May 3, 2018

JF1339: How To Create $100K Equity In 13 Months Using The BRRRR Method with Sarah Larbi

Sarah is a Canadian investor who has built up a portfolio of single family rentals. By using the BRRRR method, she has been able to grow quickly, in fact she has created $100k in equity in one of her properties in just 1 year! Sarah has been able to use that equity to re-invest and get more properties. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Sarah Larbi Real Estate Background:

-The Millennial Real Estate Investor, Speaker, Mentor

– By her early 30’s she has seven home portfolio

– Featured in The Toronto Star, 1010 News Talk Radio, and Canadian Real Estate Wealth Magazine

– Host of the “Where Should I Invest?” Podcast

– Inspires young professionals to be property owners and plan for retirement by 50

– Based in Toronto, Canada

– Say hi to her at

– Best Ever Book: Secrets of the Canadian Cycle

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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Sarah Larbi. How are you doing, Sarah?

Sarah Larbi: I’m amazing, how are you?

Joe Fairless: I’m amazing, and I’m glad that you’re amazing. Nice to have you on the show. A little bit about Sarah – she by her early 30’s has a seven-home portfolio. She’s a host of the podcast “Where Should I Invest?” and she’s based in Toronto. With that being said, Sarah, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Sarah Larbi: Yeah, absolutely. So not that long ago I literally had nothing to my name; I was finishing school, I had zero dollars, living at home, and I met my boyfriend and he was about $15,000 in debt… I remember going to the bank – and this wasn’t even that long ago; maybe like 6 or 7 years ago now – and they were asking us “What are your assets and what are your liabilities?” I had been working for a few years by then, and really realized I had nothing to really show for any of the hard work that I’d been doing.

So I went home literally that night and started googling how am I gonna get rich one day, and how to create assets, and real estate just kept coming up and up and up and up, and I said “This seems like it’s easiest of the options that there were available.” Stocks you can’t really control, business you’ve gotta be pretty savvy and it takes a lot of time, so I said “Well, it seems like a lot of millionaires are created through real estate investing, so how do I start?”

For the first couple of years it was trying to convince my spouse – I don’t know if any of your listeners are in the situation – of real estate mentor being a good idea. He just didn’t want anything to do with it for a good amount of time, because it was the “What happens if our tenants are horrible and we’ve gotta go to the landlord-tenant board?” and “What happens if they trash our property?” He’s already got like a pretty full-time job and he didn’t wanna deal with all that stuff, so we ended up actually finding a home for his sister; she was our first tenant. Now, they say “Don’t rent to family”, but in this case it just seemed like the obvious next choice to get in… And she’s still there to this day, but it allowed us to get into the market. Then since then we’ve bought 1-2 houses a year, and so far right now we’ve got seven, possibly eight – I’m waiting on a confirmation for one actually tonight.

Joe Fairless: Fingers crossed for you. To buy that first property where your sister-in-law moved in, what conversation took place with your spouse that allowed you to really convince him that “Hey, let’s do this thing. I’ve been talking about it for way too long, and now we’ve gotta make it happen”?

Sarah Larbi: I think it’s just about objection handling and just figuring out what all the objections are. In this case it wasn’t — whatever the objection is; sometimes people don’t have money or financing etc. and we really did scrape our money together to be able to do something, or to have some money to be able to at some point do something with it… And just really understanding what the objection was, and being able to say “Well, worst-case scenario, we know her enough. Let’s do it with her.” It was more of a probably back and forth debate for a couple of years,  but finally, you know, he was smart and caved in. [laughter] And it worked out well.

Joe Fairless: Thank goodness. He’s probably saying “Thank goodness I did cave in.” So it sounded like most of the objections were centered around a bad tenant – that’s basically what I heard – so once you had the sister-in-law to move in there, then that helped remedy that, it sounds like.

Sarah Larbi: It did. However, what I had to do is strategically figure out who our next tenants were moving forward. For example, the next year we tried to scrape our money together and buy our second property, and didn’t wanna have another two year debate, so we ended up actually finding a tenant first, which I ended up meeting her on Kijiji, which is the Canadian version of Craigslist, and talked to her for about three months, figured out what her budget was, what she wanted, what we wanted, to make sure that it matched, and that’s actually how we found our second tenant.

