All Forum Posts by: Chris Barrett

Depends on your goals. I typically have a 5 year hold timeline, so I'm not looking to get 100% out. I also prioritize cashflow, which requires leaving some money in the property right now. For me, it's a balance of a safe LTV and a worthwhile cash on cash return. Up until this point, I've been able to pull 2nd positions or helocs on an existing property for the downpayment, intially pay cash for the renovations, then refinance or 2nd position after renovation to get the renovation money back out. So the down payment in this case stays as equity in the property. The current interest rate market and lack of inventory has slowed this process down significantly.

It's definitely harder to achieve, but you can cashflow on a BRRR. It's even harder with current interest rates than it was a couple years ago.

Have your exit financing worked out for each deal, including contingencies for a longer hold time or interest rate hikes (unlikely at this point). You can find commercial lenders who will value based on income, but that doesn't mean you'll get 100% back out. Finding a lender you can work with and who is on board with your plan of operations is crucial. 

4 years is an aggressive timeline, I'm on a 10 year timeline. Depends on how things go, but my strategy is fewer properties that cashflow more per door, to reach my replacement income. 

Sorry, I'm in the midwest so I don't know anything about the North East :) However, hitting your return metrics is always about finding deals. You make your money on the purchase. 

The two metrics I look at in your situation, which I am also in, is Cash on Cash return both $ and %, and Return on Equity. Additionally look at tax implications. I typically look for a minimum return of 10%. Your ROE is definitely less than 10%, your CoC % is probably also below 10%. $1k a month cash flow however is a great start to passive income.

Another thing to consider is your risk profile. I think the market is going to be unstable moving forward, so for me maintaining options is the most important factor in the near term. We'll be holding onto our current single family house, and after moving out and fixing up some small items, putting it up for rent and cash flowing about 1k a month. We'll have 3 years before we have to decide to sell in order to avoid capital gains. 

If for whatever reason the rental market dries up (unlikely in our location) then we could sell. If the housing market drops significantly we won't be forced to sell. It's the best situation to be in. 

Then as you rent it out, you can pull either a HELOC or a 2nd mortgage on the equity.

Fair and balanced. Lol. Trusting professional liars would be a foolish move by anyone. 

The transaction went through, but the mortgage process literally took as long as it possible could have. My recommendation is to use a bank branch that is local to the area of the house, so that they can more easily coordinate with all the parties involved. 

I own a renovated property in Portugal, but have followed several reno projects there over the years and it seems like there are many more structural difficulties in PT to do "flips". 

1. purchasing - the purchase process is a lot slower generally in PT than in the USA/Canada. The ownership trail of properties can be difficult, and there is far more due diligence required. 

2. Velocity of money. It takes banks longer to approve lending in PT, there also are higher costs for each transaction than in the USA such as transfer taxes, stamp duty on purchase and sale. 

3. Lack of experienced workers, like most places around the world there aren't enough experienced builders to get work done in a timely manner.

4. timeline. From what I can tell it'll take 2-4x longer to get a flip completed in PT compared to the USA, so the velocity of that money you are investing is a lot slower and your return could be a lot less because of it.  

On the lending side, a lot of investors I know use private money to do projects like this. I lend out to local investors who have a great operating record and good underwriting for these amounts. 

Quote from @Nicholas L.:

@Jaron Walling

yep.  i am scratching my head at some sales that are taking place.  primary buyers are having to compete with investors of course and they don't need a "return" like we do.  but i am still seeing very distressed assets go under contract at prices that look like they don't make sense.

There's a lot of people who won't make money, or who are "betting" on appreciation to carry them. Even in my fantastic local market, prices have only appreciated at inflation for the last 2 years, so betting on appreciation isn't a great bet.