All Forum Posts by: Alex Kernus

Hey BP!

Quick math/thought process question - I'm under contract on a $118k SFR. My lender says if I put 20% down, I'll pay 0.5 points for a 3.875% rate, and if I put 25% down, I'll pay 0 points for a 3.5% rate. Math as follows:

- 20% down with 0.5 points and a 3.875% rate would require a $24,072 cash outlay (excluding other closing costs) and would get me a $444/month PI payment

- 25% down with no points and a 3.5% rate would require a $29,500 cash outlay (excluding other closing costs) and would get me a $397/month PI payment

With the 25% down payment, I'd be saving $47/month in exchange for an additional $5,428 cash outlay. Breakeven here is about 115 months.

Although, as of today, I do plan on holding the property for longer than 115 months, I'm still gravitating toward the 20% down payment because I know I can go out and deploy that $5.4k cash outlay saved in productive ways that'll yield me over a 10% return.

Am I thinking about this holistically? Does the fact that the entire $5.4k additional outlay for a 25% down payment would be going straight into equity in my property change anything?

Thanks!

@Adrienne Green @Brian Nally both very helpful, thank you so much!

Hey BP!

I'm looking for my next investment to be a BRRRR, and am looking for my cash purchase to be through a wholesaler. I think for the most part I understand the points of "what to be aware of" in working with a wholesaler from the standpoint of the deal itself, but I'd like some guidance on the actual process of working with a wholesaler from PSA to closing. This might include, but is not limited to, the following:

1. PSA - I assume a PSA through a wholesaler is different than your standard PSA that's signed if you're using an agent for an on-market deal. Anything to be particularly aware of here? (My next purchase will be in Tennessee for what that's worth.)

2. Inspections - if I have an inspection contingency, how does coordinating the inspection + any post-inspection follow-up with the wholesaler (or maybe even the end seller if they [or tenants] are living in the home) work? I've had no issue with this in purchasing my on-market deals in the past, as the seller's agents and my agents have typically worked together pretty seamlessly to coordinate the logistics of my inspections, but I imagine this will run a bit differently when working with a wholesaler?

      ^ same question for having my PM go out to look at the property pre-inspection in order to get an idea of a scope of work - do wholesalers allow the buyer (or my PM in this case) to walk the property before signing a PSA?

3. EMD - does earnest money work similarly with wholesalers as it does with a traditional on-market transaction? Assuming I have an inspection contingency, aside from backing out post-inspection if the rehab isn't what I initially thought, are there other ways to get out of a wholesale and recoup my EMD if needed?

4. Closing - I assume once inspection etc. have been taken care of that the rest of the transaction, for the most part, is in the hands of the title company, but anything else I should be keeping in mind related to closing as it differs from that of an on-market agent-represented transaction?

Lastly, and this might be a catch-all for one or a few of the above questions, is there a point pre-closing where the buyer is put in touch with the seller, or is the goal for there to be zero buyer-seller contact throughout the process?

Thanks so much for the help!

@Dean Harris that's awesome to hear (and I love your podcast). Can we connect soon?

@Riley Schaefer thanks for that and congrats!

@Account Closed let's connect when you have some time next week please, I'll shoot you a message.

Hey BP,

First post! I'm located in Los Angeles but invest in the Midwest (Memphis, TN and Covington, KY), currently own one SFR, one duplex and one triplex, all on conventional mortgages and all with self-funded down payments.

I'd like my next deal to be an entry-level BRRRR, am currently reading David Greene's BRRRR book, but find myself in every chapter coming up with mental roadblocks regarding the process, many of which are due to the fact that I'd be doing this from a distance. Some quick and obvious ones include:

1) not being able to find a good contractor

2) even if I do, not being able to get him/her/them to walk the property during the diligence period to give me a thorough scope of work

3) if I need to back out of the deal after seeing the inspection & SoW, that particular contractor not wanting to work with me again and then me having to start the contractor-finding process all over again

4) not being in a good position to manage the contractor throughout the process, thereby leading to an over-time and over-budget (and potentially incomplete/subpar) rehab.

I could go on but you get the picture. My question/request is looking for some BP members who have recently(ish) completed their first or second BRRRR from a distance, and getting a feel for how you overcame all of the mental (and operational) hurdles? I went through this same mental block process before buying my first investment, but I'm finding myself with larger blocks for BRRRR, not sure why.

Thanks for your help!