All Forum Posts by: Becca F.

@Mike D'Arrigo

Thanks for the response. I feel like a lot of new investors are being pitched BRRRR strategy by many investors/real estate gurus on social media. "You don't need to use any of your own money. Use Other People's Money such as private lenders, hard money loans. I bought 20 homes doing BRRRR and quit my W2 job in 2 years, etc" The worst part is these gurus charge thousands of dollars for their mentorship programs - I won't name names lol but I almost signed up for one of these programs.

If someone is starting out and they aren't putting any of their own money, putting some skin in the game, I'm not seeing how they're approaching a private lender and asking someone to fund their deal. I'm apprehensive about asking a private lender and I have 4 properties. I think the BRRRR strategy is much harder than it looks. I may consider doing a BRRRR out of state in the future but it would have to be a well thought analysis with my team of my realtor, contractor, and my property manager looking at that property.

@Ivan Carrillo

It's great that you're getting started at 22 with real estate investing and are very motivated. You mentioned trying to own 20 rental properties and do 8 flips. This is very ambitious.

I consider myself a beginning investor and I have 4 properties now, just closed on the 4th one last week after being in analysis paralysis for a long time. I started with my first rental in 2019. You don't mention if you have a W2 job, are a student or earning income some other way. If you have a W2 job don't be too quick to quit. Many investors use DSCR loans but you get better rates with conventional loans. Fannie Mae/Freddie Mac allows up to 10 conventional loans if your DTI ratio falls within their guidelines. I thought I would need to do a DSCR loan with the last purchase but I was able to get a conventional loan. Lenders love people with reliable W2 jobs with steady income. I really wanted to quit my job and do freelance work but there's no way I could have gotten approved for 2 conventional loans (one a cash out refinance) in the last 6 months if I had done that. I haven't used private money or hard money loans. It's all my money or pulling equity out of existing properties.

Network, narrow down the areas you're looking to buy. I like working with realtors, don't really feel comfortable buying something on my own but you might be okay buying on your own. 

As Bob asked, how are you funding the 20 properties you want to buy? If we're being too nosey, you don't need to answer. Good luck with your journey! 

@Alon A.

I'm in the Bay Area. I don't know anything about the 3 markets you listed. I had a few local realtors and investors suggest the Antioch, Pittsburg, possibly Stockton and Sacramento and they said I would cash flow in Class C areas as Class A Midwest areas. My realtor recommended Turlock. With my brief search Turlock had homes in high $300,000s to $400,000s. I don't think people earning high Bay Area salaries are moving that far out to the Central Valley but I could be wrong. With all those areas, my mortgage payment would be much higher than the rent. 

I have 2 SFHs in Indianapolis area. The first one is in a Class A area, nice suburb with great schools but I bought it almost 10 years ago. The appreciation has been about 70% from most of it during the 2019 to 2021 seller's market. I just closed on a SFH a few days ago but it's in a Class C area. It's in a growing area with coffee shops, etc being built. I actually bought it from a flipper, negotiated an aggressive offer for $130,000. I didn't want to do an OOS rehab and I have a pretty good team in place - realtor, contractors, handyman, and property manager there. I did a local renovation which went over budget (down to the studs in kitchen and bathrooms), all new electrical wiring) and it was stressful - contractor would call me at least once a week and I'd go on site. As Luka and James said, doing OOS BRRRR would be challenging. I have all conventional loans.

If your price range is $150,000 to $250,000 you might be able to find $180,000 to $250,000 house in a Class A to Class B area nice part of Indianapolis, move in ready, maybe light reno (cosmetic work). I think Midwest, specifically Indianapolis, is a great place to invest and is landlord friendly. The appreciation, percentage wise, is lower than California but it's steady and reliable, which is what I want with my tenants - they can pay the rent and not be laid off from their high paying Google job, etc. If you have any questions feel free to message me :) Good luck. 

Hi! I'm looking for a CPA who works with real estate investors clients in S.F. or East Bay (Berkeley, Oakland, Lafayette, Walnut Creek, Concord, Dublin, San Ramon). I'm doing my own taxes for 2022 since it's a little late in the game to find someone before the April 17th deadline but may want someone to look it my return over. 

