All Forum Posts by: Bonnie Low

Have you been to Boise? It's a great town, great location. Definitely an outdoor paradise with a strong emphasis on healthy outdoor activities, plenty to see and do, all the amenities you need without being in a crowded place. Strong employment opportunities and a great place to invest for appreciation.

This is one of the craziest things I've ever heard. Who does that??! I totally agree with @Bill Hampton. You need to get rid of this tenant because they don't respect the terms of your lease AND they could be setting you up for a lot of expense and a lot of liability. You now have unpermitted plumbing and electrical work in your home. If it had to be re-done, it's doubtful you have enough money in their security deposit to cover it. Get it inspected, get them to cover as much of the cost as possible - use the security deposit to cover the cost of the inspection at the very least - and then hopefully you can move forward without too much cost to yourself. You may want to be prepared to get an attorney involved because they might want to be "reimbursed" for their expenses or want their "property" back (i.e. kitchen appliances.) Best case scenario, they just leave and if the work was done well, you could have a duplex now - if your city allows multi-family in that location. Good luck to you - you'll have to post a follow up so we know how this turns out.

Yes, that's the million dollar question every investor wants to know - not just newbies. So, you're on the right track by asking the right questions. There's just no single right answer. It really depends on many factors. A good place to start is with the BP Insights data. You can read through all the market review commentary and look at the spreadsheets the analysts at BP have put together. It's handy to have it all in one place.

Hard money is common when you're picking up a really distressed property that the banks won't lend on. However, it doesn't have to be that bad for it to be a BRRRR. You might find a place that will go conventional financing. Maybe it needs cosmetic updates, or it has a lot of unused space that you plan to convert to extra bedrooms/baths and have the cash to do so. Or it could even be a property that IS distressed but you go the 203k route for repairs. Any and all of those are options. We're looking at a place that will qualify for conventional financing, but the owner is selling well below market rates because she just wants to get rid of the responsibility, doesn't want Realtors and buyers going through her home and she wants to move quickly to another state to be near her daughter. The main thing is to buy something well below the ARV you're shooting for. Know that most banks are only doing 70-75% LTV cash out refi at the most so you're going to need to leave some equity in the deal - and that means you either brought that equity to the deal via a generous down payment or you forced that equity via improvements. Either way, it almost always requires an infusion of your own cash unless you're lucky enough to find a HML who will also finance your improvements. Some will. But again, with the BRRRR strategy, you need to have enough equity to pull most or all of your money back out.

I'd be suspicious, too. HMLs are currently in the 10-12% interest range, plus fees. Why don't you post the name of the lender on this forum to see if anyone has used him/her and had good results? That's usually the quickest way to qualify or disqualify someone.

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.