All Forum Posts by: Arjay Vergara

@Heather Easterbrook thanks for the response.  I'll have to do some more reading and research into the refi process.

@Reda Akbilinteresting suggestion.  I was under the impression that I would have to meet certain criteria for down payments that low such as owner occupied.  Since I already have a primary residence and I dont plan on moving, I guess I wouldn't qualify.

I am still trying to determine whether the BRRRR method is best in my situation or if I should consider turn key for my first go around.

Thanks Guys!

Thank you all for your responses and input!

@Heather Easterbrook,

Perhaps I am still unsure or misunderstanding how cash out refi works. Can you explain why the seasoning of 6-12 months seems optimistic? What is the purpose of the seasoning requirement, do they vary based on lender, and do any other factors affect the length of the seasoning time (LTV, DTI)? So assuming my DTI is still good and the LTV is 75% or lower would I be able to do a cash out refi?

I am still just amazed with how some of these success stories from people on BP are able to obtain such large amounts of properties in a short amount of time. Is it possible to do this with the BRRRR method and/or cash out refi? Based on what I am hearing regarding the seasoning requirement, it would be a rather slow process to get more and more properties while waiting for the seasoning time period.

@Billy Smith

Great advice.  I am so tempted to just invest completely out-of-state in NC or other markets that seem to be doing well and getting a turn key property.  But i'd hate to do that because I feel like there is a disconnect there and I either wouldn't learn from the experience and/or I would overlook something and lose out on some of the return or worse actually be in the red and lose money.  So I will most likely focus on markets 1 hr drive away from me so I can still be relatively close enough.

Thanks guys!

Do you guys have suggestions, advice, or comments on my strategy and my insight on REI??

My Rundown:

- My wife and I want to invest in Buy and Hold Single Family Homes for passive income to eventually retire.  We are concerned with cash flow and not so much about appreciation.

- We bought our first home last March single family ranch in NJ with 20% down/30yr mortgage. No intention of house hacking.  

- We have decent/good jobs and have some cash to invest ~20-30k. I am thinking conservatively that we will be able to save up a small amount of cash every year for REI since we intend to save for future renovations on our own home, vacations, and kids =D. So the initial capital we have now in my eyes and opinion is very important and I want to make sure we invest it with the right things in mind, right strategy, and in a way that is sustainable throughout future real estate investments.

- Market = looking for single family homes, 3/2s or 2/1s in try he Philadelphia area since it is relatively close and away from the high NJ taxes.  Will account for property management in calcs but may consider managing myself and hiring handymen for any maintenance/repairs in the beginning.  We have considered out-of-state such as Charlotte NC or Michigan due to better numbers but think starting closer would be better.  I think we want at least $100/property on net cashflow after all fixed and variable expenses.  Looking for B class properties so im not dealing with tough tenants but will expect lower cashflow.

- Strategy/Financing = As mentioned before, I want the cash reserves we have now to be mostly what we use to reinvest in future properties and have a generally self-sustaining model.  Of course every year we will probably add to the pot but again I want to think it will supplement a smaller portion, maybe guessing 10k more or less every year.  Correct me if im wrong or it isnt feasible to rely on the initial capital for future investments as much as I would hope it can.

It seems the ideal situation/strategy is the BRRRR method where you can buy, rehab (to increase the value of the house), rent, refinance to get as much of your initial capital cash out in order to repeat the process. Here, the model seems pretty sustainable. So this is the strategy I think we will stick with. I may be ahead of myself, but I am trying to think long term and how to scale up this model in order to obtain several properties in a year (like how I hear many us BPers do on the podcast). This brings me to the financing part of it.

With only 20-30k, this is barely enough for a 20% downpayment on a home.  Most homes in the philly market i am looking at go for 150-200k.  I am after the $100k-150k homes and do some light rehab and hope to rent out for 1%-1.5% of purchase price to achieve 1% or 1.5% rule.  I doubt i can make it to 2%.  So for a $100 purchase price, I would need $20k (downpayment) and then $10k in rehab for the $30k I have.

