All Forum Posts by: Andrew Webber

@Adeva Edobor I'm glad to hear that and I'm sure there are exceptions out there.  They used to be better - I think its in the last few years they have started to turn downhill. It also stinks as their banking and car loan services are so amazing!!

@Andre' Arceneaux yeah... all I can speak to is our experience with them but it has been rough the last two years. 

@Stefan Wenninger where are you guys located in Virginia? I meet with new or interested agents all the time to tell them about the industry. I'd love to sit down with her over coffee and answer any questions she might have. GOod luck to her! It can be tough out here, haha. 

@Caleb Heimsoth I might also add Navy Fed to that list. I have never seen them close on time despite extended closing periods and daily phone calls/check-ins with the lender/processor. 

@Kendrick Salazar

@Kendrick Salazar

I am a Real Estate Agent and I am going to second the opinion that @Caleb Heimsoth shared. I had one client who didnt heed our advice on avoiding Rocket Mortgage, mentioned that they ran their business out of the home, and accrued and addition $10,000 in fees/points on the loan. Sometimes the local lender may be sightly more expensinve on the interest rate (not even always the case) but their local knowledge is super helpful. 

Also just an FYI in our market you can use the pre-approval of any lender when you submit an offer and then change your lender or commit to someone else after shopping around. most lenders can also provide a pre approval letter in like 15-30 mins. Don't let anything that you mentioned above stop you from following through on a great deal. Make the offer with the preapproval rocket mortgage gave you and then change the lender after. 

Let me know if you have any questions and talk to your local real estate agent to make sure that flies where you are =)

@Stefan Wenninger I'm a Real Estate Agent in Northern Virginia, DC, and Maryland. I am also a recruiter and a trainer for new agents. Everyone on our team has gone with TheCEShop.com. They always have a ton of discounts online through their front page so check those out. They likely have a fathers day sale today for some rediculous amout off. 

Another few popular ones are RealEstateExpress and RealEstateU. Many people will mention Moseley but I have heard  nothing but complaints. Make wure whichever program you choose has online proctoring for their xlass exam or it could be a huge pain to find a proctor. 

If you have questions about brokerages or the process of becoming an agent feel free to shoot me a message. 

Also, are you looking to get a license to become an agent or to leverage some of your deals/offers without an agent's help? If its the latter I'd recommend you focus your time and energy more on analyzing deals. Buyers agents are "free" in Virginia so it often does not make sense to forgo the realtor on that side of the transaction. 

@Ross Denman what is the national franchise that you are a part of? Do most branches mostly do BRRRR in this market or is that something that just your branch is having a lot of business with right now?

@Edward Bowlby forgot to tag you :)

Well to refinance and then to sell would be a little bit redundant and incur many more costs/fees than you want as they essentially cancel each other out. If you have a mortgage on a property and you sell that property you pay the mortgage off before taking any sort of profits. So refi OR sell. If you sell the property at $180,000 then you subtract your loan of $95,000, take away the costs of the rehab/initial investment - $70,000, and you make $15,000. But after agent commission and closing costs, it would be much less than that. I, in your shoes, would not make that trade. 

If you follow this avenue you become a flipper not a BRRRRer, haha. neither is bad but the margins you look for are very different and you lose out on the additional income revenues of appreciation, increased rent over time, and renter bought equity.  

@Edward Bowlby

If you do just a typical refi and pull the money out there may be restrictions on when/how you can use it - for example, with a traditional refi in many cases you can not use that money as a down payment on a new house for at least 60 days. But if you chose a bridge loan instead you would be able to use the money right away. Your local laws/loan products may be different though, so your best bet is to talk to your loan office or an awesome Real Estate Agent in your area. PLus the bridge loan doesn't make sense if the down payment is only 5%.

The BRRRR book talks a lot about how one of the largest benefits to BRRRR-ing is an intangible in building relationships and special pricing you get from lenders, property managers, contractors, etc so finding amazing and trustworthy partners is what really determines your success! And as for this being your first BRRR I think those numbers are pretty decent! I am hoping to do my first one in a year from now and I would take your numbers on a first transaction as its a lot better than having lost something!

Also, the book talks about your Return on Investment being different than you would traditionally think about it. In your example, if you take the $41,400 out then the only money you have left in the property is $28,600 (70K investment - $41,400 take with refinance) and then a yearly rental income of (((2 rooms x $500) - $762 monthly payments) x 12 months) = $2,856. Take your income/investment ($2,856/28,600) and ROI is 9.9%. Not a bad immediate return. Now the property should also appreciate, you will get equity monthly, and as time goes on the rent will go up and you will have a higher ROI. That's some serious earnings, both tangible and intangible.

@Edward Bowlby

So it looks like you have invested into the property: $5,000 for the down payment, $65,000 for rehab (after the higher than expected cost). Your total cash investment has been $70,000.

Your initial loan was for $95,000 so right now you have a loan on 52% of the ARV. In theory, you can Refinance and pull out cash up to 75% of the value of the home which means you could now pull out 23% of the ARV or $41,400. The numbers would have worked out perfectly had you not spent more on the Rehab step than you expected. If you pulled out the $41,400 then your total "loan" on the property would be $135,000 and typically a good rule of thumb is $600 monthly for each $100,000 of loan (if you like being conservative) so your monthly payment would likely be around $810, but it seems like you might have PMI with your current mortgage being higher than the $600 per $100,000 rule and it only being 5% down.

If you can start over with $41,400 and buy a new property immediately that would be how BRRR typically works but it seems like you might need to save up a little bit more or have someone partner with you on the extra needed money. I love the renting per bedroom you have going on as that typically means a higher income than renting the house to one family/person.

If you could repeat with your exact current numbers, and you could control your rehab to only $45,000 then you would be able to invest again soon. You would just need another $5,000 for a new downpayment of 5% on a $100,000 property, and then $3,600 to round your renovation budget up to $45,000. That's only $8,600 which with your current rent-free self and income from your property can likely happen in 6 months or a year if you want to have a cushion in case a similar thing happens. 

Some people would do it without a cushion and just finance the rehab on a credit card that doesn't ask you to pay it back for a year.