BONUS CHAPTER:

Long-Distance
BRRRR
HOW TO BUILD YOUR
PORTFOLIO REGARDLESS
OF YOUR MARKET

BY DAVID GREENE
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 Long-Distance BRRRR

How to Build Your Portfolio Regardless of Your Market

By David Greene

Are you ready to start buying rentals using the BRRRR method, but you can’t
find anything that cash flows in your market? I feel your pain. As a lifelong California
boy, I’ve learned that I can buy rental property here, but only in very specific times
in the market cycle. California, like most coastal markets, is very cyclical. When the
market is down, there are deals to be found. But when it’s up...
Well, that’s a different story. Trying to find and close on deals in a red-hot
market is a lot like looking for a needle in a haystack. So I say this: why look for a
needle in a haystack when you can find a market that has plenty of opportunity to
help you hit your goals instead?
This was the premise of my first book, Long-Distance Real Estate Investing: How
to Buy, Rehab, and Manage Out-of-State Rental Properties. In the book I spelled out a
plan for building a team, managing the process, finding deals, using technology,
and what systems you need to buy real estate anywhere.
Out-of-state investing creates opportunity that your local market may not
provide. In Buy, Rehab, Rent, Refinance, Repeat, I show how the BRRRR method
creates opportunity when the traditional method for buying real estate creates
obstacles. With this being the case, what’s better than combining both methods to
truly maximize your efficiency and wealth-building potential?
Sounds like a great idea for an e-book, right? Well, here you go! Your one-
stop authority on how to BRRRR rental properties from anywhere in the country, at
any time you want, regardless of your local market. If you’re looking to take your
real estate investing to the next level and start investing without excuses, you’ve
come to the right place.
Long-Distance Investing

Why would you invest long-distance when you don’t have to? Well, you
wouldn’t. If you’ve got deals and a team nearby, by all means use them! For those
who don’t, however, long-distance investing is really the same as buying locally. You
use the same logic, same math, same checklists, same people, and the same
process. In fact, in some ways, long-distance investing can actually be better than
investing locally because it removes you from the process.
Yes, I said you. YOU. Oftentimes, you (and I) are the problem in our business.
Ever found yourself answering tenant phone calls at 2 A.M. when there was no
emergency to justify the call? What about driving across town fighting traffic to fix a
leaky pipe, or spending hours posting your property for rent on every platform you
can think of—then fielding all the emails and phone calls that come from people
asking questions about it? We’ve all been there. The thing is, we shouldn’t be.
As a landlord, you aren’t the ideal person to be doing this kind of work. In
fact, when you start taking on all the responsibilities involved with running a
portfolio of rental properties, you become much less like a landlord and more like a
landslave! There’s an age-old adage that states, “You should be working on your
business, not in your business.” When you invest remotely, you’re forced to find
other people to solve problems that you may be tempted to solve yourself. It
removes you from the process and forces you to play the role of business owner,
not business worker. After all, isn’t that why you wanted to own rentals in the first
place, to find freedom from work?
For many people, this is a very necessary shift in their thinking. Most people I
know won’t change because they “should”, they’ll only change when they “must”.
Unless something pushes us to, most of us will stay in the same comfort zone
forever. Long-distance investing is a great way to avoid that trap. When you buy
properties too far away to get personally involved, you must create systems,
people, and leverage to help run the day-to-day operations. It forces you to work
on, not in, your business.
One of the major changes that has really opened up the door to long-
distance investing is the advancement of technology. There was a time when buying
remotely was very risky. You didn’t know what you were buying, couldn’t verify
anything, and had to take the word of a stranger you didn’t know. Many people got
ripped off.
Technology has changed all that in some dramatic ways. If you think about it,
most of the due diligence we use before buying a property can all be conducted
remotely. We get our rent numbers from a phone call or a website, our rehab
estimate from an email, our inspection report from the computer. We receive the
information about what we are buying in texts and we look at pictures and videos
of properties before going to see them. In fact, I’d argue that technology makes the
need to go see a property in person virtually nonexistent, if not entirely
nonexistent. I buy houses all the time that I have never seen, and if all goes well, I
will never see.
This doesn’t mean I’m not doing my research—trust me, I am. It just means
that technology can now help me accomplish everything I need to get the research
done. Videos from my agent as he/she walks the properties, pictures and videos
from my contractors about the work that needs to be done, PDF documents from
the home inspector regarding what’s wrong. I can get all the info that anyone else
can get in a local property, I just don’t have to be there.
How does this give me an advantage? In expensive markets where home
prices are ridiculously high and nothing will come close to cash flowing, I can keep
investing. I can buy cash flowing assets, fix them up, and refinance my money to go
on and buy more. I love BRRRR because it allows me to keep investing, regardless
of the money I’m making. I love buying long-distance because it allows me to keep
investing regardless of where we are in the market cycle.
Are you seeing the connection now? BRRRR and long-distance investing
combine to become the peanut butter and jelly of the wealth-building world. If you
learn one, it’s good. If you combine them, it’s fantastic. If you’re serious about using
real estate to build massive wealth, make yourself a millionaire, and retire early,
you really need to learn how to combine these methods and make a system that
allows you to make steady progress while everyone else is sitting on the sidelines.
If you want to be successful BRRRR-ing from a distance, you need to
understand two things: 1. What goes into a BRRRR deal and 2. How to do that from
a distance. I’m going to cover the main points I think you need to know in order to
succeed, then show you how to raise money from others to get you started. When
we are done, you should have a much better idea of what it takes to invest
efficiently anywhere in the country!

