just blows up. But all of them, either way, you're doing a pretty nice, you got a pretty nice updated um graph here. The only one was Appleton, which was surprising because I always thought of Appleton as being probably a little bit higher appreciation than Oshkosh or Green Bay, but just goes to show, you know, we're probably pretty safe with our 4% assumption in some of these things. But no, yeah, it's like I had to look go from thinking about cash flow to appreciation because again, you know, as long as it's covered, as long as the debt is serviced and it's covered and you make a little bit on top for repairs or whatever, one day those you will snowball your debt and you'll pay off the cheapest asset, then pay off the or pay off the smallest loan amount, the next smallest loan amount, et cetera, et cetera. And you're gonna actually create real cash flow. Um, but the whole the magic to this is someone's paying your debt down for you. I'm not being taxed on debt. Right. You know what I mean? And to your point, it's like I mean, I don't know, man. From in the construction of these four deals, I bet I'm gonna force well over $200,000 prior worth of equity across all four. And then maybe even more with the one in Ocano and in Colcona. So I don't know that
Refi Timing And Infinite Returns
number off the top of my head, but that's what I kind of hang my hat on that. I'm really I'm like, okay, you know, am I getting the 1% rule on rent? Meaning, am I getting 1% of my all-in costs to get this deal at least? Um, and then it's like, how much equity am I forcing? Like, how much equity have I built for myself in the last two and a half months? It's probably more than in the last three and a half years, you know. The other thing I wanted to show you guys was over here on offers due. This is the emails that we send out. Okay, so this is let me look at this. I actually ended up buying this property as well and bird this thing. Um, I didn't actually get an appraisal done. They just went off of my cost and assumed it was going to be higher. So I do have about 10 grand stuck into this deal just because um I just I went with a credit union, they had much better rates than the community banks, and they typically like more stabilized stuff. So I paid cash and then I just refinanced um with a credit union. But because it was within their six-month seasoning period or 12-month seasoning period or whatever, they had to go off of my cost. They couldn't go off of the um ARV. So, and I was fine with it. It's a lower dollar figure, not a big deal. Um, my payment on this thing though is only like $320 a month, and I get $13. I think I get $1,300 a month for this thing. So that that was a nice pickup there. But nobody else wanted this one. This one was out to the list for $64.9. Nobody bid on this property. Uh, and so those of you guys listening, what I'm describing is there's a mo there was a mobile home, uh $1189 Clairville Road in Oshkosh on about an eight uh 0.41 acre lot, kind of out in the country a little bit. And uh nobody nobody bid on it, so I just bought it, and now it's a killer property for me. Down the same time, I must have been really hungry for some deals. Here was another one. We reduced the price on this one. So the week prior, we must have had it out for a higher number, and nobody wanted this one either. So I picked this bad boy up, and now I'm gonna tell you guys here's some of the things to be careful of and considerations with um doing burrs. All right. So what we're looking at is 823 Bond Street, upper, lower duplex, two bed, one bath per unit. And the bottom, there's actually kind of a third bedroom. The appraiser actually gave me, I just got the appraisal back yesterday, he gave me a third bedroom down there, so it's really three-bedroom, lower, two-bedroom upper. Property management's only renting it out as a two-bedroom on each, and um, it is what it is. But we're now getting almost eleven hundred a month in rent, and I believe the utility, oh yeah, all utilities are split. So the I don't pay any utilities here. Now, if somebody doesn't pay the water, I'm still stuck with it, right? But let me talk about this deal. So I am all into this thing probably. We had to rehab, we rehabbed both units, did a lot of work here. I'm probably into it for 190 right now, maybe 180 on it. I got the appraisal back yesterday, guys. This should have been at least a 240 ARV. They gave me 210. So this is the risk with doing Burr. Okay. If you don't have a cash um backup, if you don't have private money that could stay in the deal with you, um, you know, if you're doing short-term bridge loans or anything like that, they and that appraisal comes in low, you might be stuck, right? You might be in a bit of a pickle there, and you might have to scramble to get somebody to come help get you some money back, right, to pay off your private lender. So luckily for me,
Northeast Wisconsin Appreciation Reality
I just did cash on this one. Actually, use cash value life insurance policy, which is a whole nother episode we could get into and use that. Um, but now I'm fighting the appraisal, right? And there's a way to do it. I actually used chat again for this. Surprise, surprise, uh, to fight the appraisal. But that is a big risk with this. This thing should have been a two. I wonder if I actually have my rebuttal on here to uh see if I can share that with you guys. Let's see. I don't think I have it on this one. So that's that's a possible risk with these properties, guys, is you may end up with uh something where your appraisal comes in low, and now you're stuck in a pickle with it. I had all that already squared away. That was all done within like I was we were working really quickly together. The bank I'm working with is great. I mean, they're turning it around quickly. But what I didn't realize is you know, appraisers have been known to not show up. And so for me, it's like I had all my pre-approvals, I was feel I was fully approved. I mean, we were ready to go. We ordered that appraisal like probably two weeks later than we could have. And the idea being, okay, about a week to get an appraisal done, but we had an appraiser no show, and it pissed the seller off big time. And so internally, it's you know, kind of taught us a lesson in about our own process. But as a buyer, I said, man, I benefited absolutely nothing not being aggressive and managing this relationship with my lenders and and trying to get the appraiser out there sooner. So it's like even if you're fully approved, you're pre-approved, you actually get approved once you get these purchase documents and everything squared away, and you're about you're closing in the coming weeks or month or so. Uh just something that I thought an appraisal would be faster, but dude, those it's