All Forum Posts by: Adam Scheetz

@Kyle Shankin I think you just illustrated my question perfectly. If your goal is B&H and cash flow is king, your 50% equity cut to keep you at $160/mth is a good deal only if you have a worthwhile venture with the proceeds that will make you money. Otherwise, maybe that's not a Refi kind of deal. Thanks so much for the real world application.

@Lee Ripma Thanks so much for your feedback. I'm going to look at the property tomorrow and will get some more nailed down numbers shortly.

Thanks to all!

@Michael Tripp thank you for the response. It's in a secluded neighborhood beach community in South jersey. At first the numbers looked to good. And I have a couple more people to talk to in order to validate the numbers based on multiple agents perspectives. I have a synopsis I've typed up with the numbers. If you like I can message you or you can shoot me an email and we can discuss it.

InvestorAdamRE at gmail

Thanks so much for the feedback

@Lee Ripma if you'd like I can show you the numbers and synopsis of the Duplex I'm looking into. J Scott told me essentially have 2 sets of analysis. One for the initial offer pre-rehab. Then the post rehab with the costs and ARV factored in. Having these two will give you a good idea of whether Buy & Hold is a good plan versus flip. Thanks so much for your response!!

@J Scott this is gold and exactly the clarification I was seeking. Thanks so much. This will make the numbers on a Duplex I'm looking at make much more sense.

Thank you,

Adam Scheetz

@David Fernandez when I get home I'll share the run down of the numbers.

The jump in mortgage was based on an initial mortgage of $90k and a refi of the appraised value $200k+. Would the refi not be based on the appraisal value? It looks like you took the difference and based the refi on that.

This is what I'm trying to figure out. I'll share the numbers shortly.

Thank you very much

@Sean Lambert thank you for confirming my suspicions. There's a magic number between the initial look and the ARV refi that should yield the per/door amount I want.

I really appreciate it.

@Terrell Hill thanks so much for the response. I would be inclined to pull as much equity out for the purpose of buying another. However, like you alluded to, I'd have to find that sweet spot where the monthly/door amount would still be acceptable.

Here's a question for you about the BRRRR. I've put this to the forums and haven't gotten any responses back yet.

Here it is; 

When using the BRRRR method, and you refinance to pull the equity out in the form of cash (75%-85%), that new loan is based on the new appraised value of the house. Wouldn't that raise your monthly mortgage payment and in turn eat up what every gross rent you have. I have an example based on a Duplex I looking at. Here's my situtation: I am looking at a duplex in NJ which is a foreclosure. C-Class/Blue Collar neighborhood. Purchase price would be approx $90k , repair costs approx $20k, approx ARV based on multiple realtors is $200-$260k, expected gross rent $3700-$4100/mth. At $90k purchase price I'd be around $600/mth for mortgage. If the ARV puts me at let's say $220,000 my payment would jump to $1300/mth. I'd go from about $160/door (net), into the red. So for a Buy & Hold investment, what I am missing here that makes this seem like a crappy deal for long term and a sweet deal in the short term?

Much Appreciated, 

Adam Scheetz

@J Scott I know everyone loves the BRRRR method. But when you Refi, won't that raise your monthly mortgage and thereby eat up some or even all of your monthly rent income depending on the amount of increase?

Example: If a $90k foreclosure house has me at $700/mth, I drop $20k in Renovations, the ARV is $200-230k and I rent it for $3,800 gross (DUPLEX). I refi, pull out 75% of my equity, but now I'm paying a mortgage on the new appraised value which will UP my monthly payment and cut into my income/door amount.

So for buy & hold, is BRRRR not feasible?

I know the BRRRR method is great for pulling value added equity out of your investment property. But if your initial mortgage on a $100k duplex foreclosure is $700/mth and your pulling $150/door. Your rehab is $15k. Then you cash out because the ARV is $200k your mortgage will jump but your rental will not. So is it worth it for a buy and hold play? Thanks in advance!