Building Your Team: The Core Four

If you’re going to be investing out of state, the first thing you need to do is
figure out how you’re going to build the team to help you do it. In my system, there
are four key components, and if I have them, I can invest anywhere. They are:

1. Deal Finder (Agent, Wholesaler, etc.)

2. Contractor
3. Property Manager
4. Lender

These four people are the foundation of your team, and all the other pieces
you’ll need can be found through one of the four. In addition to the secondary
pieces you’ll need (lawyers, roofers, handymen, CPA’s, etc.), members of your Core
Four can help you find additional team members. Your agent can introduce you to
a lender, your lender may know the best property manager, and your property
manager may have access to the top contractors. Finding just one rockstar member
of your Core Four will often lead to finding more, and we’ll talk more about that in
the next section.
The job responsibilities of your Core Four will be as follows:

1. Deal Finder
Your deal finder will be the person you have the most contact with, and they
will be your best bet for finding the other members of your team. The deal finder
won’t get paid unless you buy deals, and that means they are the most likely to
have a network of other members already formed that they can refer clients to.
Deal finders want to find deals for you, and they want to close on those deals. It’s
better for their business. If they’ve been closing a good number of deals, odds are
they will have overcome the hurdles you face already.
 Your deal finder will send you deals and provide preliminary information.
This info is typically a good starting point, but you’ll want to do more due diligence
than what the deal finder provides before deciding if you actually want to buy what
they’re sending.
In addition to sending you deals, your deal finder will also help by sending
you pictures, videos, and other information to help verify the property’s condition. I
have my deal finders walk a property and take a video of the whole thing, then send
me pictures of the specific areas that will need a lot of work (moldy showers,
corroded pipes, etc.) Not only does this help me see what I’m getting into with the
property, but I can also forward these pictures and videos to my contractor to get
price estimates for the rehab. What contractor wouldn’t like being able to avoid
wasting time and gas sitting in traffic when they can just look at pictures from their
couch?

2. Contractor
Your contractor is an incredibly important part of your team. When dealing
with out of state contractors, it’s important to make sure they have a good
reputation, as you won’t be able to meet with them in person or check out the job
site yourself. I’ve included a section specifically on hiring an out of state contractor
later in this book, but for now, you should know that a contractor can make or
break your deal. A good contractor can add massive value and virtually pay for
themselves, while a bad one can sink even a very promising property.
When communicating with your contractor, it’s important to make
expectations clear. I recommend having bids delivered in an itemized fashion so
you can see exactly what you’re paying for. Contractors are necessary, but they
don’t always operate in an efficient or organized manner. Learning to communicate
with them in their specific style is an important skill to develop.