@Jarrid Weber

As Len P. said, it depends on your goal - getting cash flow or growing equity? I'm in the Bay Area and I tend to lean towards if you have a California property with a low interest mortgage or no mortgage (in the case of someone who has owned a property for a very long time) to keep it. I have a SFH with a low property tax basis and fairly low mortgage. I could have sold and taken the proceeds and bought many properties out-of-state. I chose to keep it and rent it out because I would never be able to be get a house like that again in the Bay Area. I'm keeping it because of the growing equity and also my kids could inherit the home and chose to live in it for the future (or continue renting it out).

The price points are really high in the Bay Area and surrounding Northern California area and the price to rent ratios aren't good so I'm a little more focused on getting cash flow now. I took some of that equity out (cash out refi when rates were lower) and am buying out-of-state. I'm closing tomorrow on another property in the Indianapolis metro area. Good luck!

@Johanna Kerns

I'm closing on a SFH this week. Conventional loan, 6.998%. It was 2.97% points ($3089 + $1040 loan origination fee). My loan is much smaller than yours, $104,000. I used a mortgage broker. He said I could I could get a lower rate if I had a larger loan.

 Carlos, where are you buying to flip? I'm interested in flipping but it seems risky. 

@Brian Jackson

I'm in the S.F. Bay Area. I can understand you wanting to keep a cash flow negative property. Historically California properties have appreciated a lot. How much cash flow negative are you projecting? -$100? -$500? 

I'm buying in the Midwest, which is landlord friendly. I have a SFH in an Indianapolis suburb that I bought almost 10 years ago, Class A neighborhood with great tenants. It's appreciated quite a bit, not as much as a Bay Area house, percentage wise but it was such a great value with low interest rate. The only thing in that county is that I pay a higher property tax rate as an investor vs. a homeowner. The state tax is much lower than California and I haven't had to pay state income tax in Indiana on the rental income I'm getting,

I'm closing on another SFH next week in Indianapolis, different county and property taxes are lower. For a quick analysis, I get as close to the 1% price to rent ratio rule for cash flow in Indiana when I was doing my search and narrowing down properties. I'm getting 1.1% on the Indy suburban house since it bought it a while ago. Rental comps show I'll probably get 0.76% on this new house. I wouldn't get this on a house in Bay Area if I bought an $800,000 house, no way I can charge $8,000 rent, maybe $4000 or $4500.

I've also looked in Cincinnati and Memphis. I've heard other Bay Area investors say Kansas City, Missouri is a good market. 

@Chris Lamm

I'm in the San Francisco Bay Area. That's interesting that your friend said the landlord laws in Tennessee aren't are landlord friendly as you had hoped. I've considered buying in Memphis. Nashville was my preferred location but the price points are a bit higher than I want to pay right now. I'm a little curious as to what the TN landlord laws. 

My vote is for Indianapolis. I have a SFH rental in a Hamilton County suburb north of Indy. I bought the house 10 years ago (was my primary residence). It's in a Class A neighborhood with a great school district, and appreciated a lot in the last 3 years and have great tenants. I put in an offer recently and will be closing on a SFH next week. I was searching for turnkey/move in ready and most of them at $180,000 or less. I know that I would get the equity if I did a rehab. I didn't want to do an out-of-state rehab (after doing a local renovation which was stressful). I think the value for purchase price is great in the Midwest although my California investor friends think the Bay Area is a better investment - I love the California appreciation but not the pro-tenant laws here and the high price points right now. I will likely buy another property in Indy after this one closes.

I'm also confused about getting LLCs. I have 3 properties and a soon to be fourth property, SFH in escrow right now. I called the lender of one of the SFHs and she said I would need to refinance it to put in into an LLC. I'm definitely not doing that since my interest rate is in the 3.875%. I have umbrella insurance of $1 million beyond the landlord/rental dwelling insurance. I'm considering increasing it to $2 million.

I won't be paying off any of the properties in next 5 years, so does that mean I shouldn't get an LLC? I would think most investors have mortgages. It's possible I could pay off the one with the lowest mortgage. My investor friends in California who own 1 to 4 rentals don't have LLCs, which surprised me. The only person I know with an LLC owns 11 rental properties and he said I should really get an LLC. California also charges an $800 tax on each LLC. If I get an LLC through another state, such as Wyoming using a registered agent for anonymity, I'm guessing I have to pay that $800 California tax since I live here.