All Forum Posts by: Adri Jusczak

Hi! 

I have a private money lender giving me 25k for 4 months at 10%. They are just going to write me a check for the 25k. My question is, can I just write them a check after the 4 months of 25K plus the 10% on top? Or is there a 1099 or some sort of tax doc I need to fill out to make sure I'm following the correct process? Thanks! 

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $92,900
Cash invested: $24,000

Closed on my 3rd door! Typically I've been doing the BRRRR method. This property didn't need work, but I was still able to make the numbers work for my portfolio as a long term rental. 19% CoC ROI, 10% cap rate.

What made you interested in investing in this type of deal?

I had a goal of buying 4 doors this year, it was April and kept striking out on all of my offers. I was able to run the numbers and get it under contract within 5 hours of it being on the market. It's a clean, updated house. Being an out of state investor, it seemed like a great fit!

How did you find this deal and how did you negotiate it?

I found the deal on the MLS. My realtor worked fast to call the listing agent. The seller didn't want to go back and forth on negotiations with several people, so we submitted an asking price offer quickly and won the deal.

How did you finance this deal?

I'm using a commercial loan under my LLC with a local bank. A 25 year 5/1 ARM. I plan on doing a portfolio loan in 5 years to get my doors from this year under one loan and have a nice refi check.

How did you add value to the deal?

I'm doing some minor cosmetic work to the house- fixing a few little things. It doesn't need much!

What was the outcome?

Adding another property to my portfolio, making my CoC ROI over $1,000 total!

Hi Christopher, 

Is this SFH you are selling your primary home? If it's a secondary home, I make sure you are set up for a 1031 exchange and have the paperwork started for that before you list the house. This gives you a short timeframe to reinvest your gains into a bigger property and avoid capitol gains.

Anthony- 

I'd love to chat with you and share my experience. I'm no seasoned vet, but I have a few deals under my belt. Feel free to message me. Thanks! 

Hi Monica, 

Congrats on your first property! I would say what you do with the property depends on what your long term goal is. By selling this property for a quick profit (keep taxes in consideration) will you be able to maximize your growth? Or would you be able to rehab this property, refinance and get your money out while keeping the property for long term appreciation and monthly cash flow? When I'm analyzing properties, I like to have two strategies in case my first option doesn't go as planned. I prefer to use the BRRRR method and if something goes wrong, I can always fix/flip/sell to get out of the deal.

Joey, 

I've done a few BRRRRs in the Midwest. I'd be happy to help with any questions you might have! Feel free to shoot me a direct message. 

I personally use the lease agreements off BiggerPockets that's included with a pro membership. If you don't go that route, I would hire an attorney just for peace of mind. 

Hi William, 

Great question! Buy, rehab, rent, refinance, repeat. So, you buy the property at 110k. Your total amount you have into the deal is $41,300. After you fix it up, you rent the property out with the numbers in mind of a refinance (use the BRRRR calculator on BP). After it's rented, you apply for the refinance, try to find a lender that will give you 80% ARV. 80% of 150k is 120k. There would be some closing costs in there that you can either pay out of pocket or wrap into the loan. The refi would pay back your original loan (typically there is a 6 month seasoning period, so let's say you owe 87K at the time of refi). You would then get the remainder of the refinance check, roughly 33k back to you. This is why the BRRRR method is great, you would have a rehabbed, rented, 150K house with only $8,300 invested in it!

 I agree with Logan. I would look at comps to decide how much to raise rent. If it's a huge jump in rent, break it out over a few years. If it's under $150 a month jump, I would give the tenant plenty of notice and let them know you are raising rents to the average. 

Hi Cheza, 

If you have a lease, you really can't raise the rents halfway through the lease. If the lease is up or a month to month, I would raise the rents yearly until you get up to market rent. Tell your property manager will in advance that you would like the rents raised by X amount per year. $30 per month every month might create some unhappy tenants and turnover.