3. Property Manager
Your property manager will play a huge role in both the overall success of
your business. Good property managers take care of all the small details and
provide strong direction and advice. They are partners in your success and should
know more about real estate investing than you do. A good property manager will
cover their own cost with the value they bring to you.
 Bad property managers are the exact opposite. They can break even the best
investor’s will and make real estate investing feel terrible. They don’t fix problems;
they just cause more of them. Bad property managers cost you time, energy, and
drain your excitement and passion.
How do you know whether you’ve hired a good one or bad one? There is one
quick solution. In Buy, Rehab, Rent, Refinance, Repeat, I include a table that teaches
you to recognize “talent” or “non-talent”. The number one way to recognize a bad
property manager is with the “problems” portion of the table.
A good property manager brings you solutions. A bad one brings you
problems. Period.
When you get an email that tells you something went wrong, the property
manager should also include exactly what they are doing to fix it, as well as how
they will ensure it doesn’t happen again. This is how talent thinks, and you can
recognize it right away. When you receive an email that says something went wrong
and asks you what you want to do about it, you know you’ve got a problem. Talent
is not a messenger that informs you of bad news. Anyone can do that. If you’re
paying someone to work on your team, they should be doing more than making it
your responsibility to fix problems.
Learning to recognize this early is one of the best steps to ensure a healthy
real estate investing business and create an atmosphere in which you are less likely
to burn out. Surrounding yourself with talent (or super talented rockstars) makes it
very hard to fail. Surrounding yourself with non-talent makes it very difficult to
succeed. Many investors want to learn everything there is to know about investing,
but in my opinion it’s better to learn who you should have on your team than it is to
learn what to do in every situation.

4. Lender
Your lender may play the smallest role in your business (as far as time spent
talking to one another) but try to invest without one and see how far you get! If you
plan on making any kind of significant progress at all using the BRRRR method, you
will absolutely need a good lender on your team.
Because the BRRRR method is dependent on refinancing to build at scale, it
really doesn’t work without a good lender. That being said, not all lenders are equal.
Once you have ten financed properties, you won’t be able to get the traditional
Fannie Mae/Freddy Mac loans most investors are used to. You probably won’t see
30-year terms, fixed interest rates, or 20% down payment options. When you get to
this point (which you will if you are following my system), you’ll have to transition to
other finance sources like portfolio lenders and private money. Developing strong
relationships with different lenders is crucial.

Rockstars Know Rockstars

Rockstars know rockstars (or RkR) is a term I like to use to describe the fact
that birds of a feather flock together. The NBA all-stars tend to hang out with other
all-stars, the top CEO’s in the country all know each other, and the top producing
real estate agents all network with each other.
Typically, the best want to hang out with the best, and the bottom feeders
want to hang around other bottom feeders and are intimidated by those striving
for success. This is bad if you have a bottom feeder mentality (which I doubt you do
if you are reading this), but it’s great if you want to think, act, and associate with the
best.
This philosophy especially comes in handy when looking to build a team. If
you can find a really good real estate agent, odds are they also know really good
lenders, contractors, and property managers. Leveraging the people in your world
who are at the top of their game to find others like this is the best strategy to build
out your team and surround yourself with talent.
Eventually, you will need all of the Core Four members, but you don’t have to
find them in the order I listed them. My advice is to start with the member that is
the most difficult to find (and therefore most valuable to you), target them first, and
then move to the second most difficult.
For instance, if you know you are going to have a difficult time finding
financing in a new state, you should start by looking for a lender first. If you can’t
get funding to buy anything, having the other three members of your team won’t
benefit you at all. If you know lending won’t be a problem, you may want to look for
the deal finder first. Knowing an amazing contractor isn’t going to benefit you if you
don’t have any deals for them to give estimates on.
 When starting with the most difficult piece and working backwards, each new
member added to your team makes it easier to find the next member. As you begin
to surround yourself with rockstars, it gets easier and easier to find others to build
your business. That’s when real estate investing gets fun.

