All Forum Posts by: Brenton Fowler

Originally posted by @Ned Carey:

What do you mean by "Cash Flow?" Do you mean the amount leftover after paying principal and interest, the amount after paying principal interest and insurance (PITI) or the amount left after you pay all expenses? This makes a big difference.

Lenders will typically limit the amount you can borrow based on the Debt Service Coverage Ratio (DSCR) or in other words the amount of income left after operating expenses in order tp pay the loan payments. Again how they calculate it and what they include as "Expenses" will determine how much you can borrow. This may be less that the LTV that they would normally approve.

Personally I would not do a loan that only gave me $800 a month after my expenses. That is a very small margin and one repair puts me in negative cash flow. 

By cash flow I mean money left over after all expenses have been paid. PITI, repairs, capex, vacancy, utilities, etc. Assume that the lender will lend on 75% of the ARV ($120k).

Hello, I'd like to pose a hypothetical situation. I'm curious on how members of this community would handle it.

Let's use a typical BRRRR example, buy for $50k, $25k rehab, with the hopes of a $100k ARV and $1k rent. In the case of a $120k appraisal, what would you do?

Let's assume you plan to do more BRRRRs over the next 3-5 years, and are currently funding the initial purchases using private money at 10% interest. Mortgage recasts are not available after refinancing.

Option 1: Get a $75k loan, have a $150/mo cash flow.
Option 2: Get a $90k loan, have $80/mo in cash flow.

Is it better to have the additional cash flow over the life of the 30 year loan based on the $75k loan
or
Is it better to take on additional mortgage debt to reduce the need for private money over the 3-5 year time frame?

I'm looking for a work order system that creates a process flow for handling maintenance requests. Ideally it would look something like this:

1. Tenant makes maintenance request
2. In house property manager classifies the request and assigns it to a specified handyman/contractor
3. Handyman/contractor can accept or deny the request based on availability, job type, etc

I want it to be cheap and hopefully have a mobile app or SMS integration. I am not looking for anything full service (rent collection, tenant screening, etc) as I already use Quickbooks and Zillow for much of that.

Anyone have a software they would recommend?

Originally posted by @Matt Silverstone:

Congrats on the BRRRR, Brenton. Curious if you have any new updates around the project? How have your renters been during COVID? How has your management been? Anything that has popped up for you?

I am an investor entering the Indianapolis market. Great to see the success like yours.

 No major updates since we completed the project. We've had the same renter since before we did the refi. We've actually had surprisingly few issues related to COVID - all of our units are caught up on rent.

There are definitely a lot of wholesalers. Off the top of my head, Mainstay Property Group, Nuparadox, and Simple Wholesaling probably do the most volume.

Originally posted by @Ben G.:

Congrats on the deal. If you're looking for more of those let me know! 

Always looking for more. I'm on your list!

Originally posted by @Simon Stahl:

Congrats on your first BRRRR! I'm just wondering, did you use your own contractor for the repairs or did you use the project management of mainstay?

We used our own contractor.

Investment Info:

Single family BRRRR

Appraised Value: $95,000
Cash invested: $50,000

SFH in Indianapolis that needed cosmetic rehab.

What made you interested in investing in this type of deal?

We had purchased several rentals using conventional financing, but were attracted to the scalability of BRRRR.

How did you find this deal and how did you negotiate it?

Through a wholesaler - Mainstay Property Group.

How did you finance this deal?

$17k of the $35k PP was a PM loan, the rest was our own capital

How did you add value to the deal?

BR #1 – Existing walls were unfinished drywall, sand/mud/paint finished it out. New carpet flooring. New interior & closet door.
BR #2 – Walls were also unfinished drywall, but the floor was concrete (weird, I know). Walls finished out, new closet framed and installed, new carpet flooring, installed ceiling fan
Living room – new window and flooring, paint
Kitchen – replaced cracked floor tiles, new countertop, remove wallpaper & paint
Laundry – reframe door & trim, paint
Bathroom – caulk tub, new shower surround
Exterior – paint trim, new siding on shed, power wash, added roof vents, gutter work, front landscaping

What was the outcome?

Rehab was finished in 2 months, a tenant placed shortly after. Cash out refinance at 6 months following an appraisal of $95k (a creation of $45k in equity)!

Lessons learned? Challenges?

Let me start off by saying this deal went far better than we could've guessed. The rehab went on longer than expected, and was higher than our original estimate. Always remember to have your contractor fully scope your deals. Because the success of the BRRRR method depends so highly on the appraisal, we went through great lengths to make sure we'd be making the appraiser's job as easy as possible. This included physically being present during the appraisal, having a pre-printed packet of comps, list of repairs, the tenant lease, and improving curb appeal through quality landscaping. The most important thing was, however, buying right and buying with equity built in.

I'm surprised no one has mentioned Quickbooks Payments. If you use the online version for your accounting, you can automate the sending of rent invoices, tenants can pay right from the invoice, and automatically updates your records when they pay. They also just added an automated late fee feature as well. All free currently, but I think they may begin to charge once you hit a certain revenue threshold.

Downsides are similar to other ones that have been stuck in this thread. Money is in limbo for up to 10 days. A couple of our professional tenants have figured workarounds including delaying payment by entering an invalid bank account number or paying while having NSF.  It can sometimes take up to a week for QBO to catch these.