All Forum Posts by: Ben Magee

My wife and I just finished our first BRRR deal on a single family residence. We're looking to get smarter as we get more rentals and wanted to ask y'all for help. I wanted to see if any of you all have guiding principles on these areas of thought: mortgage length, paying extra on debt, selecting your first couple owner occupied homes, and other thoughts.

1) 15 year mortgage or 30 year mortgages? To frame this one, the question I'm asking is if you could be close to breaking even with a 15 year mortgage or you could be cash flow positive, which one would you take? If you take the 30 year, you have more of a cash providing asset. But if you want to get your asset paid off and maybe paid off before things like the roof and other stuff wears out, maybe the 15 year would be the better route. 

2) Do you want to put extra towards your mortgage ever to save on interest for these homes or do you put all that money towards getting more homes? 

3) My understanding is a bank will loan you up to a certain number of homes (4 maybe) and then they are gonna not be so inclined to keep loaning to you and maybe make you do investment properties. So my wife and I have wondered, 

a) should we try and buy the most expensive house we can (that's still an asset producer) with the lease money down, so that we can later sale those for the most cash and use that money to buy more rentals.  Basically, you could buy 3 houses that were 200K each, or you could have bought three homes that were 350 K each and later when you sell the 350K ones, they have more profit if appreciation worked out, to be used for investment purchases.  

b) should we try to climb the multifamily ladder instead (duplex, to triplex, to quad,...) ? 

4) what else are we not thinking about that might be worth thinking about (taxes, timelines etc) 

Just moved to Raleigh last Thursday from Iowa City. Great meetup yesterday, was awesome meeting several of you all. 

Welcome, Greg! I am in Iowa but will be in Raleigh in August. I'm working as a residential real estate agent and doing some Broker Price Opinion / commercial work on the side. I'm working on my first BRRR home with the target of July to be refinanced / rented. Admire your time absorbing info the past six months, what book did you like the most?

@Brian Larson, loved reading your thoughts. Sounds like we are in similar mindset. If financing changes to where it is much easier to get loans and cash our refinance 6 months after being built, I think they would explode in those areas. 

@Rene Owczarski, nice to hear about, but yeah, that seems to be the story in so many cities. The progressive folks get drawn out by the back lash. Will be interesting to see how things change over the years. 

@David Song, get points. Nice to see someone from Redwood City. I used to love to go to S'bastians coffee on Woodside Rd. I taught in Palo Alto with a program with Stanford, I was living in the Bay Area from 2015-2020 which is really when my mental obsession with ADU's started. Iowa is cheap.

I am looking for alternative perspectives on what I am finding. I have read about the various ways to finance building some version of an Accessory Dwelling Unit (ADU) [basically a small guest house of some sort added to a home]. (home equity loan, renovation loan) but because they are not as easy to pay for / finance like a small home, and not as guaranteed to raise the value on an appraisal after it has been built

-> It seems like they aren't super popular because a lot of people don't want to drop 60-90 K, go through the Hassell of permitting/building when they could just be using that money for multiple down payments on properties. 

It does seem that they are worth it in very high rental places in California, Oregon, Seattle, especially if you can find a company that does all the work at a price that justifies the rent you'll get back.  

Now, my take away is that in not as high rent places, it's better to try and find properties that already have them, pay that premium on purchase price, especially if you can find a deteriorated home where you got a deal that is far cheaper than if you had to build one yourself. 

I am also curious if anyone is finding it worthwhile or profitable to locate properties and build the ADU as a part of your fix and flip or hold moves?

Been looking at Habitat for Humanity Restore and Lowe's as my sources of materials.What do you all think the biggest bang for buck/time would be? 

Specific questions: 

- should I go waterproof vinyl floors? If so what brand.

- ideas on sinks? 

- ideas on lighting to make it better? 

Aaron, I have been watching the Raleigh market. I saw a 90 K home got over 60 offers on the first day in North Raleigh. You are right. It is pretty traffic jammed. I would just lightly remind you to think about November as a good month to buy. Iowa where I am is a good market, but it can be tough to try and do the remote purchase when so many factors such as harsh winters require a little bit of local knowledge. I would suggest you think about starting out with a 30 minute radius of where you are. That way, you can stay more in your field of knowledge to manage the risk. But I've seen other folks still succeed doing it completely different so just depends on your style. 

I got a $30 can of deck stain for $1 at Lowe's, it was on the returns cart. ;) I'm a little new to the game. Been fun to read these other posts.