My questions are mostly toward the financing/lending strategy.  Assuming the rest of my strategy is feasible and my assumptions on calculations are correct, what would be the best financing/lending strategies for my case?  My research on BP forums and podcasts has taught me that the first 1-4 rental properties can and should be financed by conventional loans/mortgages (20% down, 30 year fixed), then after that, the 5th and more properties I would try and find Portfolio Lenders.  The other option I have is to partner with my dad and/or father in law and split costs/expenses/and income 50/50 if cash reserves become an issue.  But it seems that it is quite easy to get conventional mortgage loans on the first 4 properties so do that if you can.  Are my assumptions and strategies on par with what most of you would do in my situation?

So it seems the first few properties might be slower since I would use conventional bank mortgage loans and then wait a seasoning period (6-12 months ?) until i can do a cash-out refinance.  Listening to some of the BP podcasts (i think 78 in particular), I remember the guest saying how in 3 years she had 27 properties.  This leads to my last question, which is what would you guys suggest or recommend to get us set up for the long term and for future investments in order to scale up with the strategy i have in mind right now.

Thanks so much guys!  I look forward to hearing your insight, suggestions, and/or any flaming =P

My wife and I are looking into purchasing our first investment property. We want to do a buy & hold deal.. looking in Manayunk, PA. Does anyone have experience with this market? 

We found a 3 bed, 2 bath for $230,000 that's turn-key, so total expenses are about $1100 per month. Average rent in that area is $1500.. are we overlooking something?

Thanks!

@James Wirth and @Mark Nolan

Thank you for your advice and suggestions.  It is good to know that there are many people here I can relate to.  I will definitely start looking into turnkey properties and see if those numbers will work in my situation.  

I have to give credit to BP's "Ultimate Beginners Guide" for really getting me acclimated to the Real Estate Investing world and getting some quick general knowledge on the basics with tons of links to more in depth guides, blogs, articles, etc.  We will be doing a lot more reading and hopefully pull the trigger on our first deal in the near future.

Thanks for the warm welcome and we look forward to getting more involved in the forums!

- Arjay

Hi All,

Name: Arjay Vergara

Age: 26

Occupation: Mechanical Engineer

Location: Central Jersey

I have recently gotten married back in August.  My wife and I were fortunate enough to purchase our first home together (single family -- ranch) with a conventional bank 30-year loan with 20% down.  We both got hooked on the idea of real estate investing after we both listened to one podcast.  We are very interested in the buy-and-hold game for passive income to eventually earn enough passive income to quit our day jobs (obviously with realistic goals knowing it will take years).  

Looking around the forums and based on general knowledge, NJ seems to be quite difficult to invest in as far as rental properties due to high taxes.  We were thinking of possibly investing in Charlotte, NC since we know someone there who might be able to help us on some level.  But realistically, we will most likely be interested in investing out of state with no personal contacts other than referrals, through hopefully the BP forums, or reviews online and by vetting them out over the phone.  I understand it is a bit more risky but doesn't seem impossible to do.  We also thought of Grand Rapids Michigan based on the forums and other top 10 lists of hot real estate markets.

Do you guys have any advice for a newbie, first time investor looking to invest out of state? 

• Any suggestions on finance strategies for someone with an existing 30 year bank mortgage?  We ideally would like to put low money down or if we can find a market where our NJ/NY dollars go a longer way.
• Would using our existing mortgage be a great way to finance our first deal by using a home equity loan?  Or are there even better strategies out there?
• Both our parents have some extra cash but I am a bit reluctant to ask them especially on our very first deal.  But if you guys think it is a great strategy and has many benefits over other finance strategies, it is definitely not out of the question for us to ask our parents.
• Lastly, can you guys explain how you guys get the 2nd, 3rd, 4th,... rental property works as far as financing?  I assume I can use a home equity loan to finance my first deal.  Once I acquire that first rental property how do I come up with funds to get the next deal assuming I use some money down at some point.  For example lets say I have 10-15k i want to use of my own money to invest.  I use that money for a down payment and any repairs to get the property 'rent-ready'.  After I acquire that property and start get it rented out,  how do you guys quickly come up with funds for the next one?  Or do you guys rely on your day jobs and wait until you have enough cash again to fund the next deal?  I want to plan to acquire properties at a steady but quick rate but I am a bit lost on how the financing aspect works.

I am so glad that we were able to stumble upon the podcasts and these forums.  We are both very excited to learn about real estate and network with as many of you guys as we can.  I look forward to being active on these forums and hope to eventually be able to contribute just as much as many of you are at this point in your journey.  Obviously, we have to start somewhere.  Thanks in advance for all your help!

- Arjay