someone it's a third party you can't control. Don't be surprised. It's they're like the cable guy, they show up, they don't show up. And we worked with an awesome appraiser after that. So, but the idea being, like you said, man, just play aggressively on the front end, don't leave it to chance. But overall, guys, the burst strategy, we have over a hundred units. We've used the burst strategy on pretty much every single one of them, other than some seller finance deals that we've done where the seller is only asking for five or ten percent down or something like that. Um, but the vast majority of these deals, we are using the Burr strategy, and it allows us to continue to recycle those funds. And we're ramping up our our burr stuff right now. Um, we're actually bringing somebody on to do commercial acquisitions. So we've used this in the apartment space, we've used it with trailers, we've used it with duplexes, single families, you name it. You can utilize this strategy anywhere in real estate investing, and it allows you guys to build a lot of wealth very quickly. For me, it's like build scalable systems. Um again, it's like I think the appliance thing's really interesting, just like the LVP, like buy the same brand or buy a similar product on all your properties. Your installers are comfortable with it, they work it with their hands, they know what they're getting into, you get the same quote. Um, so just try to build something that's scalable. Uh, I think that is, yeah. I mean, do it in Wisco, man. Like, again, the communities are great. Our suburbs here um are fantastic. There's a lot of places to live. Like I would live in De Pierre, Schwabanine, you know, Suamaco, Green Bay, um, all these places I would live in personally. Um see, I think that's it. When
Appraisal Risk And Seasoning Traps
it comes to investing, you gotta let go of the vine. Like you gotta have you gotta find a way to pay someone else to do it, or else you're gonna be, you know, pumping and jumping at one or two deals a year when you could be doing 20. Yeah, you just gotta have a scalable system, man. Talk to me about like if you're uh if we have an investor listening to this outside of Wisconsin, they're like, man, I would love to just build a scalable system and get get people to my installers to be able to work with the same stuff. How did you how do you find, if you're out of state person right now, listen, how do you find installers? How do you find uh these people, the who's as we always say, how do you find your who's the who's this work for you? What's been what's been the success part there for you? Yeah, a few practical ones. Facebook's fantastic. It took two posts on Facebook to get 12 you know subcontractors hitting me off. And I haven't even got I haven't it's funny enough, some of them are on our buyers list, you know, like one of them that's going out there is a um a buyer that does a lot of GC work. But I'd say Facebook's fantastic. Reach out to the guys at WDP. We have a contractor list on our website, uh lender list, etc., all that good stuff. And we're revamping the website, it's gonna be a little bit prettier, easier to navigate. But Reese has all kinds of contacts. It's not realistic, keep it up to date all the time. So there may be someone that Reese's work, like for me. I may have worked with somebody that I've introduced to Reese, right? And he's starting to get circulated amongst us internally, and maybe we want to recommend him out to some of our buyers that we would trust. Example, that Marinette property, the roof looks like it had eczema. It's ugly. It's flaking off. The the wind blows a little bit, you see shingles dusting the wind. You would think that you would think that it is it is uh like the springs here and the shingles are flying off to plant new houses. I mean it it's awful. That roof's terrible. But WDP already had a roof quote for me through prestige. The easiest thing. I just called the prestige guys, they walked me through their foot again. I say, okay, let's I mean, this was literally just handed to me. Yeah, so now I have prestige, I know who my roofing guy is. In scholars, it's kind of interesting. Like, it's easier for me to say, like, I like mine star, I'm gonna keep using them, but also I know if he gets hit by a bus, like I need to have a number two, a kitchen guy, or I'm sorry, your cabinet guy sort of thing, your countertop guy. Like, I'm posting on Facebook, I'm trying to find the best quote. I think it is a good idea to at some point be boots on the ground for a week or so so you know where you are. Um, I like that personally, but you don't got to do it. If you're out of state, you know, work talk to your property manager. Like you know, they have all kinds of recommendations. Um, WP's great, Facebook's great. Uh ask for the face best Facebook group messages from the WDP guys, like they'll tell you all this stuff. It's fantastic. I appreciate you tuning in with me and listening to my voice for the last 30-some minutes here. And uh appreciate you guys always tuning into the episodes. I would love it if you guys could share this today. This helps you, as I say on every episode. Let people know that you're into real estate. Let them know that you're into real estate investing. By you sharing this episode, they are gonna know that you do real estate investing. And hopefully it helps bring you deals, private money lenders to help finance some of these deals and build your track record and credibility by sharing the episodes, and it helps us get the word out so we can continue to bring on guests who are gonna bring tons of value for you guys every single week. So uh with that, if you're not on the buyer's list, you can go to Wisconsin Discount Properties.com, join the list. We just revamped our website a little bit. We're still working on it, so give us a little crace if by the time this thing drops, it's still not perfect. Um, we're really interested in in getting you guys quality deals. That's our number one priority. And the website is kind of secondary. I would say the same for you. If you're new and you're sitting out there instead of going out and doing deals, you're sitting on the sidelines working on a website or getting some business cards or something, just go do some deals first. But um, but you can go out to the website, fill that out, get on the buyer's list, start getting some of these deals sent to you. And if you're not ready to get on the buyer's list, you can give us a call or text on the website, uh, and we'll be happy to have a conversation
Scalable Systems And Finding Contractors
with you and just help you, you know, feel out your goals, get you started on a path to build wealth through real estate investing. Thanks for tuning in, guys. We'll see you on the next episode.
