All Forum Posts by: Ben Sears

@Brandon Kalker most utilities in Richmond are provided by the locality. Electric service in the metro area is provided by Dominion Energy. All natural gas service in the metro area is provided by City Gas Co. Water and garbage is provided by all major metro localities. While there are many private trash companies, the localities usually do a good job. In the metro area, all of this requires you to contact your county or city office to get set up. 

@Gerardo Gutierrez the key to getting the most advantage out of the BRRRR strategy is to budget your remodel. You'll need to work this strategy backwards to figure out what your repair budget is. This will then assist you in determining whether or not the property is a good deal. Let's look at an example:

You find a property to purchase for $60,000

You determine through comparative market analysis that this property has an after repair value (ARV) of $110,000

You shop loans and find a local bank that will lend you on 80% loan to value (LTV)

You bring in your contractor and determine that the property requires $25,000 worth of repairs in order to be habitable

Your budget is determined as follows:

$110,000 (ARV) x 80% = $88,000 (the total that the bank with refinance

$88,000 - $60,000 (purchase price) = $28,000 left for repairs

As you can see, there really is no "secret" to maximizing the BRRRR strategy. It really all boils down to good estimating and simple math. Now there are always extra expenses such as appraisals, inspections, closing, etc which you'll need to take into account. Fortunately these are usually known amounts that can be found out by speaking with your loan officer. Don't be afraid to shop around to different banks to discover what loan products are out there. I hope this answers your question.

We purchased our BRRRR October 12th. We would have been finished February 1 except for an unexpected well water line failure. I think your time frame depends on a lot of different things such as your experience managing a project, your contractors work ethic, materials availability, and your ability to anticipate issues that may arise. Here are a few lessons that we've learned from previous projects:

1. We will never have a project in progress from Thanksgiving through the New Year if possible. There is too much going on and the holidays create unnecessary down time. We have decided to take this time to spend with family and prepare our books and business for the new year. 

2. We will never market a property and take a tenant prior to a property being finished or nearly finished. We took a tenant early with the anticipation of moving in at a certain date. We've had to put them off twice which has been painful and costly. 

3. We will not use "handyman" services for any skilled trades anymore. We have a handyman hanging and finishing sheetrock/painting and it's taken literally forever. We will use professional sheet rock companies and painters from now on.

4. Having said that, we need to locate a handyman or company to perform punchlist and finish work (hanging towel rods, cabinet pulls, door hardware, etc). This work takes forever and has wasted a lot of time doing it ourselves. 

As a side note, my community bank will refinance at 85% LTV with no seasoning period. You need to shop around outside of the national banks for this.

Well folks...we missed our move in deadline which has set off an avalanche of other issues. We're not stressing though. Here's the back story:

We put a tight deadline of February 1 on this property. Thinking that that would be plenty of time we went ahead and marketed the property, scoring a great tenant. As we got closer to the deadline, it became very clear that we just weren't going to have the property ready to rent in an acceptable condition (you know...like with drywall and paint...the deluxe amenities!). We contacted the tenant to put her off for a week (February 8th) and took deposit and first months rent while comping her a per diem rate for the missed days since February 1st. 

Jump ahead to today, we found out that we have either a major leak in the pipe coming from the well or a bad well pump. We share a well with the property next door (vacant and on our short list to purchase) and ended up flooding that crawlspace with water. No wonder we couldn't figure out where the water was going! The plumber and our crew traveled next door, crawled in the muddy crawlspace and capped a broken water line which was causing our issue. We were then able to get water at our property, albeit with very little pressure. 

At this point, our only real option is to replace the entire line and wiring from the well to the house so that we know for sure the problem has been corrected. While this is a set back, our tenant was understanding enough to STILL want to rent the property from us provided that we can get her in in a reasonable amount of time. We comped her rent for February and applied money paid previously to her March rent. We'll take a small hit in March but it's worth it to have a great renter. 

I would really like to be stressed out and mad about this but I can't do that. I think anybody who has been at this long enough understands that no deal is going to go as expected. We've learned a ton of valuable lessons and gained a bunch of insight into systems improvement for our next project. I'll have some pictures up tomorrow hopefully. On the bright side, the house looks great!

@Blake Jenkins I'll chime in as both a contractor and an investor. It takes a lot of time and experience to be able to accurately estimate remodel costs. Even with this, always know that you'll most likely be over budget and over schedule. Make sure to pick a contractor and subs that don't mind having you hang around. Don't nag them but they should be able to explain the construction process to you. This is where you learn the intricacies such as how much per foot are cabinets, how much is a bathroom addition, what do you need to take into consideration when looking at structural repairs. Eventually you'll start to pick up on these costs and be able to estimate a lot of things yourself. Our last job was a $60k remodel that we estimated within 2%. Maybe we got a little lucky with that one! In addition to the books mentioned above, I would suggest picking up a few books on general construction to familiarize yourself with general trade work and project management. I have a couple of estimating and project management sheets that I'd be happy to share if you want to send me a message. Good luck.

Small update today...Sheetrock is almost finished. They'll be in tonight and tomorrow finishing up second coats in a few places and a final sanding. Paint on our unrenovated rooms starts tomorrow. We're juggling a lot of different trades at the same time pushing to get this job finished up. Our tenant moves in on February 8th!

@Shaun Reed I think you're referencing Deal Machine. I had the app on my phone but hadn't tried it yet. It's an interesting concept and as I remember the pricing wasn't terrible. 

@Craig Huston I don' think it matters. I would go where you can get the best rate. A cash out refinance might give you plenty of money in the future without paying the interest on a HELOC.

Thanks to all for the suggestions and discussion. I' looking forward to making my business grow from SF rentals and into the multifamily scene. I know virtually nothing about syndication so I may reach out for some education on the topic.

What is everybody doing for on-site material storage? One of our goals this year is to streamline our projects, have material on-site for our contractors, and keep our job sites a little neater. Is anybody using PODS or other mobile storage units for material/tool storage? Interested in your thoughts.