All Forum Posts by: Arron Paulino

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!

Quote from @Brandon Nelson:

Happy Friday’s Eve Aaron ,

How are you doing? Hope all is well I’d love to work together and team up on some of your properties and assist with any rehab and other rehab challenges. My name is Brandon I’m in Los Angeles, CA. familiar with San Francisco , Bay Area. I Been in Realestate for a couple of years.

 Hi Brandon,

I'm well. I don't invest in the Bay Area as I just live here and invest out-of-state in Memphis, TN. Thank you for offering though and I'll keep you in mind if something comes up.

I feel like I am in a point in my real estate investing journey where I've reached a halt. I currently have six properties in my belt where half are cash flowing with maintenance issues that arise here and there and the other half still have to get rehabbed. I started my journey back when COVID first started in 2020 and have been very interested every since. Right now, my funds have not been very liquid as I have been aggressive with my investing and have a hard time funding another deal. I understand private money is out there and need to know how to be more comfortable showcasing that I can obtain this type of lending and have the confidence to prove that I can provide a great return to potential investors. I work in an industry where I do meet high-income earners daily and want to know a way to integrate real estate investing through discussions with these individuals.

My current rental portfolio is as follows:

1. On market to be rented out and will cash flow positive once rented.

2. Fire damaged property waiting on insurance payout and quotes from fire restoration company to see if the numbers work to keep as a rental or sell off.

3. Currently rented, has minor maintenance issues, but cash flow positive

4. Currently rented, has recently had HVAC replaced hurting cash flow

5. Finalizing rehab and going on the market to be rented out

6. Needs to be rehabbed to rent ready condition; pulled off hard money, but lender needs it rehabbed before giving out draws, which makes sense and doesn't at the same time to me

I am always looking for more properties to add to my rental portfolio, but feel like I need some guidance on stabilizing what I currently have before adding more. Any feedback is greatly appreciated!