All Forum Posts by: Amanda Jewell

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Very nice overview of this project--thanks for sharing!

Love hot tubs at beach houses with cooler weather in the evenings! 2 cent vote :)

P.S. Small caveat to consider--just make sure maintenance is on point. We had a trip where our entire family got Hot Tub Folliculitis that was brutal, lingering and expensive for one of us who had a severe case. My mom ended up settling with the AirBnB owner for nearly a full refund to cover the ER visit. Just something else to weigh out. 

Thanks, Steven! I agree and will definitely make this happen even if I just move them into one of our rentals at some point but I was trying to utilize unique lending options that I otherwise couldn't. That's a good question about FHA--I thought it was only for first time buyers? If they've already owned a few homes, would they qualify for FHA? It's definitely a solid ask for my lender.

Thanks so much for your reply and consideration!

Thanks, Doug! Yes, I'm very familiar with BRRR and in the process of completing one as we speak--it wouldn't work with these scenarios but it is a great strategy that has worked well :)

Thanks again for the feedback, I really appreciate your consideration!

Thanks for your reply, Doug and I appreciate the kind words and encouragement!

Good catch--my phrasing was a bit confusing on both scenarios! 

My intent was that she would acquire the property via an FHA loan whilst also supplying the down payment. I don't qualify for an FHA loan so this would be a benefit to me and her down payment would put her "skin in the game" on the partnership. The reno will certainly exceed her financial investment but knowing I'll have a solid tenant (who also helped initially get the deal) would also be a benefit to me. My prediction is that she's 3+ years away from hopefully marrying her bf and purchasing a more ideal house than she can qualify on her own, together. With the current market rents, my analysis puts the cash flow $250 per month or $9000 at the end of the 3 years, roughly the amount of her down payment. Then at that point I could "buy her out" of her down payment (probably with a small return) and then have her seller finance it me for the remainder of the loan so I can keep the FHA terms. My goal (in addition to helping her out) is to acquire this property while I'm acquiring conventional loans under my own name. Does this sound worth it or am I reaching? LOL

That's a great question and also why I was struggling to explain it! Similar scenario in that I'm mostly hoping to take advantage of another favorable loan under someone else's name while acquiring properties with conventional mortgages under my own. Another seller finance situation where I'm responsible for all acquisition, reno, maintenance expenses and the mortgage, using the rent (from the sale of their home) to pay for and cash flow (cash flow will slowly reimburse the reno cost). I wasn't exactly sure how to handle acquiring this home as I believe a VA loan can't be transferred to someone who isn't eligible for VA benefits--but I believe that it could be inherited should they both pass (hopefully a moot point) while there's still a balance on the loan.

I really appreciate your feedback and know this might be too complicated to even be worth it. The largest draw back on both scenarios is having the renovation cost tied up without being able to refi and use on other projects. It does seem like leaving reno costs in 1 or 2 properties for an extended period of time (unable to refi without losing FHA or VA) might not be worth it--say compared to just seller financing from a stranger as far as a cash-on-cash return.

Hey BP Fam!

I've been gearing up for the last 6 months and am ready to pull the trigger on my first deal (a Hurricane Ida gutted SFH as a flip). But I am always lining up my next moves and am inspired when I hear podcast guests discuss their passion for helping others and making that the heart of their business. It got the wheels turning about how I can partner with close friends and family who all have unique needs. I'm trying to work out what would be the best arrangement, for all involved, and am hoping to get some feedback from you pros out there on successful partnerships with loved ones that hopefully go well and I can apply this strategy to future partners.

1st option:

My best friend is struggling to buy a house (like most FT home owners are) or even find a rental and I was toying with ideas of how I can grow my portfolio, while also helping her find housing. What she brings to the table is the option to get an FHA loan (I don't believe I qualify since I already have a home?) some cash, and of course a rock star tenant. I'm looking to grow my rental portfolio. Thoughts were to partner with her--where she secures the loan and supplies the downpayment, I would find the deal, manage and finance the renovation before she moved in as a tenant and finally help her find a home at some point (I'm also an agent). My thoughts then were that she could have a safe and comfortable home while she continues to look/save and see where her long-term relationship is going (buying together at a later date instead of on her own). Then my thought is that I could buy her out when that time comes. Is this a good idea?

2nd option:

My parents are both retired and their home is PIF. They live about 30 minutes away from all friends and family since everyone close has moved away. They also don't need the size home they have and are beginning to struggle with mobility to get upstairs (negating the whole point of that space). They were heavily hit by Hurricane Ida and it's been a major stressor on them to manage the repairs. 

In a dream world, I would love to have them move into one of our rentals so they wouldn't have to worry about upkeep, maintenance or repairs. I'm just not sure quite how to structure this since selling their house and moving seems overwhelming to them (most elderly don't want to make the leap until they absolutely have to BUT I'm also worried that Alzheimer's runs in my family and I would like my mother to be familiar with a new location for a while before symptoms begin setting in). 