Then since then, we’ve done it differently as well. We usually actually find our tenants prior to closing on the property. House number three, for example, I started putting some feelers out on Craigslist, and one of the tenants needed to move somewhere because their landlord was selling a house, and she was asked to leave within 60 days etc. So we ended up actually buying that house… Because we had that relationship, I was able to talk to her about putting her back to market rents, and then she’s still there as well.

So we’ve really been able to not have those issues with tenants. Of course, there’s tons and tons of screening that you need to do, but you also get tenants that I think are so much more appreciative when you’re able to work with them, and you find a house obviously for yourself, which works for you, but also you give them a nice home for them to wanna spend many years in.

So what we’ve found is our tenant turnover is zero, unless people break up, and at that point in time we find a replacement… But it’s just been an easier way to coast with the original objection.

Joe Fairless: Where are you buying at?

Sarah Larbi: Toronto, as you know, is extremely expensive. I buy for cashflow, and Toronto is not giving me any cashflow whatsoever, because you’re looking at a million dollars for a property, or at least half a million for a condo, which is extremely expensive. But that should not be an excuse for anybody living in an expensive city. If you look out even an hour, an hour and a half, two hours, there’s still some really good opportunities.

I’m buying in a town called Bradford, Ontario, which is just a little bit West of Hamilton. The house prices are so much more affordable, and the rent actually allows me to be able to get that cashflow.

Joe Fairless: How far away is it from you?

Sarah Larbi: Let’s just call it about an hour and a half.

Joe Fairless: An hour and a half. Do you self-manage?

Sarah Larbi: I do.

Joe Fairless: How do you self-manage an hour and a half away?

Sarah Larbi: It’s just about having a good team of people. A lot of the time something will happen and you’ll need a handyman, or — you can see me on video, but your listeners can’t; I clearly cannot swing a hammer… [laughs]

Joe Fairless: You’re not giving yourself enough credit.

Sarah Larbi: [laughs] Thanks. But having the right plumber, the right HVAC person that you trust, and when you have a solid team, it’s just a matter of “Hey, something happened”, you make a phone call and get them to take care of it. Everything is done electronically, payments can be sent electronically, and then I’ll still do my bi-annual inspections and visits, but at least I can schedule that on my own time.

Joe Fairless: So the moment where you went to the bank was approximately six years ago… You bought your first place five years ago?

Sarah Larbi: Yes.

Joe Fairless: Okay, you bought it five years ago… So you’ve had multiple bi-annual inspections at your properties… What does your checklist look like for that inspection?

Sarah Larbi: Similar to like a move-in checklist. What you would do when you have a tenant move in – and your folks can google it as well; just any move-in inspection that has the kitchen, and then all the appliances, and you just go through it with the tenant, and you figure out “Does this look like the same as the original? Has there been any damage since?” and then just inspection… So I would say don’t try to recreate it, use the original checklist that you did from the start.

Joe Fairless: Okay. As far as the payments being sent electronically, what specific system do you use?

Sarah Larbi: E Transfer. It might be a little bit different in the U.S. But essentially, they would e-mail me the money and I would deposit it electronically in my bank account.

Joe Fairless: Is that set up to automatically draw from their bank account, or do they have to manually push the button to send it to you?

Sarah Larbi: They have to push the button to send it to me.

Joe Fairless: Okay. Is that an option for them, to have it automatically withdrawn?

Sarah Larbi: Yeah, that’s also an option in Canada, so then you could do different things – you could get it E Transfered (what I’m doing now), you can have it so that it automatically gets withdrawn…

Joe Fairless: Why wouldn’t you do it automatic?

Sarah Larbi: Well, at the end of the day I actually get paid a few days earlier with the E Transfer. I give them the options to do different things, and it’s worked out so far for us.

Joe Fairless: So if it was automatic, then it would be a couple days later, whereas if it’s not, then you get it a couple days earlier, and that’s the only difference?