Finding Contractors and Agents from Afar

Choosing a good contractor is paramount no matter where your property is,

but it can be a little tougher when you’re doing it out of state. It’s not that the
process changes when using an out of state contractor, it’s just that you are less
likely to know somebody who does it, or somebody that can refer someone who
does.
When investing locally, you can ask friends, family, and coworkers if they
know anyone to lay tile, do framing, fix kitchens, etc. When investing remotely, you
just don’t know as many people in that area to ask. You shouldn’t be discouraged
by this; you just need to be more intentional about how to go about it.
A good fisherman goes where the fish are. This is why we invest in markets
that are more likely to have properties that work for the BRRRR method than in our
own area. The same principle applies with building a team—if we want to find a
good contractor, we should be intentional about asking people in our area who are
likely to have used a good contractor before.
Who are these people? Agents, other investors, wholesalers, small business
owners, etc. We want to find people who are likely to need a contractor at some
point in their vocational career. My favorite referral source is from those who need
to recommend contractors to their clients—because if someone refers a bad
contractor, it also makes them look bad.
If you’re looking for a top-producing agent to refer contractors, there are
several methods to use. One is to call the biggest brokerages in the area (a simple
Google search can provide a list) and ask for the team leader or sales manager.
Once you get them on the phone, ask for the top two or three agents in the office
that work with real estate investors. Repeat this until you have a list of 10-15 agents
from the biggest brokerages in your area.
 Next, search for your list of agents on Zillow. You want to see how many
deals they’ve closed in the last 12 months. The more sales, the better. Top
producing agents do more work, and more work means finding more contractors
to help out their clients.
As you go through the list of 10-15 names, cross off those who haven’t sold
many homes. Then, with those that are left, call and ask if they often work with
investors. The main points you want to cover during the call are:

1. Are you an investor yourself?

2. Are you comfortable analyzing properties, or will you send them to me to
analyze myself?
3. Do you work with a lot of investors?
4. Do you have lenders, contractors, and property managers you can refer?
5. What kind of support do you have on your team to help me? I know your
job won’t be to hold my hand, but I may need people to take pictures,
videos, and find comps for me.

If you can find an agent who has good answers to these questions, you’ve
found someone you want to work with. This is also a fantastic method for finding
both your deal finder and your contractor. Once you’ve got a few of these people
on your team, you are very likely to start making progress.

Managing Your Rehab from Afar

Managing a rehab is never a fun process, and it can feel even more
intimidating when it’s happening thousands of miles away. Most investors like to
stop by the job site and “check in” to see how things are going. While this may
sound like a good idea, it’s really pretty useless.
The majority of investors have no idea what they are looking at. Unless you
have a construction background, it’s going to be very difficult to determine if the tile
is being laid correctly or if the plumbing is up to code. Checking in on the job site
usually creates nothing more than a false sense of security—and it can sometimes
be harmful. If you inspect a property and feel good about what you’ve seen, you
may be more likely to cut corners and not ask an expert to check it out.
In my system, I’ve learned it’s better to be humble and honest with myself
about the things I can and cannot do. I’m not a home inspector, so I shouldn’t be
walking or inspecting homes before I buy them. I don’t know what to look for and I
wouldn’t know what it would cost to fix it.
On the same token, I’m not a contractor. I don’t know what labor or material
costs, and I can’t tell how long it will take to fix something. There’s no reason for me
to walk a property because I do not have the knowledge, skills, or experience to
give a good assessment. Even if I know more than the average Joe, I don’t know as
much as the expert who does this for a living.
So what do I do? I ask my agent to walk the property (if I’m going to sell it)
and make sure the contractor is doing what they said they would. I ask them to
send videos and pictures to verify the job done. If I’m going to rent the property
out, I use my property manager instead. Plus, I use Core Four members to check on
other Core Four members, so in order for me to be ripped off, they would all need
to be conspiring against me.
With most rehabs, I typically send the money in four installments, often
called “draws.” Each draw is 25% of the total budget and is used to pay for materials
and labor as they’re conducted by the contractor. Once I am comfortable with the
contractor, I adjust this to two draws of 50% each.
Before sending the next draw, I have someone else on my team verify the
work that the contractor said they did. If the contractor says they finished the
flooring and the cabinets, I make sure someone verifies it. If I was being lied to, I
know this is the last time I’ll be working with that contractor. I never send the last
draw until someone (usually the property manager) has verified that the work is
fully complete and the house is ready to rent.
Paying your contractor the full amount before finishing the job is a great
recipe for driving yourself crazy. Once they’ve moved their crew off the job and
started a new one, they won’t want to send someone to go back and finish up what
they missed because it’s going to cost them money. Learning to avoid this situation
will save you a lot of stress in the end.
Another thing to consider while running a long-distance rehab is that not all
material or labor costs are the same throughout the country. The cost of a new roof
in California is 40-50% more expensive than in Florida. If you live in an expensive
market and are investing in a cheaper one, it can be very easy to overpay and think
you’re getting a great deal.
How do we avoid this? The key is to get multiple bids from different
contractors before choosing the one you want to work with. Once you see what
different people are charging for the same work, it’s easy to spot the one who
charges higher than market rates. This is especially important if your contractor
knows you live in a more expensive market.
One trick I use to avoid overpaying is to ask my contractor how long it will
take to complete a task, then ask how much the materials will be. Once I know
these two numbers, I can quickly find out how much I am paying per hour for the
job, and this gives me a number I can compare to other contractors.
For instance, let’s say a contractor tells me he is going to charge me $1,000 to
hang five doors. I ask the contractor how much each door costs, and he tell me it’s
$75 a door. I can quickly confirm this number online and make sure it’s accurate. I
would then take five doors times $75 a door to come up with $375. That means the
labor cost for this project would be ($1000 - $375) $625. Is that good or bad? I need
to know how many hours I’m paying for.
When the contractor gives me the bid for $1000, I would also ask him how
many hours it takes to hang a door. Let’s say he tells me it takes three hours per
door. If I have five doors, times three hours, that’s 15 hours of work. If I divide the
$625 in labor by 15 hours for the work, it comes out to $41.66 an hour. That’s high,
but it may not be unreasonably high. The contractor may be hiding his overcharge
by claiming it takes longer to do the job than it does.
I combat this by asking one of the other contractors who bid for the job how
much time his crew takes to hang a door. Let’s say he tells me they do it in one
hour. That would mean five doors, one hour a door, for a total of five hours. If I
divide $625 by five, that comes out to $125 an hour. That is definitely an
unreasonable number. Seeing how odds are both contractors are employing similar
labor, it is very unlikely one crew takes three hours to do the job another can do in
one hour—the first contractor is just hiking his labor fees way up. This method will
expose whether or not you’re not overpaying in an area you’re unfamiliar with.
The important thing to remember when it comes to managing rentals from
afar is that you must create systems for everything you’re doing. You want systems
for choosing contractors, getting bids, how you want those bids written up, etc. You
also want checklists for each stage of the process. I have checklists for writing
offers, checklists for escrows, checklists for after-close rehabs, and checklists for the
post-rehab process when my property manager is trying to rent out the property.
If you don’t have systems, you might be missing things, and you can’t scale.
Managing a big portfolio of homes will not be fun if you aren’t organized, so I
recommend working on your systems early and improving them as you grow. It’s
much better than waiting until your work is huge.

