All Forum Posts by: Alfonso Aramburo Zepeda

I've been all excited since I "found a gem" but now after running number over and over and over again I break-even only if I manage it myself after moving out.

The property needs the following:
- Flooring - Currently it has a stinky-smudgy carpet

- Cabinets - Old, falling apart, discolored stain

- Countertops - Currently it has laminate jagged up counters

- Outside-Inside Paint - Stucco needs to be painted on the outside. Inside is dirty, discolored walls.

- Bathrooms - Super dirty bathtub, toilets.

Single Family Home Purchase Price: $355,000

FHA: 3.5%

Mortgage: $2200

Rent: $2400

Comps Avg: $370,000-$440,000

Rehab Cost: $20,000

Is it a good Deal or Bad deal?

Before moving ahead and accept the counteroffer I wanted to be sure that I'm getting myself into something that its worth it.

This would be my 1st BRRRR, so I'm a bit nervous before jumping in.

3 Votes

@Andrew Postell @Andrew PostellVery insightful advice, something to keep in mind on the 10 year maturity of the Loan.
In that case I will reach out to the bank and start digging into that as it could help me on my next BRRRR.

@Kevin Romines

Would you say going with a big bank would be better or a local Credit union/bank would be better? I will definitely get that LOC to build wealth!

0 Votes

Originally posted by @Dan H.:

Originally posted by @Alfonso Aramburo Zepeda:

Originally posted by @Kevin Luttrell:

Hi All,

I'm just starting my real estate investment journey. I don't have too much experience yet, but I've been a mortgage banker for some time so I have a decent base knowledge.

I was wondering if anyone could give me some advice on investing in southern California (I'm in Orange County). The rent/price ratios are terrible and so far it seems like even if I can find the perfect BRRRR deal, the rent will barely cover the PITI (at least for SFR). So right now I'm trying to search for 3-4 units in LA and Orange county, but does anyone have any other areas they would suggest I search in? I'm really willing to look anywhere in SoCal.

Also, any advice on long-distance investing would be great as well. I'm beginning to think that would be my best option and I'm searching around the country for good areas to buy in. I feel comfortable finding a good realtor and property management company in an out-of-state area, but I'm definitely nervous about buying a fixer-upper and trusting a local contractor to rehab it. Anyone have experience with this? Any advice?

Thanks in advance for your help!!

Hi Kevin,

I'm about to purchase my 1st investment here in California & the best I've found is .8 rent-price ratio. Best deals I've seen is on Duplex or Quadruplex. For SFR's .5-.6 ratio is most common from what I've seen. What I'm focusing is on houses on distress that have a garage or enough space to add a bedroom and then remodel the house with the minimum necessary. Only then I can break-even. In my case I'm doing this local to learn but then I'm planning on Investing out of state as standard ratios in the Midwest are 1.3% from what I was just looking 1 hour ago.
Challenge will be to find a reliable team, boots on the ground...

A couple of items:
1) in my market I can have solid cash flow with a 0.8 ratio and very conservative vacancy, maintenance, and cap ex estimates. My break even on cash flow is just above 0.7 ratio using very conservative estimates (like $500/month for maintenance/cap ex for 2 BR SFR).
2) A good value add can cover a lot of negative cash flow. My last couple BRRRR both had low appraisals but still netted over 6 digits over purchase and rehab cost. Neither of these purchases were cash flow negative (one was basically projected cash flow neutral). The BRRRR did not significantly change the cash flow situation (i.e. the associated rent increase was very similar to the loan payment increase from the refi). However, the rent will go up. The payment is fixed. The cash flow will increase each year and this is on top of the over $100K I made on the value add (with an assist from market appreciation).

I will say it has been over a year since my last purchase (Oct 2017) and that competition for value adds is significant. However, if I were willing to accept smaller returns than my minimum, I could have purchased some RE (with values adds that may net $20K). So the competition is stiff, but there is still value adds that can provide margin for any poor cash flow.

Good luck

We are not too far from each other. I'm planning on investing on the Inland Empire-San Fernando Valley within a 3 hour drive at the most where rates are better than Orange County or LA for the most part.

0 Votes

Today I got an offer from my bank that I’m approved for 100K in a personal credit of line.

I don’t have any rentals income as I’m about to buy my first one. Truth is I’m highly motivated to start my investor journey in real estate and want to speed up the number of investments per year by financing creatively. This being said, I’m exploring all possible option and running numbers.

Now, before jumping the gun anyone out there with good/bad experiences on this type of credit lines?

Your insight will be much appreciated!

0 Votes

Originally posted by @Mike McCarthy:

@Alfonso Aramburo Zepeda Remember that every time you refinance, you’re paying closing costs. Appraisal, application fee, notary, title insurance, etc.

So that needs to figure into your calculations. If you're only going to keep the mortgage 2 years, it almost certainly doesn't make sense to refi in that time. But after a year or two, with a higher ARV and enough paid off to not need PMI, then you might be worth a refi. Some banks will remove the PMI with an appraisal and some paperwork too - maybe not a full refi.

Anyway, you’re on the right track!

I’m going to explore the partial refinance avenue. Interesting!

0 Votes

Originally posted by @Laura Cardenas:

@Alfonso Aramburo Zepeda

Depending on how you’re funding the purchase, you could aim to purchase a home that doesn’t need any major repairs only minor and then it would be easy to achieve with 10-15k.

But to answer your question:

1.) urgent repairs

2.) paint: walls/cabinets

3.) flooring

Goodluck on your search!

It is going to be a matter of find the right deal.

I know Is a tight budget. I'll post before/after picture once done.
Thank you

0 Votes

I was listening to Josh, Brandon & Grant Cardone on one of the podcasts & they were talking about how sometimes going the extra mile & doing something creative would make the difference over other offers.

So far I’ve gather the following:

- Earnest Deposit

- Desktop under writing

- Be fast at making the offer

- Include a Love Letter

if you have more things that have helped you get deals please share as the market where I’m in is very competitive with people even making offers above market price just to get the property. Some of them even remove contingencies.

0 Votes

@Joseph Firmin

Beautiful! I’ll be shooting for that then.

Thank you!

1 Vote

@Victor S.

I’ve painted before & installed countertops so at least I won’t spend much doing that. Other than that I think video tutorials will be my best friend for a while haha

0 Votes

All Forum Posts by: Alfonso Aramburo Zepeda

Alfonso Aramburo Zepeda has started 20 posts and replied 140 times.

Post: Seller counter-offered. Help Analyzing this BRRRR Deal!

Post: Seller counter-offered. Help Analyzing this BRRRR Deal!

Post: 100K Personal Line of Credit good or bad for BRRRing?

Post: BRRRR Investing in Southern California

Post: 100K Personal Line of Credit good or bad for BRRRing?

Post: Any advise before closing the deal?!

Post: Top 5 remodeling things that increase the value of a property?

Post: Best Practices for closing deals

Post: Any advise before closing the deal?!

Post: Top 5 remodeling things that increase the value of a property?