Sarah Larbi: Yeah, you basically get it instantly. So even if it’s Sunday, the banks are closed, or a holiday or whatever it is, the E Transfers go through regardless.

Joe Fairless: Hm, that’s magical.

Sarah Larbi: [laughs]

Joe Fairless: So you’ve got seven homes… It sounded like six years ago, according to you, you were scraping by, and then you got a house, and then you got another and another and another… How are you paying for these homes?

Sarah Larbi: That’s a great question. So obviously, the properties that I’m buying are about 180k to about 280k; that’s the cost of a home.

Joe Fairless: 180k to 280k?

Sarah Larbi: 180k to 280k.

Joe Fairless: Okay.

Sarah Larbi: Now I would say it’s probably closer from 250k to 280k. They’re a little bit harder to find at that price originally… But it’s gonna be a combination of using the cashflow from your tenants to help snowball the payments, but also appreciation. So one of the things that we’ve had in Ontario, specifically Southwestern Ontario had quite a lot of appreciation, and a lot of that is also due to the immigration. We have about 400,000 people coming from different countries a year, and a lot of them go to Southwest Ontario – the Hamiltons, the St. Catharines, Bradford including… And so it’s really creating such a high demand, and there’s not a whole lot of supply – for purchases, but also for tenants.

We’ve found that in the past five years (and it’s still going) that some appreciation on the properties – you’re looking at 20%… We don’t factor in 20%/year, because you don’t expect that to be every single year, but that’s definitely helped. But the biggest thing I would also say is if you become a market expert, whatever market it is that you choose – in my case, is Bradford – rather than having a house an hour from each other in different markets, learn a very small segment very well, and you’ll be able to really jump on the opportunity.

I’ve been able to buy a lot of properties that were under market value, and within a year I was able to actually refinance them and be able to use some of that money for the next one, and then  if I’m taking a HELOC out, for example, still factor in the cost of the HELOC per month on the new cashflow.

Joe Fairless: I love this, and I’d love to follow the breadcrumbs from first property, your down payment, to now you’re making an offer on the eighth, because it sounds like you’re buying under market, you’re then doing a refinance, get the cash back out, and then you’re rolling it into the next one. Is that basically the gist of it?

Sarah Larbi: That’s basically the gist of it. Obviously, the first two are gonna be the hardest for anybody, especially in Canada – we don’t have $30,000 houses [unintelligible [00:12:18].02] But the first one was actually 129k, which is unheard of; it’s very hard to get that now. And it was really scraping pennies. I ended up cashing out some vacation originally, and trying to have second jobs so that I can save as much… So it does take more effort for the  first one, and I would say the second one I was still in the same situation. With my job being in sales, I was able to get some commissions, and I would save all my commission checks to be able to create that down payment.

Afterwards, for example the second house I ended up buying for 177k, it got reappraised about a year later for 230k.

Joe Fairless: 177k purchase – did I hear that right?

Sarah Larbi: Yeah.

Joe Fairless: And it appraised for how much?

Sarah Larbi: It appraised for 230k the year after. Right now it’s probably about 285k, based on the current market.

Joe Fairless: How much did you put into it in the first year?

Sarah Larbi: In the first year there was just a roof to be done, about $2,500, some railings. Some of the properties are not complete gut jobs, which is great… So that one I put in about 5k.

Joe Fairless: Okay, so in a big picture not a whole lot. So you were all in at 183k, a year later it appraised at 230k… I’m guessing since you appraised it, you were doing something with it; so you did a refinance on that one?

Sarah Larbi: Yeah, absolutely. I do refinances on all the properties, and there has been some mortgage changes and rules starting in January this year, so I made sure that all my properties are actually refinanced beforehand… Because you wanna get money when you don’t need money, right? So you have a great deal to figure out how you can get the money, so pre-positioning yourself is definitely really important. So all the properties that we’ve had so far have been either refinanced with a HELOC, or there were some that we did a BRRRR, so you buy a house, you renovate it, you rent it, and then you refinance, and we’ve been able to pull 100k in literally 13 months.