Finding Money

In short, the BRRRR method works so well because you are spending the
same dollar over and over. This is possible because of the value you add to a
property before refinancing it. When done right, you can rehab 100% (or more) of
your initial capital to reinvest. This allows you to build big wealth much faster than if
you were to save and invest every dollar.
So what do you do when you don’t have that initial capital? Well, you’ve got a
few options. Make it and save it, or you can borrow it. Making and saving is my
favorite option because it’s less risky. The downside is that it also takes the most
time—for those looking to invest money without waiting to make and save it, there
is always the option of borrowing it from someone else.
When borrowing money, there are a few things to remember. I’ve summed
them up nicely in this section because a good understanding of this topic is crucial.
If you want to get private money, there are two things you need to understand well:
how to adopt the right mindset, and how to create the right mindset in those you
are pitching your opportunity to.
When it comes to raising private capital, the first thing you need to get right
is your own mindset. There are two ways to look at the situation:

1. I am asking for a handout (charity-based pitch)

2. I am offering someone a fantastic opportunity (value-based pitch)
 The first option is a charity-based mindset. It assumes the person with the
money is doing you a favor, and you are appealing to their benevolence to help you
out. This mindset will change your entire pitch, and you will come across like you
are desperate, not in control, and not trustworthy. It may work on family members
like parents or grandparents, but the vast majority of others won’t feel as obligated
to let you borrow their money as a “favor.”
The second mindset is a value-based pitch. You are offering this person a
way to make more money with you than they could make on their own, as well as
an opportunity to invest in real estate when they may not know how. This mindset
is based on the fact you have skills, hustle, knowledge, and opportunity that others
don’t, and they are lucky to know you!
The mindset you adopt will determine the tone of your presentation, and it
will therefore have a huge impact on your results. You can know everything there is
to know about investing in real estate or following the BRRRR strategy, but if you
present it like you’re looking for charity, people won’t be likely to lend you money.
You want to create an atmosphere where others are excited at the prospect
of partnering with you. The way in which you present your material is a big part of
that equation, and adopting the right mindset is the key. Before you even think
about getting in front of people and telling them why they should work with you,
you need to be in the right frame of mind: you are confident, know the deal inside
and out, and have multiple exit strategies or contingency plans in case things don’t
work out like they should.

