All Forum Posts by: Alexander Zurn

@Dave Blackman I am a little confused but nothing we can't work through. Let me break down how it would go and see if that clears anything up. I'll use your numbers for the example.

Purchase Price: $55,000

Your own funds: $11,000

Financed funds: $44,000

Rehab: $20,000

ARV: $110,000

With these numbers, here is how the refi would work.

You have a total of $75,000 invested in the property (your funds, financed funds, rehab funds). When you refi, you'll get an appraisal that will give the ARV of the property and it comes back at $110,000. Since you have $75,000 invested, your equity in the property is $35,000. The 75% comes into play here.

Most lenders will only let you take up to 75% of the properties value in a cash out refi (for their security). For this example, 75% of $110,000 is $82,500. With this amount of cash out, you would pay everything back. So take $82,500 - $11,000 (own funds) - $44,000 (financed funds) - $20,000 (rehab) = $7,500. This number would be your profit on the deal. However, don't forget to subtract any closing costs with the first loan or refi loan.

I hope this gives you a clearer picture.

Hey @Dave Blackman I am by no means an expert in the BRRRR strategy but my understanding is that most conventional lenders won't lend on a property in a state that needs a lot in repairs, which is why people generally get private financing for the BRRRR strategy.

Another thing you have to consider with any loan (conventional or private) is the time that it takes to rehab and rent out the property. If you do the rehab in 1 month and rent it out the next, you'll have to consider your mortgage payment, insurance and taxes into your costs during that time. However, it can get tricky when you rehab it and 1 of 2 things happen (or both!):

1. You don't rent it for 3, 4, 5, 6 months (all holding costs to consider)

2. You don't get the rent you were hoping (always be conservative in your number crunching)

Make sure you consider these holding costs in your numbers and give yourself deadlines of when the rehab MUST be done by and when you MUST rent it out by to hit the numbers.

Might I also suggest running your numbers through the BRRRR calculator? This gives you a template to consider every number you need to and then when you calculate it any questions you may have you can sort through each of the numbers and find out how to adjust it to get what you want to see (i.e. maybe adjust the # of months for the rehab to 1 meaning less holding costs; maybe find ways to increase the rent; maybe find another lender with a lower interest rate; maybe the property isn't as good a candidate as you thought!; etc.)

Good luck

@Ryan Antista Depending on the wood this is, it could be "bleeding wood". This is typical with colored wood and usually comes about after cleaning or painting it. Before the "and about 10 days later its coming back" clean, did you paint it/prime it/clean it? 

I have not had this problem myself however based on a little research, I would prime it with Kilz and clean it with Bleach. Give it ample time to dry out as well before doing anything with it again. Also, may not be a bad idea to run in there, picture in hand, and explain the situation. There will no doubt be some experts there on the subject. Good luck

@Chris Galvez I think this would be a factor of inflation as most lending companies cost to do business have increased as a whole. So if you think about it, the appraisal goes up $50, the UW fee goes up $100, the title agent fees go up $300, so on and so forth. All are a reflection of the economy and specifically the housing market. With refi's going down over the next year due to increased rates, many companies will increase their fees on the purchases they do. 

TRID is more geared towards fair lending and forces the lender to disclose every fee to the buyer. It does not necessarily regulate the fees that are charged (to a certain extent). I think over the next few years and perhaps long term, we will only see the prices go up with the rates being where they are, the competition that always exists between lenders, closing agents, etc., and the housing market staying stagnant.

Hey @Kaelyn Hearn I began on Bigger Pockets about 10 months ago and still have not found my first deal. I'm plenty happy with that however because, in that time, I have saved more and more money, learned A LOT, and have developed connections through networking at my local REI group. All of this has lead me to where I am now, literally 1 step away from getting my first house.

If that's all you're looking for, there you have it! Good luck.

@Aryelle Collins I know what you mean, I have definitely been there and I still continue to adapt my speech when describing my market. The phrase "just get out there" insinuates that we need to, literally, get "out" there as if you could go into the housing market.

What is really meant by this phrase is to "watch" the market. Follow redfin, zillow, trulia updates. Get set up for MLS notifications from a Real Estate agent so you can watch your housing market as 2 bedroom, 3 bedroom, 4 bedroom properties with 1 bath, 2 bath so on and so forth are priced in your market (which means "the area you want to buy in"). As you become for familiar with the prices and rents (!), you will begin to have a better scope of the market and be able to talk about it without the computer right in front of you.

Here's an example. I live in Rhode Island. The overall RI market is stagnant with economic growth due to lack of increased jobs, high taxes (and more coming), and possibly overall small market. This effects the housing market as you might think it would. My specific area is in a higher end part of the state and the prices are just outrageous, due to its location and popular summer rental demands. Just about every house that comes on the market is overpriced for the rest of the state, but again, that is because of its location. 

As you can see, each state has economic characteristics that can play into the housing market. The more you watch your housing market, the better you'll be able to understand what effects your market.

I dragged on there but hopefully you get my point.

Disclaimer: I'll be curious to see if any RIREI hop in here and agree/disagree with my (mini) analysis of the state.

Good luck to you!

@Jesal Shah I'd recommend to keep simple on the first go round. As you will find many people say, it is ALL about what you want. Lets review the options you've presented.

1. Single Family - the best way many people get their hands dirty is through "house hacking". This is when you purchase a home (SF or MF) and rent out the other rooms (in a SF) and/or the other unit(s) (in a MF). You charge for the other room/unit rental and it helps to pay the mortgage. Along the way you pick up experience land lording and collecting money, while experiencing home ownership for the first time. Other options in a single family include: live in flip (takes time & $$), regular flip (takes experience & $$), or fixer upper (takes time, experience & $$).

2. Multi-Family - as mentioned above this gives you the opportunity to be a home owner, a landlord, and perhaps your own contractor. You can valuable experience that will no doubt be the building block for you as a real estate investor. It's important that you do your homework. For example, a "small MF Property" as you mention in your first post is actually 2-4 units. Anything bigger (5 units+) is considered a commercial property and goes by a whole different set of guidelines/rules/loan products, etc. IF that is your goal, a large MF property than by all means explore BP and certainly track deals on loop net. Multi-Family's are great for house hacking, buy and holds, flip, etc. 

Let me know if you have any questions! You're in the right place, BP has been great to me and will continue to be great for anyone that joins.

@Edward Carreno message me your details and I will see if I have someone!

@Ungwang Boiteto welcome! You've come to the right place. My knowledge on flips, costs, hard money, etc. is limited at this point in time... HOWEVER, if you haven't already, you must read The Book on Flipping Houses by J. Scott. It is considered to be the best book on flipping ever written and is a favorite of this site. It breaks down every single step to house flipping and probably has a specific chapter on out of pocket expenses, which you could just flip to and review if you wanted. Good luck

@Juan Carlos Gutierrez I would reach out to any local investors you know to ask them for not only the price but also a sample of a report they received. I recently paid $400 for a 3 unit and learned A LOT, I thought it was a great expense. However, I showed it to some REI's I know after the fact and they were no so impressed with the actual report. Be sure to do a little research on the company as well, some companies will post sample reports on their site. Also - be sure to tag along with the inspector. You'll learn a lot