But just to go back to your question, the second one is about 280k. The third one we bought was 165k, and then got that reappraised, it was about 230k as well. Now that one would probably be about 260k; it was about a year ago that we got that one appraised.

Then we’ve bought one for 207k, got that reappraised for 280k… So if you buy under market and you’re buying the first day that it comes out because you’ve got a good team in place that knows what you [unintelligible [00:14:55].22] I think that’s what’s been able to help us so far.

Joe Fairless: A couple questions, let’s see… What was that second job that you took?

Sarah Larbi: I worked retail in a store. Nothing fancy, nothing–

Joe Fairless: What store?

Sarah Larbi: It was called Accessorize Me. It was jewelry, and clothing, and…

Joe Fairless: What are your hours in your day job and what hours did you work at your second job?

Sarah Larbi: Originally, I worked for a photocopier company when I first started, Xerox, and that one was–

Joe Fairless: Not so much anymore, huh? [laughter]

Sarah Larbi: [unintelligible [00:15:24].27] but a good company to start… But I would say like [7:30] to about [5:30] with [unintelligible [00:15:30].24] and then weekends, Saturdays and Sundays I would spend working at the store. Then I got a job [unintelligible [00:15:37].26] afterwards, and that paid a little bit better, as I was going through property number two and half-three (let’s call it). That one paid me more commission, it also covered a little bit of a base, and I just worked my butt off to be sure that I was the number one rep when I was there, to get all the bonuses and that kind of stuff. But I used to cash out a lot of my vacations; I don’t have to be doing this forever, but at the beginning I’d cash out some of my vacations to use that money towards the down payment.

Joe Fairless: So you don’t go on vacation days, and in exchange you get money from your employer… Got it. Cool. I haven’t worked at a company that had that, but that’s a pretty cool perk.

Let’s talk about the increase in values of these homes. That’s incredible. You mentioned you focus on a very small segment, and you find under market properties. For example, the 165k purchase appraised to 230k, and now to 260k… Or the other home, 177k, one year later to 230k, to now 285k. So my question is, I’m wondering are they really under market, or are you just in a crazy appreciating market?

Sarah Larbi: I think it’s a little bit of both. I think that sometimes you can find something if you’re ready to go quickly, but I also think there’s an appreciation factor. But in the Southwestern Ontario, Hamilton being a big city, I looked at the town next to it, and I said in Bradford there’s like that trickledown effect or whatever it is that you call it when in a city there’s a lot of construction, a lot of employment etc., it’s gonna trickle out to the other markets.

So I think part of it was being able to quickly act on something when you do see a property that’s out, but also working with a realtor that’s an investor – that’s definitely really helpful… Somebody that’s local that has some pocket deals, and just knowing really the market, so that you know when to pull the trigger on something.

Joe Fairless: When a property comes out, what are the main things that you’re looking for to determine if it’s under market value?

Sarah Larbi: At this point in time you can definitely look at some comparables. And what I’m looking for, my specific market is 3 to 4-bedroom homes, and I do want them at around 250k or less. So when I can buy something at that price — actually, my most expensive one so far that I bought was 238k, and I’m renting that at $1,600/month. But in terms of finding properties under market, I think it’s just having a good team, a good realtor that’s an investor, that’s able to go and visit things very quickly for you, and make some offers. Sometimes I throw in some lowball offers and they come back at a higher price, but it’s still pretty lowball, so… [laughs] [unintelligible [00:18:34].02] at the right place, at the right time.

The last house I bought was originally listed for 265k, then it was 250k, and they had two offers that were exactly what I had offered, I just ended up offering a month later in this case, and they took it because of the timing and they needed to get out.

Joe Fairless: So there might be a listener out there who’s a numbers geek, and he/she might be saying, “Wait a second, as you continue to leverage up and do these cash-out refinances, it’s great, because you get money back out, but now you’ve got a bigger mortgage payment that you’re paying every month”, and with the number that you’ve just said, 238k purchase price, at $1,600 rent, doing that math… Do you know the 1% rule?

Sarah Larbi: Yeah, I do.

Joe Fairless: Yeah, so it’s .67 of a percent, so it’s a little higher than half of a percent. So do these properties cashflow? And if so, how?