How to Create the Right Mindset in Others

When someone wants to lend you their money, there are five things they are
going to care about, in this order:

1. How likely is it that they will get their money back?

2. How well do they understand what their money will be used for?
3. How much do they trust the person they are lending it to?
4. What is their recourse if the investment does not go well?
5. What kind of a return can they expect?
 You’ll notice that before the question of the return on their money, they want
to feel very sure their investment is safe. It is human nature to worry about what
can go wrong before considering what can go right. If you can respect this by
addressing the lender’s concerns before proposing the return they’ll make, you are
much more likely to find success.
My advice to you is to make sure you address each of these concerns during
your pitch and to tackle them in the order in which the listener will care about them
the most. Don’t expect them to care about the return until they feel confident they
will get their money back! Fortunately for you, the BRRRR method is one of the best
ways of investing and recovering capital, so the content itself will be on your side.
I’ve written out the five questions most potential investors have when it
comes to being comfortable letting you borrow their money, and I’ve prepared the
ways in which you can handle those objections. Understand how to tackle these five
questions and you’ll be ready to deliver your presentation like a pro!

How likely is it that they will get their money back?

Your investor’s first question is going to be, “If I give you this money, how can
I know I’ll get it back?” Lucky for you, this is the BRRRR method, and recovering
capital is pretty much the reason we use it! When explaining how they can expect to
receive their money back, there are several key points you should hit:

1. You are buying the property with a method specifically designed to ensure that
investors get paid back.
The BRRRR method is specifically designed to allow the investor to recover as
much capital as possible. This will be explained in the PowerPoint presentation, but
you want to make sure your audience understands this. Go over why you want to
pay cash for the property, what your plan is to fix it up, and how you can trust the
validity of the comparable properties you’re using to determine the ARV.
If your audience understands the reason you need their capital, they are
more likely to open up to your pitch and consider it. If they don’t understand why
you aren’t just buying a property the traditional way, their skepticism will override
any ambition they have to earn a return. Make sure you clarify how this investment
will work and how the cycle progresses. Once they understand how you benefit by
having all the cash up front, they’ll see how their investment plays a vital role to
your success, and that allows them a share in the fruits of it—in the form of a
return on their money.

2. You are choosing a market to invest in that is specifically geared towards protecting
your investor’s capital.
Novice investors try to force a square peg into a round hole. If they are more
comfortable investing “in their own backyard,” they will try to force a deal where
there is no deal. What happens when this goes wrong? The investors lose money.
But you’re not a novice investor! You’ve taken the time to research, isolate,
and develop strategic alliances with business partners in the areas that are
uniquely and best suited to your investing strategy. Why’d you do this? Because
protecting your time, and your investor’s money, is of utmost important to you.
You’re not like anyone else, because you really value the relationship you have with
these people. That’s why they’re better off investing with you than anyone else.
Make sure your audience understands real estate is local, and you’ve chosen
a locality that is best suited to long-term buy and hold investing. Use this as an
opportunity to explain to them the difference between house flipping, note
investing, the traditional strategy, and the BRRRR strategy. The more you show
what you know, the more credibility you build with them regarding your knowledge
and expertise.
Hammer on the research you’ve done. Show them how you can get the same
rent in this area for a house that costs twice as much somewhere else. Show them
how you’ve tracked the census date, migration patterns, and employment
prospects. The more data you give someone regarding the beliefs you have (and
you’re convincing them you believe borrowing their money is a good idea), the
easier it is for them to believe you. Make it easy for your investors to trust you by
showing them how you have gone above and beyond and chosen a market
uniquely suited to protect their investment!

3. Your investor can have a first deed mortgage on the property.

If you have an investor who trusts the process but doesn’t necessarily feel
comfortable knowing they’ll be paid back at the end, this is the best way to put their
fears to rest. By giving your investor a first position mortgage on the property, their
investment is secured by the property itself. If you default on paying them back,
they have the ability to foreclose on the property and take title to it, which allows
them to recover their capital.
The process of putting a deed on a property is relatively simple and can be
handled by just about any title company. Explain to your investor that this is the
same way banks protect their investments when they give out loans, and because
they are acting as the bank in this transaction, you are going to make sure they get
the same protection.
To really drive this point home, make sure you show them how the deal you
will be buying is so good that they would probably recover even more of their capital
in the case of a foreclosure. As long as you buy a property significantly below
market value (as you should be), they should recover more than they let you
borrow when they go to sell it.

