All Forum Posts by: Cel Arrington

@Justin Simpkins Roanoke native here.  I'd recommend chatting with Century Title, aka Wilson law firm. They'll let you know if that's something they or another title company can help you cover.

If they can't, they will probably know some good RE attorneys in the area. 

@Neil Seldomridge it is going on and it is every Tuesday at 6:30 PM.  

I won't catch you this week myself, but I hope to attend one in the next week or two!

Hey @My Danh!  I am a very active local investor in Roanoke.  I'd love to chat with you about the property.  Buying homes that need rehabs is my specialty, so this could be a win/win. 

@Kelley Webber I'm relatively new to the REI world, but have been in and out of the Roanoke area my entire life. I have 6 doors in ROA now. I'm not having much trouble still finding solid deals around here, and agree with what's been said about cashflow being pretty strong/stable in exchange for less appreciation than other metropolitan areas. Also willing to help out with knowledge of the area.

@Dustin Morris You seem like someone I'd love to get to know in the area!  We should grab lunch or coffee sometime soon.  I live over in grandin village. 

@Neil Seldomridge There are two REI meetups that I know about

- One happens every tuesday at Jersey Lily's in Salem, this is a long-standing meetup.  People that regularly show up are anywhere from brand new to multi-hundred door investors, so solid mix of people.  I've gathered that these meetups tend to be a bit more focused on landlording, but I know they try to cover everything over time.  

- There is a newer BP meetup that happens on the last Wednesday of every month at Twisted Tracks - 6:00 PM.  You (and anyone else reading this) should definitely come!  Solid turnout of people with very similar goals/mindset. 

Hey BP! 

We are being asked to provide a rent verification form, also seeing them called a landlord verification form.  Does anyone have a good template we could use for this?  For once I'm finding it difficult to find a free resource here.  

Also, I'm hoping someone can give me some clarity around what this form actually needs.  We are being told by a previous landlord that the tenant has to sign this form giving them permission to give us this information.  That seems fishy to me, so I wanted to see if that's actually a law or if they are just being difficult.  

Thanks!

I actually just got done talking through the process with the zoning administrator.  Here are my high level takeaways: 
- you must go through a special exception approval process to have an above board STR.

- The only way you will get approved in this process is by being zoned for commercial residential mixed use (maybe other commercial zoning as well, but I'm assuming you are talking about a typical house or small multifamily

- If you are not, you would have to rezone.  Rezoning to commercial/res mix is extremely unlikely to work if your property is in a residential area.  

- the only other way you can run a STR is if it is your primary residence, and you are only renting out a portion of it while you are living there.

I just tried to get my duplex in grandin approved for a STR. It is currently zoned RM-1 for residential mixed density. I was told to not waste my time applying, because I would 100% not be approved. I was also told there was no way I'd be approved for a rezone to mixed commercial/residential because the street I am on is residential.

Hey BP!  

This is my first BRRRR, and I Just got my appraisal back for the refi. Quick deets:

• 58k purchase + 8k rehab + private loan interest/closing/refi closing = All in at 75k
• Home appraised for 120k post rehab, 75% cash out refi = 90k
• 15k net profit, excluding rental income earned during seasoning. 

Obviously I'm pretty happy!  I realize I have a new problem to consider with this good news.  If I pull the full 15k out, my mortgage will go up, which will bump my total monthly expenses to pretty much exactly break even with the rental income.  caveats:

• I'm including property management in my expenses ($100), but we manage it now.  So, technically I am getting 100/mo in cashflow, but wouldn't if we hired out in the future
• mortgage + taxes/insurance = ~$650 with a rent of 1k/mo, so the 'break even' is me setting aside all of the other costs like repair/capex/vacancy etc.

In my mind, I am choosing between $100/mo in cashflow on a house I plan to hold long term, vs pulling 15k out now.  

15k represents 12.5 years of $100/mo cashflow.  So, do I take $15k now, or in 12.5 years in exchange for added month to month cushion?  

The answer that seems obvious to me is to take the 15k now, because more cash on hand and less equity in the deal is technically safer if something goes sideways, and it's cash I can redeploy in another BRRRR now.

Am I thinking about this right?  Is there something glaring that I'm missing here? 

Thanks!

Great timing on this thread, I just wrapped my my first BRRRR!

I would say I had a best case scenario outcome, which I wasn't expecting when COVID hit mid BRRRR. Purchase + rehab I was all in at 70k. The house just appraised for 120! I'm pulling 75% out, so 90k, minus the 5k to refi. I net 15k off the BRRRR. I also got slightly higher rent than I planned for, and the loan I structured with a private lender was a flat interest regardless of time up to a year, with zero payments until 12 months. So, I got to keep 5 months worth of rent, which is another 5k, and pay my lender back in ~half the time it was due.

That's not what you asked, but I had to get the win off my chest to the community that taught me practically everything about doing this. 

What I would do differently:

• I echo other people's mistake of trying to take on some of the work myself.  It's absolutely not worth it IF you are doing this on the side. The little free time I had got sucked away with the work, and it got done significantly slower.  I probably could have had it rented in 2 months, but it took 4 months instead.  Obviously, if you're doing this full time I think that changes the equation, especially if your problem is being cash strapped. 
• I did not set up an easy way to track expenses during the rehab ahead of time, and this caused me a lot of headache on the other end.  What I spent is spread about all over the place and it's going to be a pain to get it together for my CPA this year.  Get an app that lets you snap a picture of every invoice and receipt, store physical copies in a simple folder in a filing cabinet.  Don't be lazy here!
• I should have vetted more lenders ahead of time for the refi.  It obviously ended up working out, but I was scrambling to get that going when I could have had it lined well in advance. 

That's all I can think of now.  I'm a prime example of someone with zero experience that read every book and listened to every podcast they could find, and followed advice strictly.  If I can make 20k from buying a cash-flowing rental with OPM, anyone else definitely can.  I'm also positive I got extremely lucky. 

Hopefully this inspires you to take action!

Update: 

Just the little bit of pushback revealed two things: 

• The cost to close included an escrow to cover taxes.  Of course, this is an expense I already accounted for in my numbers every year/month, so I do not consider this a closing cost, just taxes to be paid. 
• This also included $980 in points paid.  Apparently it's a default for an investment property, but it sounds like I'll be able to remove that.  

Original perceived cost to close was $5,200, minus points I won't pay and the tax escrow, we're down to ~$3200.  

Thanks for the insight, and hopefully my partial blunder and partial reasonable catch will help someone else in the future :)

Thank you both.  3-4k is what my original expectation was, so this is great to hear.  I'm going to shop around, I'll report back what I find in case it helps anyone else.