Sarah Larbi: They do, but Canada is a little bit different, in Ontario. We’re not gonna get the 1%. We’re not gonna get the 2%, we’re not gonna get the 1%, so it’s just a different market. So when I look at something that’s 238k at $1,600, even though it’s .65, yes, it still cashflows. It probably doesn’t cashflow as much as the U.S., but when we factor in that there is some cashflow, there is still some appreciation – probably more than in the U.S., for sure, in Southern Ontario – and there’s still the mortgage paydown, I’m happy with those numbers.

Joe Fairless: With the refinance approach, as you continue to refinance, pull cash out, if you’re making just slightly a little bit of cashflow on each property because of the spread there, would you then in the near term start looking for more cashflowing markets, like the U.S. or somewhere else, where you can build up the cashflow, that way you can match up the equity appreciation with the cashflow that you’re getting somewhere else?

Sarah Larbi: Possibly at some point we’ll go into the U.S., but I think right now for Ontario it actually works out really well to be in Bradford. For the cashflow, at some point, I’m gonna have to go somewhere else, absolutely. But it’s going to be four hours away, it’s gonna be twelve hours away, depending there’s still some markets, as it gets harder in Bradford. Bradford used to easily have properties at 170k, 190k, 200k… Now definitely we’re fighting a little bit more for them, so at some point there will have to be a change of market, but at this point I think I can still find some in Bradford for the next 2-3 years at a reasonable price, for what I look for.

Joe Fairless: Are all the homes separated from each other, from a loan standpoint?

Sarah Larbi: They’re all single-family homes, yes.

Joe Fairless: I’m wondering worst-case, the spread on these homes is not much from a cashflow standpoint, so if someone moves out, then you lose your job, your spouse loses his job – and worst case, this will never happen, but just worst-case hypothetically, one house goes under and you have to give it back… Are they connected from a personal guarantee or anything, or are they all isolated?

Sarah Larbi: Some are in corporations, some are personally guaranteed. And the other thing to factor in is the vacancy rates in these markets, like Toronto for example, is 1%.

Joe Fairless: Wow.

Sarah Larbi: So when I for example have a property, I can fill it before the property closes, so I’ll ask for like four showings and I’ll have ten tenants come through. I’ll put it on Kijiji and I’ll have like 50 replies. It’s a bit of a different market here; there’s just so much demand, and very little opportunities for people, so they’re a) staying longer, but they’re also — on the last property I had, I had like ten applications to pick from, and you have the ability to be very selective, and you can do it before they close.

If I was in the U.S., I might be a little bit more worried in some markets based on vacancies, but here we’re having like an opposite problem.

Joe Fairless: That makes sense. And not to try and create competition for you, but an approach could be a U.S. person who wants to make potentially some good appreciation, do a cash-out refinance quickly in one year and make a good return, go invest where you’re investing – and again, I’m trying not to create a lot of competition for you – and then take that money, invest it back where they live for cashflow, and then just keep riding that until the music stops, and then don’t do it anymore.

Sarah Larbi: Yeah, absolutely. It’s funny, while you were talking I got a text message that I got my eighth property.

Joe Fairless: Sweet, congratulations!

Sarah Larbi: Thank you! But just to go off of that, so I offered on two actually today; one got accepted. One had five offers, and literally went like way above asking price. So you still have to be smart about it, to look at your after repair value and what your repair costs are gonna be, and how long it’s gonna take to flip, if that’s what you’re planning on doing – absolutely.

One of the things that I say is there’s not one single way to become wealthy in real estate. There’s so many different opportunities, there’s so many different ways. I personally have a full-time job that involves a lot of travel, and so does my spouse, so when I look at all the different types of real estate, buying and holding and doing it for the long-term, doing some renovations, doing a BRRR here and there doesn’t create a whole other job for me.

In Canada it’s important that you get a T4 job to be able to get the best rates, with the best lenders… So I do love what I’m doing, but it’s definitely important for me to be able to not have a whole other full-time job at this point in my life, until down the road I’m replacing more of my income.

Joe Fairless: Based on your experience, what is your best real estate investing advice ever?

