Business Mogul Ben Mallah Reveals His Secret: How He Achieves 'Infinite Returns' in U.S. Real Estate Without Touching Sale Proceeds

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Real estate has long been known for generating significant returns, helping investors build wealth steadily over time. However, according to real estate mogul and YouTube personality Ben Mallah, the potential gains can far exceed even the most ambitious expectations.

During an appearance on “The Iced Coffee Hour” podcast with Graham Stephan and Jack Selby, Mallah shared his preferred wealth-building strategy in real estate.

“Every time I had a property, I improved it and I went and I increased the value in it, I would refinance it … because that's a non-taxable event — pull my money out of it and still cash flow,” he explained.

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Refinancing a property involves replacing the existing mortgage with a new loan. If the property has appreciated in value, an investor can often take out a larger loan based on the higher current value. For example, in a cash-out refinance An investor obtains a bigger loan, utilizes this new funding to settle the previous mortgage, and gets the leftover amount as cash. As refinancing funds are essentially considered borrowed money instead of taxable income, they typically do not incur tax liabilities. By employing this approach, investors can access the property’s equity without giving up ownership or halting their cash inflow.

This is a property investment approach often referred to as the BRRRR technique, with BRRRR standing for purchase, renovate, lease, redraw funds through refinancing, then do it again.

Mallah highlighted the impact this strategy has had on his earnings. "My main objective with real estate has always been: purchase an asset, enhance it—now it’s worth more—and recoup your investment. This way, I end up having zero capital tied up in the property yet continue generating income from it. Can you imagine what sort of return that provides?" he questioned.

“Unlimited,” responded Mallah and Stephan together. Let's delve deeper into the mathematics supporting this assertion.

‘Infinite’ returns?

Mallah described a strategy where, once a property’s value has increased, you “get your money back” through refinancing. By pulling out his original investment, Mallah is no longer out-of-pocket on the property, yet it continues to generate rental income.

In simple terms, Mallah argues that by removing his initial investment through refinancing, his personal capital in the property effectively becomes zero. If you calculate the return by dividing the property’s cash flow by the remaining personal investment (now zero), the result could be infinite.

To be clear, when you divide a number by zero, it’s undefined. And while dividing a positive number by something approaching zero can result in a value approaching positive infinity, “infinite return” here is more of a conceptual term. It reflects that he continues to generate cash flow with no initial investment capital remaining at risk, but from an accounting perspective, the initial investment isn’t truly erased — it’s just been recouped. And for accounting, the return would be calculated based on the full cycle of the cash flows and capital involved, making the “infinite” concept more motivational than strictly accurate.

There are potential pros of the BRRRR method, like the wealth building opportunities, but there are several pitfalls and risks investors should be aware of. Chase Bank mentions high starting costs, the difficulty of finding properties that have potential for renovation and adequate rental income, the possibility of investing in property that won’t appreciate in value or gain tenants and the significant commitment required for renovating and managing rental properties.

The BRRRR strategy may not be suitable for everybody. Those adopting this approach must dedicate significant time to finding profitable properties, renovating them, and managing several rental units at once. Additionally, one needs substantial expertise in real estate along with an acute sense during refurbishments. Miscalculations regarding property values, renovation expenses, or failing to attract tenants when required could lead to financial losses," explains David Greene, a seasoned real estate agent contributing to BiggerPackets. "Should you decide to pursue the BRRRR route, collaborating with a group of proficient professionals who possess both the capability and understanding to maximize your investment would be advisable.

Nevertheless, Mallah emphasized the effectiveness of this approach: "Now I find myself in a position where I have refinanced multiple properties. This means I've recovered all my funds and can reinvest them into new opportunities, use them as needed, or even enjoy spending some of it. The best part is that I continue to generate income from these ventures, allowing me to possess various enterprises and real estate holdings without having put up any initial capital."

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Learning from Mallah

When questioned regarding his present portfolio, Mallah informed Stephan and Selby, "Currently, our collection consists of a substantial amount of what I prefer to term as necessary real estate, also known as essential properties."

He mentioned that although he invests in retail, his focus lies on properties resilient against online competition—businesses which, as he explains, "cannot be harmed by the internet" nor "by Amazon." To illustrate, he stated, "'I prefer sectors such as dining, essential services including salons, nail care, grocery stores, robust eateries, dental clinics, healthcare... these are areas where individuals cannot simply achieve their needs through an online platform.'"

In a society where the internet has significantly altered consumer behavior, Mallah’s strategy underscores the significance of concentrating on crucial face-to-face services that are more resistant to online disruptions.

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Residential real estate is an essential industry since everyone will continually require a place to reside. Innovative investment platforms are now simplifying access to the property market more than ever before.

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Offering risk-adjusted internal returns between 12% and 18%, this strategy serves as a proficient, low-maintenance method for Invest in homes where owners live. across regional markets.

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1031 exchange

Besides refinancing, Mallah attributes the 1031 exchange rule as a key element in his approach to building wealth. He leverages this effective tax-deferment method to consistently grow his collection of real estate assets.

"What built my wealth largely relied on the 1031, you know, deferred tax exchange as per IRS regulations," he explained.

According to U.S. tax legislation, a 1031 exchange permits an investor to offload a real estate asset and then redirect the earnings towards acquiring another “like-kind” property without having to pay immediate capital gains taxes on the transaction. By postponing these taxes, Mallah can keep additional funds available for investment, allowing him to acquire increasingly bigger or more profitable properties, thereby increasing his wealth gradually over time.

Mallah emphasizes the importance of timing for his success. By choosing optimal moments to sell properties, he ensures maximum value before carrying out a 1031 exchange. This strategy allows him to achieve top profits which he then uses to purchase new investments, all while postponing tax payments on every transaction.

"Timing is everything. Even when the market rises, there could still be significant value present... Therefore, at this moment, I may choose to act, wanting to increase liquidity, pursue larger transactions, perhaps sell off assets, but should I opt for selling, I would typically roll over those proceeds into another investment through a 1031 exchange," he clarified.

This structured method has proven effective for Mallah, supporting his development across more than thirty years. "I have adhered to this practice for over three decades. I refrain from using funds from sales; instead, they get redirected into subsequent deals. This essentially compelled my progression," he noted.