All Forum Posts by: Ben Smith

Hey @Lori Sims, I second @Brian G.'s recommendation of J Scott's Book on Estmkating Rehab Costs. It breaks down nearly every possible expense you might have in a flip in a way that's easy for someone new to the business to understand. It's also a companion to his Book on Flipping Houses, which is a great overview of the broader concepts involved in flipping, and even residential property investing in general.

Hey @Jared Garza,

I highly recommend J Scott's The Book on Estimating Rehab Costs, which is a companion to his Book on Flipping Houses. It breaks down nearly every potential rehab item you might need, and a range on potential costs that he based on extensive research. 

Also, I'm working on a spreadsheet based on his tables from the book. I'll send try to remember to send it to you when I'm done.

Ben

Hi all,

I'm looking at investing in a BRRR deal with a friend/private money partner. I know that the typical way to use private money for a BRRR or a flip is usually just to borrow the money at a fixed rate of return and pay it back after sale/refinance. However, in this case I'd like to incentivize fully funding the deal by providing 50% of the whole deal to the money partner. I know this is possible, but I'm having a little trouble figuring out the specifics of ownership, profit distribution etc.

1.    Limited Partnership:   It seems that one way it could work from a profit distribution standpoint is to create a limited partnership, in which I am the general partner and the friend/investor is the money partner. In this case, how would ownership of the property itself work? If the partnership owns the property as an entity, would it still be possible to obtain conventional financing for the refinance? (I'm guessing no).

2.    Individual Ownership:   If I own the property individually, it would then be fairly easy/simple to obtain a conventional loan for the refinance. However, in this case, how would we handle profit distribution, especially in the eventual sale of the property?  Is there some sort of entity structure we could use for sharing profits while I still hold title as an individual?

3.     Tenants in Common:   If we own the property as tenants-in-common, is it still just as easy/simple to get a conventional loan for the refinance? And are joint bank accounts all that would be required for the accounting piece? 

Hi Steven,

I know this is VERY old, but I'm considering a similar structure in order to do BRRR deals, and I wondered if you followed through on this and had any key takeaways or lessons learned?

Thanks!

Has anyone had any experience renting bedrooms individually in the Austin area? I am considering a 3BR/3BA in the Round Rock area, and I think this might be a way to create some cash-flow in a market that is otherwise not friendly to cash-flow investors.  What are your thoughts?

Thanks!

Well it looks great from the outside! What did you spend on rehab? Did that also come from the private investor?

Hey Ryan,

I recently obtained a pre-approval letter from USAA. Their method allows me to adjust the amount - up to the maximum pre-approval- each time before printing so as not to "show my cards." Not everyone qualifies for USAA, but surely they're not the only lender who does this?

hey @Andrew W., thanks for the feedback! As I've looked at what's on the market, I've found that you're right, long term cash flowing investment properties are virtually impossible. If I knew I'd be in town long enough to also capitalize on some appreciation, I'd probably do what you're doing in simply reducing living expenses via house hack. Not sure that's the right play for the short term though. Anyways, congrats on the good work with your duplex!

@Dan Burstain, is what you said about Austin's housing market - that it has seen a constant steady flow of appreciation - still ring true two years later. Is it true even when considering the crash in 2008? I am in the same position as the original poster here in that I am looking for a house hack in Austin but can't seem to find anything that would cash-flow as a stand-alone rental.