All Forum Posts by: Alan M.

Why not bring in an investor to buy the units and take a fee for the referral? This will give you some equity to work with on the next deal. Or, if you can't find an investor, you'll know it wasn't that great a deal.

Highly unlikely that he'd find an 8% cap rate in CA. Indianapolis seems to be doing well and unemployment is tracking better than the national numbers. Give it a look.

Sure, that's the easy part. But then what do I do with all the cash?

Thanks, Matt - great insight. I really like how you framed (and bolded!) the idea that I'm only making money when I sell. An excellent point.

What about putting down a good sized chunk of change, say 45%, such that the property DOES cash flow. I could then take a HELOC on the property to tap into the cash later, for other purchases. I guess the downside is, at some point, tapping into the HELOC will make the property not cash flow any longer. I think I may have just talked myself out of that one :)

@Enis Shehu ahh ok. You had ARV of $2M, that's why I wasn't following

@Enis Shehu I am not quite following. You bought it for $1.55, put in 450k, and then will refi. Won't that mean you'll have roughy 500k in, given normal LTV requirements?

Or, is that what you mean about not much money in the deal?

Thanks for the invite on the 19th, but I will be just getting home to CA after a week on the road. Maybe next time

I've owned real estate investments for about 10 years, but just started listening to the BP podcasts and blog posts about a month ago, so apologies in advance if some of this question is naive. 

I have a full time job that is my primary source of income. I also have young kids that, when combined with my job, take up a large amount of time. Plus, I like my little remaining time and aren't looking to get into a giant time-suck. However, I have a pretty decent chunk of change ($3M) sitting in one investment property that has no debt attached to it. I also have access to equity in another rental property, a condo in Boston that's worth about $1M and has only a $300k mortgage on it. I also feel most comfortable investing in markets that I know - mainly the East Bay area of the Bay Area and metro Boston.

I've heard of the BRRR method being used almost exclusively on houses that are around $90-$120k. First off - none of those kinds of properties exist in the areas I'm used to. Sure, you can find something for $300k-400k in a crappy area, but I don't want those kind of tenants. Second, with this kind of idle cash and a lack of time, I feel like I'd rather do a few big deals, even if they're not as profitable as if I did a bunch of small individual deals - I just don't have the time to dedicate to making $30k. At the same time, I'm not familiar with items like financing debt out of a multi million dollar property and I'd rather not taking on another $3M-$4M multi-family property as my next foray into real estate. Lastly, I live in a neighborhood with mainly homes worth about $1.5-2.5M, but there are a few houses that look like they could be on Hoarders, and for sure could be had for $950k-$1.1M.

So, after way too much preamble, my question: Is it worth doing a BRRRR deal where, you put down 100% cash (by pulling it out of other properties, assuming I can figure that out) on a house for about $950k, renovate for $250k or so, refinance on a property now worth $1.4M but then basically just are cash flow neutral after? The rents around here, in the Bay Area, wouldn't be enough for it to be cash flow positive. But my thought being that, it's minimal work, the appreciation alone is worth about $100k a year which, with only about $250k invested makes it pretty attractive. And would allow for pretty substantial appreciation ($ wise) on just a few units.

Or am I thinking about this completely wrong, and there are much more obvious ways to get better returns without a ton of work?

Thoughts appreciated!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $544,000
Cash invested: $175,000

1 bed, 1 bath unit in the heart of Boston (Back Bay) and includes a luxury item - a parking spot! We did a high end renovation (kitchen, bath, walk-in closet, surround sound, etc.) before we moved in and now rent the property out. We've found success in this as it's probably one of the nicest one bedrooms in Back Bay and have consistently found wealthy customers looking for a pied a terre or a place for their children to live while attending MIT (just across the Charles River, 10 minute walk).

What made you interested in investing in this type of deal?

We bought it as a primary residence and realized it would cash flow out when we moved, so kept it as a rental.

How did you find this deal and how did you negotiate it?

The unit had been on the market for 3-4 month and needed a complete gut. We were fortunate to have a contractor that we had worked with previously and he was able to do the renovation rather cheaply. He's since gone out of business, probably because he didn't charge enough, but did great work and was very honest and courteous.

How did you finance this deal?

25% down, 4.25% 30-year mortgage

How did you add value to the deal?

High end renovation in a desirable area, including parking spot

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We worked with a rental agent named Crystal Roach who is now at Compass. She's fantastic, consistently finding tenants for us at top dollar.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $544,000
Cash invested: $175,000

1 bedroom, 1 bath unit in the heart of Boston (Back Bay) and includes a luxury item - a parking spot! We did a high end renovation (kitchen, bath, walk-in closet, surround sound, etc.) before we moved in and now rent the property out. We've found success in this as it's probably one of the nicest one bedrooms in Back Bay and have consistently found wealthy customers looking for a pied a terre or a place for their children to live while attending MIT (just across the Charles River, 10 minute walk).

What made you interested in investing in this type of deal?

We bought it as a primary residence and realized it would cash flow out when we moved, so kept it as a rental.

How did you find this deal and how did you negotiate it?

The unit had been on the market for 3-4 month and needed a complete gut. We were fortunate to have a contractor that we had worked with previously and he was able to do the renovation rather cheaply. He's since gone out of business, probably because he didn't charge enough, but did great work and was very honest and courteous.

How did you finance this deal?

25% down, 4.25% 30-year mortgage

How did you add value to the deal?

High end renovation in a desirable area, including parking spot

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We worked with a rental agent named Crystal Roach who is now at Compass. She's fantastic, consistently finding tenants for us at top dollar.