All Forum Posts by: Benjamin Seibert

@Jaron Walling I definitely agree. It shows that even with minimal amounts put into a rehab, you need to purchase the property at a good discount when going through with the BRRRR strategy.

@Jaron Walling the example was purely hypothetical just to make the numbers a little clear and easier. I was meaning only to show the method of calculation not my own deal.

Hey Kip, you don't necessarily need to purchase a property with all cash to go through with the BRRRR method. I am currently going through this process now with conventional financing. I am purchasing a SFH with 20% down as a rental. I am going to rehab it and rent it out and then refinance to get my cash back that I've put into the property. I performed all of the calculations beforehand to make sure I could pull all (or at least most) of my money out after. An example of the numbers are as follows:

Purchase Price: $100k

ARV: $167k

Down Payment: $20k

Renovations: $10k

Closing Costs: $5k

$167k (ARV) * .70 (assumed LTV I can take out after refinancing - this should be conservative) = $117k

$117k - $80k (amount left on loan after down payment) = $37k (total amount received after refinancing)

 $37k > ($20k + $10k + $5k) (my total out of pocket expenses)

I did leave any fees from the refinancing out of this but it may be included in the total out of pocket expenses portion. I hope this helps provide an example of what I did and answers a portion of your question.

Hey Marlo. The market is hot right now and it is tough to find deals. I'd recommend the following ideas:

1) If you can't find great deals right now, stockpile as much cash as you can and keep it ready for when the market turns a little south (this is the second longest bull market we have ever had for the stock market, so it will go down and pull housing with it a little).

2) Try different approaches. If you aren't getting success then step back and reevaluate your methods. Maybe you need to focus more on social media marketing in your area (Facebook, Instagram, etc...) or maybe you need to expand your reach and look at other markets slightly outside your area.

3) Maybe try finding someone to partner with who has done a couple deals so you can at least get part of the pie.

 In all, this is a tough time to jump into the market but don't lose hope. If you give 100% and still can't seem to muster a deal, don't fret. Stockpiling cash isn't horrible, other than it doesn't hedge against inflation. But in the short term it may be the right option until you can get your first deal. Just keep searching! 

@Jay K. that looks great! Congratulations on a very successful BRRR. I did have a question for you. How did the HELOC work for the purchased property? I'm slightly confused by how much you can pull out after repair? To make numbers easy: if the property I purchased was for $50k (with 20% down) and I put $10k into the rehab and the appraisal came in at $80k, would there be any equity I could take out of the property? I read that banks require a 70% LTV and was confused on how much I could really take out, if any.

Thanks for the help on clearing this up!

@Micah Carter I didn't have any formal home repair knowledge but I have always been one who likes working with my hands and figuring things out. I work on my own vehicle and am always tinkering with some sort of building project. Almost all knowledge you need to flip a house is on Youtube though. The most recent project I completed was epoxying my basement bathtub and replacing a bunch of broken tiles. I didn't know the best way to do this so I Youtube'd it and read reviews from people who had done it. You'll make mistakes and figure things out along the way, but that's one reason I like construction. There is a lot of room for error on many fixes.

Hey Michah! I went down the route you mentioned on purchasing a house to live and flip while also house hacking it. A friend of mine from college and I went in together and bought a 4 BR house and rent out two other rooms to subsidize the costs. In the meantime, we are also working on fixing it up to sell (~2 year time horizon to sell).

It may work out better for you to just purchase a multi-family unit to live in and rent out the other units. It really depends on your area though. I know for my area, there aren't any multi-family properties so we decided to go with the larger single family house. Either way, as long as the numbers work well and your bringing in equity and cash it can be a good investment. One thing that may be good about purchasing a small multi-family to live in and house hack is that you can typically get in with a lower down payment (where as if you wait until it becomes a true investment you wont typically get in for less than 25% down).

Hey Jamal, welcome to BP! The best strategy really depends on your goals e.g. single family buy and hold can be great for long term wealth building and is a fairly stable asset class where as flipping can get you capital quickly but can be riskier. In terms of wholesaling, there is an ongoing debate about whether it is technically legal or not (if you search wholesaling in the search bar I believe Brandon Turner put out a large article about this).

Also, I know there is a real estate investors meeting in Baltimore. I live right outside of Baltimore but haven't personally been as my work hours fluctuate. I would recommend starting there and meeting/networking. Best of luck!

Just a note, many issues I dealt with before where the foundation was cracking in early construction, it was not insurance that handled it. Sometimes it required a licensed engineer to come in and take a look at it to help see who is at fault and unfortunately, has a chance at ending up in litigation. I hope this works out for you and the contractor can remedy the issue.

Hey Ken! Congrats on joining BiggerPockets! There are definitely a ton of resources here to help with any and all questions you have. You've definitely come to the correct place with high aspirations!