All Forum Posts by: Andrew Garcia

Hi @David B., it really all depends on how long you are going to hold it. Let's say it costs you $1,000 a month. Being conservative, let's say that the property appreciates $1,000,000 over 10 years.

That means you lose $120,000. However, you make $1,000,000 (plus the principal that you paid down)

Principal more than nets out the $120,000 but let's just say you made $1m flat as profit. Assuming 25% down initially, that is over a 12% IRR, which is really good.

With the choppy economic conditions, the biggest thing to be concerned about is inflation on a macroeconomic scale. However, with inflation, home prices also rise so that is not too much of a concern. Cash would be more of a concern.

The housing market could see a correction but with the area, you are unlikely to see the same amount of decline in prices.

This strategy is often employed on the commercial side of things. They buy an A+ property at a 2% cap rate and make a killing when they sell or refinance. They just take the losses until then.

Hope this helps! Let me know if I can be of any assistance.

Hi @Reden Dionisio, is there a reason that you do not want to use a HELOC or cash-out? Personal loans generally have higher interest rates than those secured by a property.

Hi @Khairy Jones, hello from MD! In a typical market, the rule of thumb is ARV * 70% - repairs - wholesale fee. However, in today's market, many investors are offering 75% or even 80% to remain competitive.

 @Darryl Griffin-Simmons, sorry I missed your reply! FHA loans cannot be used on investment properties. However, they can be used on 2-4 unit properties in which you live in one unit and rent out the other unit(s).

Your wife cannot be on another FHA loan. You can only have one FHA loan at a time. Therefore, your wife would need to refinance into a conventional mortgage to free up her FHA.

I would be happy to connect with you.

Hi @Iris Hou, I agree with Bruce. There is still a bidding war going on, even in new construction. It is easier to get offers accepted on new construction but it is still competitive.

Looking at it from a lending perspective, if you are using 3% down conventional, new build would definitely be easier but if you are more of a cookie-cutter, straightforward borrower, then resale will be comparable. 

For your personal situation, I would recommend that you look at both resales and new constructions in the right school districts and areas. You might find a resale you like better than new construction and vice versa.

Hope this helps! Let me know if I can be of any assistance.

Hi @Jordan Bigler, welcome to the community! You seem like a smart guy with a plan but I am sure you are lacking the tactical day-to-day knowledge of what to do or how to start.

Before becoming a lender, I did some wholesale deals. I would be happy to discuss my experience and best practices.

Let me know if I can be of any assistance.

Hey @William L Morgan, depending on the area, I might be able to refer an agent to you.

Hi @Chris Webb, obviously the rising interest rates are making cash flow more challenging on BRRRRs. There is also a shortage of contractors and/or supplies in some parts of the country.

The good news is that there has been phenomenal appreciation so when they cash out, the equity has appreciated so investors are starting to offer more on the front end. That could be a good or bad thing depending on your point of view.

Hi @Sean Baker, there is a similar metric used in real estate: cap rate. The cap rate is typically used on multifamily properties or portfolios. The cap rate is determined by dividing the net operating income by the purchase price. It all depends on the area, value, size, etc. but cap rates are typically higher on STRs.

Hi @Jose Arreola, you can schedule the loan to cover the rehab costs. However, you will need to pay the carrying costs. You could put less money down with the right lender and use those funds only in case there is an overage or for carrying costs. 

Please let me know if you have any other questions or if I can be of any assistance.