All Forum Posts by: Bonnie Low

Especially since you're new, you will find that EVERYONE wants to give you advice about real estate whether they know what they're talking about or not. Seriously, it's like having children - everyone has an opinion about parenting whether or not they have ever had kids. Ignore 99% of it unless you are talking with a seasoned investor. And even then, there are nuances depending on the niche you're investing in, what your personal goals are, your personal finances and the market(s) you're considering. All those books are greater starter tools. Since you like reading, you might pick up Tax Strategies for the Savvy Real Estate Investor by Amanda Han (she's been featured on the BP podcast a few times). Making a blanket statement like "your taxes will change after you own a few properties" just isn't helpful. How will they change? That all depends on your financials and what you're doing with your properties. Are you buying or selling? Or both? 1031 exchange? Flipping? Rehabbing and holding? Commercial property or residential? Owner occupied or not? Cash flowing or not? Do you have W2 income? All of these things make a difference in your tax strategy but, generally speaking, real estate is as good a tax strategy as there is. But make sure you're talking to an accountant who knows real estate to make sure you're making the most of your investing and not paying more in taxes than you should. I know it's hard when people offer unsolicited advice. Just try to smile and have a ready, neutral response like "I'll have to look into that." But don't let people who are not investors (or who tried and failed) burst your bubble. Your success if up to YOU. Best of luck to you!

I'm not a wholesaler, but I am an investor in California who sometimes buys from wholesalers. I understand the LA market is very hot, and that's probably going to make wholesaling more difficult, but you have sheer numbers on your side: lots of distressed properties, lots of distressed homeowners and landlords who are probably beginning to feel the effects of the rent crisis due to COVID. Your job is to focus in on the areas with potential and begin your outreach. And that's where a CRM comes in. Customer Relationship Management (CRM) software allows you to manage your contacts for outreach and marketing. It's the tool behind your marketing funnel. Salesforce is one of the best known CRM platforms on the planet, though it's not real estate specific. I'm sure if you use the BP search feature you'll find CRMs that REI's recommend. Good luck to you!

I highly recommend you use the Bigger Pockets BRRRR calculator. It appears you don't quite understand how the finances work on the BRRRR method and that's very important to make sure you understand how much money - if any - you're going to get back when you refinance. Knowing that number will tell you whether or not to do the deal. The calculator is free, it's accurate as long as you know what numbers to plug in, and it helps you think about line items you might forget to include, like closing costs, which can impact how much cash you walk away with. With the numbers you're suggesting, you don't have much wiggle room so it's worth it to run that calculator a few times until you can do it quickly off the top of your head.

You can't go wrong investing in Boise. Year over year appreciation, days on market and low inventory are and have been huge market drivers for the last several years (we've been investing in Idaho since 2017 and the trend has only increased in most desirable cities - Boise, Eagle, Nampa, Caldwell, Star, Pocatello, CDA, Chubbuck, etc.). If you can find a duplex, house hack, come close to cash flowing or at least reduce your monthly expenses I'd go for it. The only reason I can think of that an FHA loan may not be ideal for a house hack (and I use the term "ideal" very loosely here) is that you don't have to put much down and that means you don't have a lot of equity in the property. It also means you're paying mortgage insurance. But in a rapidly appreciating market, those shouldn't be deal breakers and the FHA loan can be a great way to get your start in real estate investing. I'd look at holding on to that duplex if I was you, even if you want to move out of it in a year or so. It appears you have really good W2 income and are a diligent saver so you'll have no problem saving up money for your next down payment. Boise is a GREAT market and people are flocking there so this sounds like a solid investment.

I think a lot of things have changed since the BRRRR concept was coined by BP. In the years following the 2008 crash when there were a lot of distressed properties (and sellers) out there, you could pick up a property and make the numbers work. Now, we have fewer foreclosures and pre-foreclosures and a lot of properties have already been flipped or BRRRR'd so it's slim pickings in lots of markets. Also, lenders got very nervous about cash out refi's so they ratcheted down the LTV. It's more common to get 65-75% cash out. Those 80% deals are golden, if you can find them. So those all work against the method. Luckily, where we invest, the market keeps going up so we do have the ARV working for us, but then again the cost of labor and materials have gone up significantly and so have the time frames for doing the rehabs because all the trades are booked out far, far in advance. This increases your holding costs. That means the numbers really have to work in your favor and there's little room for error. While we do still believe in the BRRRR method, the number of properties we find it working on are much fewer than even 3-4 years ago. And we've adjusted our expectations. We don't expect to get 100% of our money back, and we're ok with that. It's still a good strategy, in my opinion. It's just that the metrics around it have changed and you have to be realistic and not distracted by the hype.

Hey @Sven Segers - I give you a ton of credit for jumping in. So many people suffer from analysis paralysis. And being in an all cash position on your first purchase isn't a bad place to be! You are definitely taking a leap of faith. It's bold, but sometimes bold gambles pay off big. You're right - from the photos it doesn't look too bad, especially considering what you got it for. To find a good general contractor, take the time to go to a local REI meeting. Talk to other investors to see who they recommend. I can't stress this enough, especially since you're not going to be able to be there in person to keep an eye on your renovations. You don't want to gamble with someone doing shoddy work or ripping you off. You might also find another investor who would be interested in partnering with you to be your boots on the ground and do the project management for you. Also, I'd spend the money to hire a home inspector to go through it top to bottom. They're going to be looking for things that must be addressed. It's not too costly to pay for a home inspection. You can then use that list from the inspection as a rough scope of work to give to a contractor. That way, you're telling the contractor what needs to be done rather than the other way around. The home inspection probably won't identify cosmetic repairs - but those are a matter of choice anyway and you can tell your contractor what you do or do want to address cosmetically. But it's the big ticket items you need to be most concerned with, like foundation issues, roof, mechanicals, water intrusion, etc. and a home inspection will identify all of those. From the pictures you shared, it doesn't look too bad so it might not take too much to get it rent ready if all your big ticket items are solid. Do you have any idea how long it's been since it was last occupied or rented? Best of luck to you!

Yes, that's basically the concept of being over leveraged. It usually refers to owning or buying a property and having very little cash or equity in the property. So if you buy a house with 3.5% down and it hasn't appreciated much, you owe almost as much as the house is worth. Leverage can be a great thing - you're using the bank or someone else's money to help you buy more properties instead of having to come up with your own cash. However, when you're over leveraged, like in the example of the house I mentioned, if the property value drops and you have little equity in it, you can quickly find yourself "upside down" where you owe more on the property than it's worth. Or, in the case of a rental property, your mortgage payment could end up being more than you're able to collect in rent if rental rates decrease. That's the danger of being over leveraged. Hope that helps!

@Simon Obas it's awesome and uplifting that you have such a gracious heart. But protect your investment - that is the surest way you remain able to help as many people as possible in the future. Surely they will find something they CAN afford and then you will be helping out someone else who can both afford your home and is also in need of housing. 

I would not change anything while this tenant is in there. Clearly, she's not careful with your property (like having a dog when the lease says no dog.) Do nothing until she moves out then upgrade to some type of laminate as it's more durable. As for matching the existing floor, it's always nice to do, but unless you're in an A class neighborhood, it's not necessary. Maybe you can stay in the same color family so the transition from old to new is less noticeable. You'll always notice it because you know it doesn't match, but tenants are usually just thrilled that it's new.

Unfortunately, your guy's property is probably underwater then. You can't help everyone. But offer to stay in touch with him and let him know when you see the market starting to change. At least he will feel like he has someone looking out for him and you'll earn some loyalty should things turn around in the future.