Sarah Larbi: I would just say don’t come up with so many excuses and take action. And even if it’s something small, just go do it. You’re gonna wish that you would have started sooner. So take action.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Sarah Larbi: Ready.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:24:40].07] to [00:25:23].27]

Joe Fairless: Okay Sarah, best ever book you’ve read?

Sarah Larbi: I am a big fan of Don Campbell, and he is probably well-known in Canada; I’m not sure if you know him or not, but he writes a lot of books, and one that I would say is the best one for Canadian listeners for right now is The Secrets of the Canadian Real Estate Cycle.

Joe Fairless: Okay. Best ever deal you’ve done that we haven’t talked about?

Sarah Larbi: In December 2016 I bought a property site unseen through my realtor. He’s done a few already with me, so he knows what I like… It was 151k, and I was gonna put in about 25k-30k, but just to test it out I put a feeler out on Kijiji/Craigslist and found a tenant that didn’t want anything changed, loved the purple bathtub, loved the [unintelligible [00:26:10].18] loved the ugly tiles on the floor, and… Long story short – they literally moved in day one; broke up in September, and we decided to actually renovate that place. That was originally rented for $1,295. We put in about 25k-30k of renos, and now we’re renting it at $1,545 and we were able to do a cash-out refi and pull out 100k, and [unintelligible [00:26:32].10] In one year.

Joe Fairless: In one year. I was waiting for the mic to drop, and there it was. What’s a mistake you’ve made on a transaction?

Sarah Larbi: I think the biggest mistake – and I’ll talk about Canadian experience – is not using a mortgage broker, because in Canada you need to structure your deals very carefully and using the right lenders at the right time in order to scale up… So I was originally going to the bank and working with the bank, because that’s where I was comfortable, that’s where I have a checkings account, a credit card etc., and that would have actually stopped me from being able to scale up properly.
When you work with a mortgage broker, they actually know which banks are investor-friendly, which one  has the best rates, the best opportunities, but also which strategy you need to use so that you can keep going with different banks afterwards.

Joe Fairless: Best ever way you like to give back?

Sarah Larbi: I don’t know if you guys have this in the U.S., but I have a little sister, so I’m part of the Big Sisters, Little Sisters… She’s awesome, and I’ve actually shown her how to calculate some cashflow, look at some properties, I’ve taken her to some real estate seminars, and I told her when she’s 18 she has to buy a property… But I love to help somebody that would never have that opportunity otherwise.

Joe Fairless: And how can the Best Ever listeners get in touch with you?

Sarah Larbi: I do have a website, it’s They can e-mail me at, or they can also listen to my podcast, called “Where Should I Invest?” and if they are in Southern Ontario, I actually host a monthly real estate group. Once a month we meet, and this is gonna be in the past, but March 22nd is actually our one-year anniversary and we’ve got 205 people registered for it, which is really exciting.

Joe Fairless: Wow, that’s cool. What’s the main attraction for the anniversary meetup?

Sarah Larbi: Well, basically we provide knowledge for like no sales tactics. It’s just pure knowledge and networking, and we started a year ago, and we said “Hey, it’s been a year. Let’s just celebrate, and keep bringing the value.” It’s just been amazing to be able to connect with like-minded individuals and allow others to connect with one another.

Joe Fairless: Sweet. Well, Sarah, thank you so much for being on the show. Clearly, you’ve been going above and beyond what’s typical in some ways that you talked about… One is getting another job while you had a job to make things happen, to get the first property. Two is creating that meetup that you’ve just talked about. A lot of people just attend meetups; you create the meetups, you create a podcast, and as a result of those efforts and just that approach, seven homes and soon to be eight homes in approximately five years, at a price point that is a healthy price point from American standards… So that’s great, that’s incredible stuff, plus the refinances and the different ways you’re approaching it – very interesting stuff, so thank you so much for being on the show. And then also, lastly, thank goodness you convinced your spouse to invest in properties, and the tip for finding a tenant prior to closing on a property – that’s something that we should all certainly do.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Sarah Larbi: Thanks very much, I appreciate it.

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