All Forum Posts by: Adam Blevins

@Gretchen Guarino - thank you, I'll reach out shortly!

@Evan Polaski - Simple and succinct answer, thank you for clarifying!

So, I"m a new investor and I'm trying to wrap my head around the seasoning requirement. Near as I've been able to ascertain, the best bet to work around it is to find a portfolio lender that doesn't have that requirement. Seems like that'd work out in the BRRRR model where the financial lending is all between the property owner and the bank. That being said, what about flips? If I purchase a property to flip, how can I direct a potential buyer to a certain lender? Otherwise, wouldn't I have to hold the property 6-12 months before selling it?

When I scroll through the BP Podcasts and see titles like "150 Deals at Age 22", "How a 25 Year Old Bought $1M of Real Estate in 1 Year", 0 to $1m Net Worth in Five Years", etc., that tells me one of two things. Either a lot of people had a pile of cash lying around to buy A LOT of properties in quick succession or there's a piece of the financing puzzle I'm missing. In most instances, I'm betting its the latter and not the former. 

Any advice on working around the seasoning requirement and how different financing strategies play in? Are there resources anyone would recommend checking out so I can better educate myself?

Thanks in advance!

BP,

Before I get into this, this scenario and the numbers are hypothetical, though based on numbers I've seen in a market. Assuming the following deal as a BRRRR for buy and hold:

ARV (Based on CMA): $105,000

All In Invested (Rehab/Purchase Price): $65,000

Rent: $900/month

If one decided to flip the above property:

Selling Price: $105,000

All In Invested (Rehab/Purchase Price): $65,000

Closing costs: ~$6,000 (if seller paid all)

Capital Gain Tax: $7,000 (20%ish)

Carrying Costs/Misc: $2,000

Profit: $25,000

Assuming the selling price is close to what the CMA pegged the value at, would this deal make sense from a flip perspective? What am I missing? The reason I ask is that I've heard other investors comment that one shouldn't be trying to do flips right now, and one should be focusing on BRRRR buy and holds, or you'll loose money. That logic doesn't seem to make sense to me if the value of the finished property is the value of the finished property. Don't get me wrong, I'm not decrying anyone that says flips are a bad idea right now, I'm only trying to educate myself and garner some opinions.

This is also setting aside for a moment the long term appreciation of the asset and the passive nature of a rental income stream.

The profit would end up going into the pool to purchase buy and hold properties at some point anyway - just looking at potential options to increase cash reserves. 

So, to reiterate, if you were looking for increased cash reserves, why wouldn't you flip in this case? Is there something about flipping a property that changes the numbers from a BRRRR deal?

Appreciate anyone's feedback.

Best,

Adam