All Forum Posts by: Alexander Bacon

@David M. This is honestly a great summary and what I was looking for so I appreciate that. Sometimes I just need to read the same thing worded a different way to get it to click, thanks!

@Matt Ziegler The numbers off the calculator look perfectly fine but that is subjective. The first question would be, do those numbers meet your goals? For instance, a 12% CoC ROI may be great for one person, but another may not even look at a deal unless it is 15% or greater (these numbers are simply an example). Also, some may look for $200 a month for cash flow while others look for $400 or greater. Another thing to ask yourself is how conservative where you? How did you get to the repair costs, ARV, and time in rehab? It is impossible to know how much research you did, and I am not saying you didn't do any by any means, however, without knowing the market and being able to see comps, this is a very hard question to answer. On paper, those numbers look solid and I would personally move forward with that deal but it is impossible to know if those repair costs are accurate and, more importantly, if that ARV is realistic. One important thing to note is that you are refinancing to take out a $108k loan on a house valued at $135k. I do not believe this is realistic and you should assume 70% of the ARV. So, if the house is valued at $135k after repairs, you likely will only be able to get a loan on that place for $94.5k max (135,000*0.7). I would also recommend setting you CapEx above 3%. I personally use 10% on my properties when I am running the numbers. The 3% seems pretty low to me on a BRRRR property because unless you're replacing kitchen, bathroom, roof, flooring, and HVAC system, there will be high dollar items that need to be fixed. Seeing that you're estimating $16k for repairs, unless the roof in brand new, the HVAC is brand new, and your only costs are for the bathrooms and kitchen, you will want more in reserves for these fixes that are inevitable. All this being said, I am new to this myself so take what I say with a grain of salt but this is simply my two cents.

@Jake Belden I see, good to know. And yes, I did see that and it sounds reasonable. I'm just curious about personal experience I guess. I would like to hear about a person who was using their personal accounts and then switched to an LLC. What reasons specifically did they make the change for and how was the outcome? Was it worth it vs should they have waited or did they wish they started out with an LLC etc..?

Patrick, PM me when you get a chance. I may be able to help you out here.

Does anyone have a link to an article or post that summarizes the whole LLC topic? I am about three months away from getting my first deal for a buy and hold. This will potentially be three properties as a package deal from a landlord offloading some properties. I am trying to figure out if I should be setting up an LLC prior to getting involved in my first deal or if I should wait until further down the road, maybe in a year or so after a couple properties under my belt? I am trying to do my own research but I seem to end up confusing myself with the pros and cons. My limited understanding is that it is initially easier to get financing done when it is in my own name and then switch over as mentioned above but at what point in your investing career does one typically switch to using an LLC? I see most people that have 10 or more units almost always use an LLC but it seems to vary widely when someone has 5 or less units. Any advice or pointing in a direction would be greatly appreciated

I would put your money into stocks, but keep it all liquid. As others have mentioned, now is a perfect time for many stock investments. I have parked about $25k into the market as of last month and have made $5k in the last 30 days. Obviously there is nothing guaranteed here but I am confident I will get better returns than if my money was in the bank, even including capital gains tax if I pull my money out today. While my money is sitting in the market, I am constantly analyzing deals in my area and I plan to invest in about 3 three months. I am not willing to force anything and due to the uncertainty, I am being slightly more conservative with my numbers. All of that being said, if the numbers check out with over 15% CoC return AND there is a at least a 15% below market opportunity, I am taking that deal. This is specifically for my requirements at this time and for buy and hold properties to rent out. I am primarily looking at package deals of SFH where current landlords are trying to offload some of their units or decent deals on multifamily units (2-4).

TLDR; Be more conservative with you numbers/estimates during this time but keep your money readily available to jump on that inevitable deal that comes up. Let the numbers speak to you and stick to them, remove all emotion

@Yusef Griffin PM me when you get a chance. I’m currently in Columbus and am searching the market for a good deal as we speak and I would be potentially interested in going 50/50 (after looking at the numbers, obviously)