All Forum Posts by: Caleb Godsey

@Jake Russell

Thanks for the feedback. Always love to hear the thoughts from a seasoned investor. 

To dig in a little about what you said about city inspections. What kinds of things related to inspections would increase the cost of rehab of a home? Are those things that are baked into the contractor's estimates when provided?

Also, with the growth of the city, not that I would be investing in appreciation, but that's one of the draws of Waco for me is that it can cashflow and there's an opportunity for property value to increase in the area. Do you think this is true?

I've seem to come in contact with a superb property manager who has been very helpful up to this point. The connections seem strong, but haven't actually gotten numbers on a specific house yet. Hoping to get close to that within the next week or two and it very well may be too much to spend on contractors and at that point I'll have to figure something else out. But direct mail marketing is on my radar and sounds like it's even more necessary in Waco.

Hello BP Forums and Happy Friday! 

I'm looking to complete my first deal soon. Following many recommendations in the BP podcast, for a first time investor, it sounds like owner financing can often times be the best route to take. One problem...I'm not sure I fully understand how the numbers work. 

I figured it would be helpful to post about my lack of knowledge for others to learn from as well. I have a deal that came across my desk recently that I'd like to use as the basis for the numbers. Some of the numbers I think I understand but others, not sure I quite get it. The property below will be used for a BRRRR or fix & flip.

So here's the deal:

Home Price: $37,000

Rehab Costs: $15-20,000

Owner Financing Terms Outlined by Seller: 10.25% interest. 10 Year Amortized. 15% Down.

Estimated ARV: $80-90,000

The way I understand how owner financing works:

Downpayment: $5500 one time ($37000 x 15% [or .15])

Financing Payment per Month: 268.64/mo ($31,450 x .1025 = 3223.6/12)

Amortized over 10 Years: Not sure about this part and how it affects calculations above

Would love for any help I can get on understanding these numbers and hope that this post helps others who may have the same questions as me. 

Thanks in advance!

 Hey Jack! Thanks for the advice about private lender/hard money. I've done a little digging into this route but probably should do more research as I don't think I fully understand all the ins and outs of how this would work.

I've heard that this can be pretty risky for a first time investor like myself because if something were to go wrong I wouldn't have as much experience on how to handle that. 

What are your thoughts on this? 

Hello BP Forum!

I'm new to real estate but currently sprinting & hustling to the end of the year to find and buy my first property. I'm from Austin, TX and looking to purchase a BRRRR property in a 1.5-2 hour radius of Austin. Specifically the Waco, TX area.

I'm getting all the pieces of the puzzle put together like Property manager, narrow down the area, contractors, etc. but the final piece of the puzzle that I'm looking to get advice on is how to fund this first deal.

The type of house I'm looking to purchase and think I can acquire is purchasing a house for around $35k-40k with rehab costs of $10k-15k so i can be all in at around $50-55k. Expecting the ARV of the home to be around $80-100k and the property shoud rent for around $800-900/month

I have about $20-25k I can spend, but prefer to have as little cash in the deal as possible. 

Does anyone have any stories or suggestions on what method to use for a first time rental property buyer? Open to any suggestions and open to starting a dialogue with any banks, loan officers, private lenders, etc. 

Hello everyone! 

I'm getting very close to feeling comfortable purchasing my first BRRR rental property. One of the things I'm am asking for tips on is determining the ARV of a home to better assess whether or not this will be a good deal with as accurate of numbers as I can get without bringing in an appraiser.

Currently, I go to Zillow, Redfin or similar property listing tool and find the house I'm interested and view other homes in the same neighborhood/area that are similar in size/bedrooms/bathrooms/etc and then that's how I get an ARV.

Any tips on how I can be more accurate with these numbers? Thanks for the help in advance. 

Hello Bigger Pockets community!

I'm curious about people's thoughts on and experience with C-Class Neighborhoods that you've invested for BRRR rental properties?

I have a market that seems to stack up as far as numbers but my final concern is regarding the type of tenants that the area will attract. 

As far as numbers I could get a home in the $50k range and rehab it with around $10k-15k and average rent in the area would be around 850-900 for a 3/1 or 3/2 SFH. If we're applying the 1% rule, we're actually closer to around 1.5% or so. So numbers are good.

My question is, will the area and the tenants it attracts end up causing more headaches than the numbers are worth? Anyone with experience that can help would be greatly appreciated! 

As a point of reference this is the article I'm referring to when I talk about C-Class neighborhoods. 

Thanks for the help!

Hello Isaac! Not an expert by any means, but the deal at first glance seems to be a bit low on the cashflow side. The rule of thumb I've heard is 1% (at a minimum) of the purchase price should be the rental income coming in. Potentially even 1.5-2% if you want a very safe deal, which I'd assume you would want for your first deal.

It looks like you're at about .5% of the purchase price which seems a bit risky to me. Open to hearing what people with more knowledge have to say about this deal.

 Hi Greg! Thanks for the response. 

I'm not super familiar with hard money so I will probably take your advice and stay away from it for now until I have more experience under my belt. I'm definitely looking for something to get me started in the rental category. I'd like something that cashflows well (don't we all) but am not super concerned with an appreciating market as it seems that's just a bonus that you may get.

Are there any specific markets you'd recommend for someone just getting started? Others have mentioned the San Antonio market, it seems very hot right now...potential cash flow and appreciation there? 

 Hello Caleb! I second that....great name!

I've briefly researched the Killeen & Temple area. It seems like a relatively great area and it appears multi-unit properties are available there as well. Have you personally done any investing in these markets. Curious if they have a high amount of vacancy with it being a military town or if that actually works in favor of the town because there are always people being moved there?

 This is great to know Zackary! I wouldn't have known that the Coe College students are required to live on campus. That was one of the reasons I thought the Wellington area would do well.

So for the home you purchased, was it difficult finding tenants to fill the units? Do you use a property manager or did you end up filling it and renovating it yourself? 

Thanks so much for the reply! Always great to hear from someone who just recently entered a market and can give you current info about their experience!