All Forum Posts by: Bradley Cumming

Hey Thomas, 

Welcome to the community! I'm in a very similar situation to you. I'm very young but have a few properties under my belt! Feel free to message me directly if you ever want to meet up and discuss the Northern Colorado market!

-Bradley

Cameron,

I'm glad you started this discussion. My company has plans to just this and becoming vertically integrated in every possible facet of the revenue chain. Right now, we are focusing on building the construction subsidiary to lower costs in our BRRR strategy.

An example of what we want one of our deals to look like: 

Buy a multifamily property (4 units) on a huge lot that is capable of adding more housing on it. Have our excavating/concrete company dig and pour the foundation for the additional living quarters, our carpentry company complete the framing, our partnerships with electrical, siding, and gutters companies do their part, and our own roofing company to finish the roof. Obviously, there are a lot of missing pieces in the construction process and those will be filled in by subcontractor for the time being, but our goal is to have a hand in each step in the construction process eventually.

Where I have the biggest issue is selling that idea to other potential partners. Specifically, I have trouble convincing others of the merits of being paid in equity in the business instead of being paid in labor. As part of the BRRR process, we hold the property after the additional unit has been constructed, which leaves a recurring stream of revenue, but subcontractors don't necessarily want to be in the real estate investing business. People would rather have a larger up front pay day instead of an equity stake in a cash flowing property.

So how does one convince others of the merits of a vertically integrated, large scale BRRR company as opposed to working individually on the same projects?

Thanks for the tip @Mike Hanneman! I currently do have a credit card strictly for building credit. For this first deal we are using a cosigner who has excellent credit and excellent income. So he is going to help me get a great interest rate and help me build some credit on this first property and potentially even help with a second property.

Absolutely, any time! I will probably get pre-approved by the end of this week. So I will hopefully have a house under contract within two weeks and start cash flowing soon after. Good luck with your plan and keep us posted!

I'm so glad there's people out there doing the same thing; helps me not feel like I'm overambitious and actually have a chance at success. As to your question: I believe that for any loan over 78% loan to value (an FHA with 3.5% down would have a loan to value of 96.5%) you have to pay private mortgage insurance (PMI) to protect the lenders in case you default on the loan. Once you have 22% equity on the loan (or 78% loan to value on the loan) you will no longer need to pay PMI. PMI is an unwanted expense that can be the difference between cash flowing and not cash-flowing, so getting rid of that should be a priority.

Thanks Ruth! I just wanted to make sure there were no holes in my logic. Hopefully I can pull the trigger within a month or two and get the investing snowball rolling.

I'm hoping I can have a clean, smooth, and positive start to my investing career. Thanks Bill, I will be sure to look him up!

Hello BiggerPockets!

My name is Bradley Cumming, and I am a freshman at the University of Northern Colorado in Greeley.

My buddies and I are looking to start-up a real estate investment company that initially focuses on multi-families near our campus. We plan to use 4 (there are 4 of us) separate FHA/203k loans to acquire tri/quad-plexes.

At the moment, we are campaigning to gain outside investors and cosigners and will hopefully be profitable with a couple units by early 2017. We are graciously open to any tips and suggestions that will yield success to our business and are willing hustle to gain as much experience and insight in the world of real estate as possible. We are young but very hungry.

Looking forward to networking and contributing to this awesome community that has already taught me so much!

Best Regards

For the past 9 months I have been listening to and reading BiggerPockets material to learn how to generate wealth using real estate. Based off of what I have learned I think the following course of action is the best possible way for me to get started in real estate given my age of 19 years old (aka no credit and little money). Does this BRRR plan sound solid?:

1)Find an investor who would double as a source of money for down payment and a cosigner

2)Use an FHA loan (3.5% down if I live in a unit) to buy a quad-plex

3)Use the 203k aspect of the loan to improve the quad-plex and force appreciation in the property

4)Refinance in a year or two to a regular loan and pull equity out to either pay off my outside investor or use equity for another down payment on another quad-plex

5)Repeat

With this plan, I believe I will be able to cash flow from day one because I will be able to rent out three units to college students around campus who are willing to pay higher rents than most. Along with the refi after a year or two, I would save up the cash flow to buy another property or contribute to the down payment to get to 78% LTV as fast as possible to avoid PMI and to be able to qualify for a regular loan.

Based on everything I know, this plan seems to be the most efficient way to acquire as many units as possible in the shortest amount of time, but again I am fairly new and don't know all the possible options. Any thoughts and suggestion on what the best plan of action for me is?