4. When you refinance the property, investors get paid back first.
If your investors are skeptical about when they’ll receive their capital back, let
them know that you will draw up an operating agreement that specifies who gets
paid back first once the refinance takes place. The operating agreement is designed
to protect them in the case of a default, or a horrible tragedy happening to you
before the process is completed.
If any of your own capital is going in the deal, explain that if the refinance
does not amount to the total you anticipated, any shortcomings will come from
your side. For instance, if you anticipate an appraised value of 100k and therefore a
loan in the amount of 75k, you may borrow 65k from your investor and use 10k of
your own money. If the appraisal comes in at 90k instead (and you’re only able to
borrow $67,500), your investor will still receive back their 65k (plus interest) and the
money that gets left in the property will come out of your side.
This should put most investors at ease so they can listen to the rest of your
pitch with an open mind.

How well do they understand what their money will be used for?
Nobody moves forward when they are confused, ever. Confusion causes
paralysis more than anything else. If you want your investor(s) to feel comfortable
lending you money, they need to understand what you’ll be doing with it. This does
not mean they need to be good at the process or able to do it themselves (that
would defeat the purpose of them needing you). It just means they need to have a
rudimentary idea of how this whole process works.
Make sure that, as you walk your investors through the slideshow, you stop
to answer their questions. For those who aren’t asking questions, stop periodically
and ask if they have any. Some people aren’t comfortable admitting they don’t
understand something, or they don’t want to insinuate that you aren’t being clear.
Again, you don’t have to teach them how to do this themselves. They just
need to understand what it is you’ll be doing and have confidence that you will be
able to do it. If you can convince them of this, they’ll remain open-minded towards
the opportunity you’re providing them!

How much do they trust the person they are lending it to?
While the rest of these objections have to do with the BRRRR process itself,
this is the only one that has to do with you, your character, and the way you make
people feel. While the majority of the work we do explaining our system and
process to investors is about the process itself, the main reason we are doing it isn’t
to educate anyone about real estate. It’s to showcase that we know what we’re
doing and we are a safe bet.
In the end, the investor isn’t just investing in the deal. They are investing in
you. It’s easy to fudge numbers, lie about data, or present information in a way that
makes it appear the way we want it to. Deep in their hearts, people know that.
What makes people feel comfortable giving you their money is the fact they trust
you with it, trust your motives, and trust your ability to do what you say you are
going to do.
Make sure you are sincere during your presentation and your top priority is
getting everyone else paid before yourself. If this is really where you’re coming
from, you should find that it gives you the confidence to really go for it. Sincerity
makes itself known and people want to feel that your relationship is important.
Nobody wants to be seen as a means to an end.

What is their recourse if the investment does not go well?

As you should have mentioned earlier in your presentation, reiterate you are
just as concerned with their investment as you are with your own success. In fact,
it’s a good idea at this point to make sure they understand you plan on using them
for opportunities like this more than once! If they understand your success
depends on them, and they can see how committed you are to that success, it
should do a lot to boost their confidence in you.
If you lose their money, it means you can’t keep buying properties. And since
buying properties is your main goal, you will make sure you don’t lose their money!
In the unlikely event that things don’t go as expected, they will have the operating
agreement in place and a first position lien on the property. Showing them you’ve
taken just as many steps to protect their investment as you have to protect yours
will go very far in the eyes of most people.

What kind of a return can they expect?

The Language You Should Use

Once you’ve covered all the “fear” based objections, you’ll finally be ready to
propose how your investors will benefit by working with you. If you’ve followed all
the steps up to this point, they should be feeling confident, eager, and excited to
hear what you can do to help them. This is your chance to show them the
opportunity you are bringing them and just why they should be partnering with
you.
Use the phrase “partner” as often as possible. It provides a sense of
togetherness, relationship, and a structure that is mutually beneficial. You want to
say things like “we are going to…” instead of “I am going to…”. Really hit home the
point that you are taking a risk and enjoying the profit together. It doesn’t matter if
you’re just offering a straight interest rate with no equity, the point is that you are
creating an atmosphere where they feel connected to you and safe in the
partnership, not exposed like an “investor” would typically be in a deal.
This is an important point. “Investors” are risk takers. They are those risking
money with no say in the operations or success of the company. “Partners” are
different. They are those in the fox hole with the company, striving together to
ensure a successful outcome. While you don’t want your investors to have a say in
how you run the deal, you do want them to feel safe and connected to you and the
outcome. Using the right language is crucial to achieving that outcome.
The Returns

