All Forum Posts by: Carmen Pellegrino

Ok need some help, recently posted I am getting slammed on a couple of appraisals and need to understand how this works. I get using a comparable sale but there is also an Income Value. For my example the appraisal lists 3 comps with a GRM average of 85(GRM is value divided by monthly rent) yet the appraiser used 54. This took the appraised value from $148,000 to $94,000. Where does this number come from?

Ok feeling very frustrated. Need some advice. I am in the refinance phase of the strategy. We did the remodels got the properties rented did almost all of the work ourselves. The rent is good and return is not bad but our appraisals for refi came back way under what I was expecting. We had a realtor walk through and give us her estimate on selling price plus checked comps but basically the value went up the amount we put in. This means most of money will not be able to be pulled out. Any help or ideas around how to deal with this? Example one SFH purchased for $48000 remodel included new kitchen, new appliances, new flooring through most of the home(original hardwood in areas not replaced) new bathroom, rebuilt deck, completely rebuilt porch to include new roof. Put about $20k in and a ton of hours. Comps in area going for 80K-110K. Appraisal came back at $65k.....House is rented at $950 month tenant pays utilities.

Doors are a pain in the #$%!!! I had similar issues with exterior doors. Old house don't match the width of new doors so they need to be custom. Installing is a nightmare too. Anyone got ideas for those? I had Lowes quote and it was over $1000 per door installed for basic steel door. Also bought standard doors and hired independent to install at $400 per door and didn't come out the greatest. The deals for BRRRR are always older 1900-1930 homes which has this come up often.

Just had this happen to us but we knew it was going to be an issue and wanted the tenant out anyway(slobs). I would go in assuming the worst and make sure you can manage. I am in Ohio and scenario went like this:

Closed end of August. Tried to contact all tenants about new lease and terms as all were month to month. Could not contact the problem tenant.

Sept 2 No rent received from them(good!) posted eviction notice-they finally called. We told them per the notice they had 3 days to pay or be evicted. No money came but lots of texts and explanations.

Sept 6 Filed eviction

Oct 19 court date and eviction granted

Oct 27 sheriff serves eviction

Month of November cleaning and renovating hoping to have rented by 12/15/20

Explaining this so you know what can happen. That's 3 months of no rent and added expense of cleaning and eviction. We knew going in and this property will still BRRRR great. Just plan for the worst and make sure you can manage with these costs and timelines. Obviously this will vary by state and local laws.

Just had this discussion with my wife. We bought a triplex and we are renovating 2 of the 3 units. After evicting and cleaning up the mess in one unit we found solid oak hardwood that is in good shape but needs refinished. Some areas have no varnish left on them. I wanted to refinish but wife convinced me it was a bad idea. Very labor intensive and tenants in this area will not take care of them. Would end up a waste of time and huge upset when someone did something to them. Switched to LVT. Holds up better and can be replaced for minimal cost if needed. Also able to add some underlayment for sound proofing as this is an upstairs unit. 

Hard to match that trim but I would just go with something that looks close. 

Yes good point Kenneth, I have a lender that will do mortgages down in the 30's The original was bought on a mortgage for 38k. Have to be careful other thing I learned from David's book is the holding period I can not refi for 6 months but already 2 months into that so should be good around Jan.

Just finished a rehab of a property and so excited this stuff works!!. Looked around and found a property (SFH) with good bones but need updates and some major repairs. The front porch was so bad I had to have a structural engineer inspect it before the mortgage company would release. Bought for 48500 with closing and down payment have 12000 of our cash in. Spent about 15000 on rehab including a full rebuild of porch and porch roof, window replacement, deck rebuild and kitchen and bath remodel. Current mortgage/taxes and insurance $308.00, rent $950. Realtor is telling us house would sell for $90,000 all day now. With refinance after holding period we will be able to pull all our cash plus some and still have nice cash flow!!

I just did my first one this week. Used Smart Move by Transunion. You enter the property details. As tenants fill out aps you go the site and enter their email. You have the option of them paying or you pay. An email gets sent to them and they do the rest. Mine came back within 30 minutes. There are 3 levels to choose from and they give a recommendation as well as the details for what they found. I like it and will use it going forward. I have to think this will protect us from passible discriminations lawsuits as well.

Side note make sure you validate they are who they say they are with DL or ID.

Read BRRRR by David Green

Hi Brett we live in North Ridgeville and have 3 properties soon to be 4 in Ashtabula county. I have not completed the BRRRR yet but that is my plan. I have the same concerns you do and am worried about the appraisal on refinance. I know the 25% down for multi still applies if its not owner occupied. Also if its currently financed you sometimes will find lenders have a hold period before you can refi again. My lender is 6 months so keep that in mind. Also she is saying refi is higher interest rate but not too much. Need signed leases as well to help with income to debt if needed.

My current concern is we are bought with loan, put cash in to rehab and then in 6 months want to refi after its rented. I am worried the appraisal will be low or the tenants will tear things up lowering the appraisal. The appraisal is the biggest 'x' factor to get our cash back out of the deal. 

By the way I would think if you do the BRRRR method you could buy more than 1 every 18 months! Read BRRRR by David Green.

I think on the next deal we are going to try cash buy, rent and refi ASAP because a cash buy only requires a 30 day hold. I can turn the BRRRR much faster.

Sorry if my number of R's in BRRRR is off!