All Forum Posts by: Bryan Johnson

I'm curious to hear how others underwrite capex when analyzing a deal. Specifically, if I do a reasonably thorough rehab in a BRRRR deal, I should see lower capex in the subsequent 5 years. I've been underwriting $50/door/month in that scenario. Do others estimate more or less? Or use some other means of estimating capex?

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@Christel Zachary

Thanks, Christel! The flooring is waterproof laminate flooring from Home Depot.

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@Lloyd Silver

Hi Lloyd,

Your question would make my family members laugh out loud. I definitely am not construction savvy. I was informed pre purchase by a sellers agent that the mechanicals were in average condition. I could see the cosmetic issues in the photos I found online. I discussed scope and cost with a couple contractors and, when I was confident in what they said, I took a calculated risk and moved forward on the purchase.

1 Vote

@Eric X.

It’s in Rockford, IL!

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Awesome @Nikki Frick! Thanks for the shout out!

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@Nikki Frick Absolutely - would love that BP shoutout! I just updated my profile page to include some of these before and after photos. Several more attached here. Thanks!

1 Vote

Originally posted by @Stephen Keighery:

Originally posted by @Bryan Johnson:

Originally posted by @Stephen Keighery:

@Bryan Johnson great result to get the property turned and leased so quickly. What do you think the house will appraise at now?

Thanks, Stephen. I actually just received the appraisal report. It came back at $55,000, which is a little lower than I had hoped. I'm going to provide my comps to the appraiser and make an argument for an increased appraised value. Lesson learned --- I probably should have done this before the appraisal occurred!

That is a good lesson to lean. You created $15,000 in equity though and you are getting cashflow from your tenant so not bad for your first BRRR. Once you get that refinance work on the repeat and build that momentum.

UPDATE ---- I sent my comps and reasoning in support of why I thought the appraised value should be increased to my lender. The lender did not take that to the appraiser; instead, they agreed to lend 80% LTV (rather than the typical 75%) because of the strong monthly rental value. So I'm now going to be able to get all of my cash investment back in the refi. So good news...

3 Votes

Originally posted by @Charles Harris:

@Bryan Johnson

Thanks for sharing.

I wish I could find a property that cheap in my market (Bend, Oregon).

I am in the process of rehabbing my first property. I’m considering adding two bedrooms above the garage to significantly force some equity. Have to wait awhile though to have the capital.

Question:

What was one challenge or Hang up on your project that you learned a good lesson from?

Charles, the part of the process that annoyed me the most was the appraisal on the back end. I didn't quite get the number I wanted. In the future, I think I will provide my comps to the appraiser in advance and hope to positively impact the appraisal value through my diligence and attention to detail.

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Originally posted by @Caitlyn Ulinski:

@Bryan Johnson

Hey Bryan, can you share a little bit about the deal on Auction.com? We have a number of houses that we bought conventionally and now we want to try BRRRRing with an auction home. We are a little nervous to buy a home we can't see though. How did you do your due diligence before purchasing & were there people in the home that you had to evict after you bought it? If so, please share the details of that! Thanks!

Hi Caitlyn --- No doubt purchasing at auction site unseen is unnerving. In this case, I felt fairly confident because the site had a number of interior photos and I could see the interior condition. Plus, I was familiar with the area where the home was located. So I had a good sense of ARV. Those two factors gave me confidence. But honestly, there could have been interior issues with mechanical/HVAC/plumbing systems that I could not see from the photo. So it's a calculated risk. If those systems needed major repairs, I could have dealt with them because I purchased for so little money. But it was definitely a concern. The home was vacant at the time of purchase.

1 Vote

All Forum Posts by: Bryan Johnson

Bryan Johnson has started 8 posts and replied 35 times.

Post: Can i Wholesale on the MLS

Post: Estimating CapEx in BRRRR Deal

Post: Just completed first BRRRR

Post: Just completed first BRRRR

Post: Just completed first BRRRR

Post: Just completed first BRRRR

Post: Just completed first BRRRR

Post: Just completed first BRRRR

Post: Just completed first BRRRR

Post: Just completed first BRRRR