Now, there are several ways you can structure the return you will pay your
investors. The main two ways investors benefit in a deal are:

1. Equity
2. Debt

Equity means the investor is receiving a chunk of the profit, usually in terms
of a percentage of the end profit. Giving away equity is less risky for the one
managing the investment. If the investment does not go well, the investor earns
less money, so the one managing the project (we will refer to this person as the
“principal” from now on) won’t lose any of their own capital.
While it is less risky for the principal to give away debt, it is also costlier. If the
deal goes really well, giving away a chunk of the profit can be really expensive! It
can also be harder to structure deals this way when there isn’t a sale as the exit
strategy. In the BRRRR strategy, we are looking to refinance, not sell, a property.
This makes it difficult to structure your return if you’re trying to give away equity.
Debt is different than equity. When you offer debt, you are paying someone
directly for the use of their money, and they do not receive a portion of the profit at
the end. Debt is riskier for the principal (you) because you will have to pay them
even if you don’t make money on the deal. While it is riskier, the benefit is much
less costly. When you give away debt, you know exactly what the cost of your
capital will be and can plan your deal accordingly.
My advice to you when using the BRRRR strategy is to structure it using debt.
Tell your investors you will be paying them for the right to use their money, and
they will be earning a fixed rate for the length of time you have it. This lets them
know their return is guaranteed, so they don’t have to worry about you messing up.
This is especially powerful when you don’t have a track record or trust established
yet with a new lender.
Once you’ve done a couple deals with someone, if you want to switch to
equity instead of debt, you can, but it’s much simpler and easier in the beginning to
sell using debt.
Long-Distance BRRRR

In so many ways, combining long-distance investing with the BRRRR strategy

is a combination that will allow you to take your investing to completely new levels.
If you understand both methods, you can explain to your investors why you are
investing in different markets and how you will be able to recover their money once
you finish. The better you understand the two concepts, the more clearly and
confidently you can articulate your plan to others.
If we really look into this, the whole reason you use the BRRRR strategy is
because you believe it’s the best way to structure a deal. The whole reason you
chose the market you’ll invest in is because you believe it’s the best place to invest.
You’ve put in the work, done the research, and put together your plan. Why not
make sure your investors understand just how much due diligence you’ve already
done?
Long-Distance BRRRR works because we are chasing efficiency:

• We are looking for markets with more properties that match our criteria,
being efficient with our time.
• We are looking for markets with higher price-to-rent ratios, increasing the
efficiency of our cash flow.
• We are establishing long-distance relationships with rockstar team
members, increasing the efficiency of our time and effort.
• We are adding value to our property through the rehab, increasing the
efficiency with which we create equity.
• We are refinancing our capital to reinvest, increasing the efficiency of the
velocity of our money.
• We are buying deals significantly under market value, increasing the
efficiency of how quickly we build wealth.

And on and on and on! Long-Distance BRRRR isn’t just a catchy buzz word. It’s
a legitimate practice of investing in the most efficient way possible to build your
wealth quicker while simultaneously reducing your investors risk the most. Make
sure you cover this in your presentation with potential investors. Information not
relayed has no power.
 I highly encourage you to include the PowerPoint presentation included in
the bonus content when making your pitch to potential investors. I also encourage
you to watch the video of me showing you how! More than anything, I encourage
you to make the pitch several times to no audience while recording yourself.
Go back and watch these recordings and see where you appear stuck,
unsure, or unconfident. Practice those areas until you’ve articulated the point
enough times that it comes out smoothly. The better you sound making your
presentation, the more open others will be to investing with you.
If you refine your presentation enough, consider filming yourself formally.
You can now share this video with others who don’t live near you when they hear
about your success and want to invest with you as well. This “Long-Distance
Presentations” strategy will work just as well for you as the real estate can! You’ll
find that word spreads quickly when people are happy. When you do what you say
you’re going to do and people get paid, a snowball effect will start to take place and
more people will start reaching out than you anticipated.
I’m a huge believer in “Long-Distance BRRRR” and I’m excited to see you
become a believer too. Believe in yourself and the process and start taking action
today!