🏆 Zero Guesswork Wealth Plan – Legendary Cut Part 3
You are not chasing houses; you are building a cash-flow engine that feeds your future.
Start with $30k, a 515 credit score, and unshakable discipline. End with 8–16 doors, $3,500–$8,000/month net cash flow, and $400k–$1.2M equity.
This is the playbook movies try to imitate.
🎯 Speak “Lender” Like a Pro
Script (call/email):
“I am purchasing a 2-unit primary with FHA (Federal Housing Administration) 3.5% down. My score is improving (target 640). What are your DTI (Debt-to-Income Ratio) and reserve requirements, and can we close in 45 days? If I pursue 3–4 units, do you require the FHA (Federal Housing Administration) self-sufficiency test, and how do you calculate it?”
⚠️ Note: For triplex/quad, the net rents must cover PITI (Principal, Interest, Taxes, Insurance). Ask early.
💳 72-Hour Lift → 30-Day Cleanup
Slash utilization to less than 9% before statements (leave $10–$30 on one card).
Add rent reporting + Experian Boost.
PFD (Pay-for-Delete) letters first (30–50%); if denied, settle to $0.
Autopay “Minimum Due.”
Story: One investor cut utilization from 74% → 8% and jumped +82 points in 45 days — unlocked FHA (Federal Housing Administration) terms, saved thousands.
🛡 Legal Armor (Days 7–21)
Form LLC (Limited Liability Company), get EIN (Employer Identification Number), open business checking (no commingling).
Bind $1–2M umbrella policy.
Use attorney-vetted contractor agreement + lien waivers and lease templates.
Lesson: Handshakes make friends; documents build empires.
🛠 Rehab & Lease-Up (Months 2–4)
Standard scope (repeat forever):
Paint + LVP (Luxury Vinyl Plank flooring): $2–$4/sf.
Fixtures/lighting/hardware: $600–$1,500/unit.
Curb appeal: $250–$750.
Payment rules: Materials at delivery, milestones only, lien waivers each draw, change orders in writing.
Pre-lease by Week 3: Screening = income greater or equaled to 3× rent, no recent evictions, renter’s insurance required.
MTR (Medium-Term Rental) option (travel staff): Furnish $2.5k–$4k → +$300–$700/mo, 3–6 mo terms.
🔄 Compact BRRRR (Buy, Rehab, Rent, Refinance, Repeat) (Months 6–12)
Buy $120k • Rehab $15k • Costs $5k → All-in $140k
ARV (After-Repair Value) $180k → Refi @75% LTV (Loan-to-Value) = $135k
Equity ≈ $45k • CF (Cash Flow) ≈ $200–$350/mo
DSCR (Debt Service Coverage Ratio) example: NOI (Net Operating Income) $1,135/mo, Debt $855/mo → 1.33 ✅
If DSCR (Debt Service Coverage Ratio) is thin: add RUBS (Ratio Utility Billing System), pet rent, parking/storage, laundry; or lower LTV (Loan-to-Value) / buy down rate.
📐 Underwriting Guardrails (Never Break)
MAO (Max Allowable Offer): (ARV (After-Repair Value) × 0.70) − Repairs − Fees
NOI (Net Operating Income): Rent − (Taxes + Insurance + Maintenance + CapEx (Capital Expenditures) + Vacancy + HOA (Homeowners Association) + Mgmt (Management Fees) + Owner Utilities)
DSCR (Debt Service Coverage Ratio): NOI (Net Operating Income) ÷ Annual Debt at 1.20 or more.
COC (Cash-on-Cash Return): Cash Flow ÷ Cash In at 8–12% or greater.
Value Add Rule: +$100/mo NOI (Net Operating Income) at 6% cap ≈ +$20k equity
🗓 Cadence That Compounds
Daily: Analyze 3 deals • Make 1 offer • Message 1 operator.
Weekly: Tour 1–2 properties • Get 1 contractor bid • Update tracker.
Monthly: Close 1 or more doors at DSCR (Debt Service Coverage Ratio) at 1.20 or more & COC (Cash-on-Cash Return) at 8–12% or greater.
Parable: Drops do not drill stone by force, but by consistency.
🧯 Risk Controls (Downturn-Proof)
30-yr fixed loans only.
Stress-test every deal (−10% rent, +1% interest) → still CF+ (Cash Flow Positive) or pass.
Attorney leases + umbrella insurance.
LLC (Limited Liability Company) banking only, lien waivers every draw.
3–6 months reserves (personal + operations).
Lesson: Offense builds wealth; defense keeps it.
🧭 Lifestyle Rule (No Faux-Rich)
At $1,000/mo net, allow $150 upgrade.
At $2,500/mo net, allow $400.
3:1 Law: Add $3 NOI (Net Operating Income) before adding $1 lifestyle.
📌 Example Snapshot (Buy Only if Price Fits)
ARV (After-Repair Value) $180k, Rehab $15k, Fees $5k → MAO (Max Allowable Offer) ≈ $106k.
Rent $1,800, OpEx (Operating Expenses) $600 → NOI $1,200/mo.
Debt $855/mo → DSCR (Debt Service Coverage Ratio) ≈ 1.40, COC (Cash-on-Cash Return) ≈ 20.7% (if ~$20k left in).
👉 If seller will not meet the math; walk. There’s always another deal.
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