• Jude Bernard bought his first house when he was 25-years-old.
  • Since then, he’s built a portfolio of 16 homes in New York City.
  • He shared the financing strategies he used to acquire the homes.

It was in 1997 when Brooklyn native Jude Bernard decided to get into real estate. 

Times were different. Bernard was 25-years-old, and was able to take $12,000 of his student loan money to purchase a home in Queens, New York through a Federal Housing Act-insured loan, which required down payment of only 3.5%. 

You can no longer use student loan funds for anything but educational purposes, but Bernard still recommends — for those who qualify — using an FHA insured loan to get started in real estate.

For him, the purchase changed the trajectory of his real estate path. It inspired him to grow his portfolio further, and he took out a mortgage to buy a second home. And then a third. And then a fourth. 

Bernard, now 48-years-old, told Insider on Tuesday that he then used the buy, rehab, rent, refinance, repeat (BRRRR) strategy to purchase a third home, this one in Brooklyn. In this strategy, investors fix up a property, refinance its mortgage, use the cash to purchase another home, and have renters pay back the equity over time.

Bernard then moved into his third home with two roommates, renting out its two other floors to other tenants, bringing in enough money to make Bernard cash flow positive. After seeing significant appreciation in the property’s value, he was able to take out a secured line of credit for a few hundred thousand dollars on the property to continue building his portfolio.

When investors use a secure line of credit to build a portfolio, they use the borrowed cash to purchase more properties, refinance these properties, and use that cash to replace the funds from the line of credit. They can then dip back into the line of credit to purchase more properties and repeat the process. 

Today, Bernard has a portfolio of 16 homes in New York City that add up to 28 units, according to property deeds viewed by Insider. 

Bernard’s advice for getting started in a hot market

Today’s housing market is different than it was in 1997, and it is more difficult to find deals. The average home price has increased by 20% year-over-year. And although rents are also increasing, they’re not rising as quickly as home prices, meaning that returns are becoming harder to earn.

But Bernard said he has seen this type of environment before: during the 2008 housing bubble. 

“Things are super hot right now, and it’s very reminiscent of how things were back between 2006-2008,” he said. “So I’m moving with caution.”

At the time, Bernard — who now runs the The Brooklyn Bank, a center for improving financial literacy — said he became over-leveraged. Rents dropped, and he had to start picking up work to help cover the mortgage payments. He had to wait until 2012 to continue expanding his portfolio, he said. 

Today, with the market hot again, Bernard has changed his approach, only buying properties he can find for 75% of what he believes he can sell them for after fixing them up. He said he is also diversifying his investments outside of real estate, not over-leveraging, and keeping a “war chest” of money to invest if and when property values drop.

He did say, however, that he would never tell prospective investors to “wait” to get into real estate, especially if they’re investing for the long-term. 

“If you’re buying for the long-term, prices traditionally go up,” he said. “But I would tell people to be careful and not to bet on speculation.”

He also recommended focusing on relationships because finding deals from close contacts is the best way to get good value for a deal as opposed to buying from a multiple listing service. 

Further, Bernard said investors should have a forward-thinking mind, and be able to see what a property could become instead of focusing on what it looks like at the moment.