About this Video

• Video Title: How to Get Rich Using Other People's Money - Jaren Sustar
• Channel: The Rich Dad Channel
• Speakers: Jaren Sustar
• Duration: 00:28:18

Introduction

This video explains how to build real estate wealth using other people's money (OPM). Jaren Sustar details strategies for leveraging OPM, including utilizing private lenders, hard money lenders, and institutional lenders. He emphasizes the importance of understanding the six pillars of real estate wealth and the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat) to achieve financial freedom.

Key Takeaways

1. Six Pillars of Real Estate Wealth: Leverage, Forced Appreciation, Traditional Appreciation, Cash Flow, Debt Paydown, and Tax Benefits. These pillars, when combined, create a powerful strategy for building wealth.
2. Using Other People's Money (OPM): Three main ways to use OPM are through private lenders (individuals in your network), hard money lenders (companies specializing in short-term loans), and institutional lenders (banks).
3. BRRRR Method: This method involves buying a distressed property, rehabbing it, renting it out, refinancing to pull out equity, and repeating the process to build a portfolio.
4. Mindset Shift: Approaching potential lenders as a businessperson offering a lucrative investment opportunity, rather than as someone begging for money, is crucial for success.
5. Financial Freedom: The ultimate goal is not luxury items, but the freedom to enjoy simple things like spending time with family and reducing financial stress.

Here are the answers based on the provided transcript:

What are the six pillars of real estate wealth as described in the video?

The six pillars of real estate wealth, according to Jaren Sustar, are:

1. Leverage: Using debt (other people's money) to acquire assets.
2. Forced Appreciation: Increasing a property's value through renovations and improvements.
3. Traditional Appreciation: The natural increase in property value over time due to market forces.
4. Cash Flow: The positive income generated from rental properties after expenses.
5. Debt Paydown: Tenants' rent payments reducing the mortgage loan.
6. Tax Benefits: Utilizing tax advantages like depreciation and 1031 exchanges.

What are the three main ways to utilize other people's money (OPM) for real estate investment, according to Jaren Sustar?

Jaren Sustar outlines three primary ways to utilize OPM:

1. Private Lenders: Individuals in your network who lend money for real estate deals.
2. Hard Money Lenders: Companies that specialize in short-term bridge loans for real estate projects, often covering a significant portion of purchase and renovation costs.
3. Institutional Lenders (Banks): Banks or DSCR lenders that provide traditional mortgages, often with longer terms and cash-out refinance options.

Explain the BRRRR method in detail. What are the steps involved?

The BRRRR method, as explained by Jaren Sustar, stands for Buy, Rehab, Rent, Refinance, Repeat. The steps are:

1. Buy: Purchase a distressed or undervalued property, ideally at a discount. Funding can come from a combination of private lenders, hard money lenders, HELOCs, or personal cash.
2. Rehab: Renovate and improve the property to increase its value (forced appreciation).
3. Rent: Secure a tenant to generate rental income. This step may or may not be necessary before refinancing, depending on the lender.
4. Refinance: Obtain a new, long-term loan (cash-out refinance) from an institutional lender (bank or DSCR lender) based on the property's increased appraised value after renovations.
5. Repeat: Use the equity pulled out from the refinance to fund the purchase and renovation of another property, repeating the cycle to build a portfolio. The key is buying at a discount to ensure the refinance covers the previous loan plus any expenses.