My father is a retired vet and could get a VA loan so my thoughts were to work with them to find a home near us (and the grandchildren) that they could help choose the location and renovation finishes. Similar to the option above, they're on the loan that I can't acquire on my own, I pay for renovations and they become tenants. This is where it gets tricky with business and personal...it feels strange to collect rent from my parents when they currently don't have a mortgage BUT, I would be the caregiver in their later years (another pro to having them closer) since my brother lives further away and has a demanding career with lots of travel. What would be the best arrangement to eventually acquire the home, while also giving them the security (cash from the sale of their home), a close proximity to friends/family/grandchildren and a smaller home that maintenance would be cared for?

Side note: I'm also in the process of starting an Opportunity Zone Fund and was considering a situation where they could shelter their capital gains from the sale of the home. The downside is that I can't directly purchase a home in an opportunity zone for them to live in (my entire county isn't considered an opportunity zone). But perhaps I could fund the home they live in and they could fund my other investments in OZ? In essence, "trading our cash"? Open to any feedback at all. 

Thanks, as always for giving back!

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*This link comes directly from our calculators, based on information input by the member who posted.

Hey BP Family!
I just analyzed my first deal and of course I have a ton of newbie questions that I'm hoping to get some guidance on.

1. 1. I found this property on foreclosure.com and they have an EMV of $168,693. I'm not fully sure what this means even after researching on the FAQ of the site. I believe this is their valuation of the property but I'm wondering why it's so far off from the $230k that comps are going for and what the Zestimate is. Is this the suggested offer for a bankruptcy? 
2. 2. I used the BP Rehab Estimator to come to the total BUT I think I may have been "compounding conservatism" that is to say that I overestimated how much each line item would cost, then I added in a 20% "unforeseen expenses" line item as a safety net. I feel like $60k seems like A LOT for a 1500 sqft house but with replacement of nearly all major home expenditures, perhaps that is close? All of my estimations are site unseen since it sounds like you can't get access during a bankruptcy purchase--is that true? 
3. 3. I've only completed 1 full rehab--to my own home--and we took nearly a year to complete it because we were doing the work ourselves on the weekends. I'm not sure if this timeline is feasible for this project. I did some reading on BP and it looks like alot of newbies budget 6-24mo for a rehab. I went with the low end because the house is small, it's in our backyard, we have a Project Manager and this isn't our first Reno. Maybe that was overly ambitious? My goal is to analyze/find a deal between now and June, purchase in June, rehab and hope to have it on the market end of 2022, early 2023 (I've also heard this isn't a ideal time of year?)
4. 4. I also went on the conservative end of ARV--Zillow and other comps seem to be selling for around $230k in the current condition, renovated comps are going for $275-300k
5. 5. I also wasn't certain about closing costs. I used several online calculators that ranged from $3-17k, BP recommended 1-2% of the purchase price so I went with 2%
6. 6. Theoretically, it seems like this would be a $300 cash flow BUT that is with only refinancing the amount put into the property. If I pulled out 70% of the ARV, the 2% rule is shot and I'm negative cash flow. Should I not refinance this high, especially when I don't necessarily need the cash and can use the cash we put in and take back out to recycle to the next deal. We weren't planning on touching the cashflow anyway, just keeping it in a reserve account to continue to qualify for conventional loans
7. 7. Would this be a better flip? The ROI is $110-$179k depending on actual final reno cost and the ARV range. I'm currently furlouged due to COVID and so REI is my only income as of now. Our strategy was to flip for income and B&H for retirement
8. 8. This exercise was really for practice while I get my RE License. I don't currently have access to the MLS but have been monitoring RedFin and Zillow in my target market for about a year now and have a good idea of comp prices and ARVs. After listening to a BP podcast episode, it seemed beneficial to try out a foreclosure.com subscription and see if there might be any deals there. The best/lowest are all $160k+. I know that "money is made on the purchase" so is this range too high? Do I need to start looking into yellow letters or partnering with a wholesaler to find better deals to make the numbers work?
9. 9. Last question in relation to finding deals--does anyone have experience with soliciting in the wake of a natural disaster? We had a category 4 hurricane hit the area in August 2021. Most homes just lost shingles or had roof damage that either did or didn't cause water damage inside. We're now nearly 6 months out from the storm and I feel like "distressed properties" are nearly wearing a target on them. If you still have a blue tarped roof, it's likely they are distressed in some way (didn't have insurance, didn't have enough coverage, not enough cash to complete the replacement, etc.) 
10. 10. For the sake of posterity, I'd love to end on #10. Is there anything I'm overlooking?

I'm aware that these are pretty green questions so I really appreciate any feedback! 

This is amazing, thank you! I’m a huge fan of the podcast/YouTube channel and am already a couple of BP books in—it seemed like the time to join! Everyone has been so friendly and helpful so far, love this site! 

Have a great week and keep up the great work! 

Great points! Is it possible to have a contract with an agreed upon sales price (after rehab) with the seller that there is intent to close at this price? Is it possible to work with a professional prior to rehab to estimate the ARV of the additional construction? As well as work with the lender having reviewed the ARV?

OR do you think it would be better to move forward with the sale and then simply offer construction services (perhaps with a few renderings) to the buyer should they have cash after closing? Or offer the additional Reno on terms if they don't have cash?

I realize these could all be ridiculously ignorant questions! I'm trying to figure out how to avoid over-rehabbing but also get the ARV as high as possible.