All Forum Posts by: Arron Paulino

Hello,

I am now 3 years into real estate investing from starting during the pandemic and have been able to obtain 7 SFRs into my rental portfolio all using the BRRRR strategy and now closing in on my 8th property maybe even my 9th fingers crossed. I am looking to make sure that everything is stabilized in terms of making sure that I cashflow positive each month. My goal is to match my monthly W2 income by the end of the year and eventually surpass it by doubling, tripling, or more as my rental portfolio continues to grow. Is it wise to pull out any equity in these properties or leave them as is? Also, do I need to transfer these into an LLC in Memphis to free up my ability to continue to use conventional financing? Right now, I am slowing down in terms of scaling since I've been relying on my own funds rather than using OPM to grow quicker. I currently work in the golf industry so I've connected with high-worth individuals, but don't really know how to word what I do in real estate to convert them into private lenders.

I also heard that the seasoning period for Freddie and Fannie loans has changed from 6 months to 12 months. Could someone please explain what this means to the BRRRR strategy? Is this a big deal in cash-out refinancing? One of my properties is close to the former 6-month seasoning period so I am curious and want to be prepared for the next steps.

Eventually, I'd like to delve into multifamily to scale. As much as I'd like to keep my long-term SFRs, I understand I may need to trade them in for bigger properties down the road. Looking forward to hearing from the community!

Hello,

Does anyone have recommendations on lenders to start the BRRRR or fix and flip in Detroit? My plan would be to purchase SFR or small-multi with a lender and then either keep the property long-term or flip it to obtain liquid funds for the next deal. Looking forward to hearing from the community!

Hello,

Does anyone have recommendations on lenders to start the BRRRR or fix and flip in St. Louis? My plan would be to purchase SFR or small-multi with a lender and then either keep the property long-term or flip it to obtain liquid funds for the next deal. Looking forward to hearing from the community!

Quote from @Drew Sygit:

@Arron Paulino two lines of thought:

1) Would you invest money in someone that came to you with where you are now? Why or why not?

2) As you scale up, you do reach a point where you can financially handle challenges you listed on a regular basis while still adding more properties/challenges. Given your answers to question #1, do you think you are at this point?

 I appreciate these lines.

1. I think I would and would not. I wouldn't due to the instability of the portfolio and would rather see stabilization and cash flow positive first and then I'll have more confidence to invest. I would if I solely think like a hard money lender and focus on the upcoming project as collateral and see the potential with that one. I do understand what you are asking though.

2. That's what I've noticed with investors ahead of me on their journeys. I do think I have to handle internal issues before scaling.

Thanks for the reply!

Quote from @Eric Gerakos:

Why would you focus on acquiring more properties when the properties you have aren’t performing? As a wise man once said, I would focus less on collecting properties and focus more on collecting money......

 I appreciate your reply. I'll be focusing my attention to what is currently in my rental portfolio before moving onto my next project.

Quote from @Katrina Razavi:

Awesome progress over the past 2 yrs @Arron Paulino! Personally, I'd focus on getting #6 stabilized and under control before making more investments or putting more cash out there. Hard money is expensive money and you don't wanna be rehabbing for a long time at a high interest rate. When you're done w/ the rehab perhaps you could cash out refi? No one knows where the market is going but IMHO there will be continued softening of the market which means less competition and more inventory to choose from.

Thanks for the reply! That's what I was thinking as well as everyone else to stabilize. I am planning to cash out refinance immediately once the rehab is completed to pay off my hard money lender and repeat the BRRRR process. I like the reassurance of the softening of the market as I don't want to make any rash decisions and rush the process.

Quote from @Joe Villeneuve:

Your "standstill" is due to the properties you already bought.

 That's what I figured I got myself into.

Quote from @JayCinta Henry:

1-How long has this sat vacant? Are you managing that or someone else? If more than a month I would look at different, fire-on-my-back strategy to get this rented but a quality renter. I know that's an oxymoron but everything about this property should be focused to find a quality renter - increased showings, ad postings online/offline like local hospital notice boards, etc, rent concessions, etc.

3&4-How long have these been rented out? Do you have reserves set aside for repairs, etc?

5-Focus to get this out the door. Draw on your experience from #1 above so that you can cut down on the time it takes to get it rented.

I would pause on adding more properties and stabilize these for now. You have 4 that need to be off your mind and on a routine. #2&6 is where your daily attention should be. I would therefore work to reach there first before continuing with more acquisitions.

 1. This property has recently had a tenant move out and property management had to do some clean up to get it back on the market. I'm not too worried about this one as my property management company has been good.

3&4. These have been rented out for almost a year now with the leasing terms ending towards the end of this year. I did have reserves set for these, which I recently had to use (for HVAC and electrical work) so I am back to replenishing mode to get my reserves back. 

5. This one hit a bump on the rode as the electrical company (basically a monopoly in my market) has been delayed with their work. I've constantly been in contact with them to get this going so hopefully something gets done asap. Once the work is complete though, I expect it to be like  property #1.

Copy that. That's what I figured and just wanted a second opinion to help reassure/guide me through what I've been going through. I appreciate the reply!

Just food for thought for my learning, when do you suggest I look into adding to my portfolio? I am thinking once I have at least $5-10k in reserves for each property as well as them being cash flow positive monthly. Also, I definitely think I need to be more savvy with using OPM to scale up rather than my own funds. I'm just in a pickle whenever I use my own funds into a deal as I have to wait until I cash out refinance which in theory, delays portfolio scalability.

Quote from @John Acheson:

FOCUS on your strengths,

and let go of weaknesses...

"opportunities are very few over our lifetimes"

by Charlie Munger

 I'm still trying to wrap my head around what you're saying. You mind providing an example? I do appreciate your reply!

Quote from @Joe Villeneuve:

I would describe what you have been doing so far by comparing it to someone that has just gotten their first credit cards, and treats the credit lines as their private cash...assuming they will be able to pay the cards off because they can pay them off in pieces (monthly payments), but reaches a point where they are not paying them off as fast as they need to...and they need to pay them off to use them again...like cash.

Their impatience in wanting to use them again, causes them to do two things:

1 - spend the credit they have paid off already...again, and...

2 - add more credit cards to the mix.

 I get what you mean. I think I need to focus on stabilizing my rental portfolio first and then once stabilized and liquid reserves are obtained, then continue to add to the mix. I just don't want to miss out on low interest rates and scaling up, but I completely understand your point. Thanks for the analogy!