All Forum Posts by: Chris Evans

The worst case scenario is that you chop down and dispose of the fence. Factor the cost into your valuation and then it's no longer a concern. 

Hi @Arthur Parker, 

Welcome to BP! Rich Dad & The Millionaire Nextdoor were the two most influential books that led me to REI. Figure out your goals before you dive in. If you know where you're going then you will make decisions that move you there. The second thing is to start. Avoid analysis paralisys, get your team together, and dive in.

Good luck!

There's not enough information to know about how the finances will play out, but I can tell you that it's not impossible for the BRRR method to generate enough positive equity into real estate to fully cover the initial investment.

I have a deal I put under contract yesterday:

PP 230k
Rehab 80k
Buyer paid commission $6300
ARV 400k

Refi at 75% of 400k will recover about 95% of the initial cash outlay.


I just noticed your DM. I'll reply now. 

@V.G Jason No amount of market knowledge or expertise can insulate your business from external events outside of your control. The idea with diversification is to make your business model anti-fragile. I'd recomend reading Dr. Nasim Taleb's Black Swan and Anti-Fragile. 

@Eric Samuels The very first fundamental principle we were taught in finance is to have a diversified portfolio. Diversification is a way to minimize the unsystematic (specific) risk of a particular investment. This can be done through several factors:

1. Diversify tenant pool. By having properties in different physical locations near major employment hubs we can reduce the risk that if one employer collapses then we will still have opportunities for qualified tenants. 

2. Maximize door count. A duplex will still cashflow with one vacancy compared with an SFR which will not. One move we did from 2021-2022 was to 1031 two SFRs. We purchased two duplexes and one SFR in the sale. This added further diversification by converting two properties to three and two doors to five.

3. Diversify investments. Investing in more than just real estate is a smart plan. Stocks, bonds, PE, business ventures, and rental income is a solid plan. Ideally, these investments should not be correlated. When one market is doing well other investments should underperform or lose money. 

4. Avoid over-leverage. One of the most significant causes of failure in real estate investing is over-leverage. Keeping high LTV ratios on every property is a risky endeavor. Portfolio reallocation is sometimes necessary to provide for the long-term success of the investments. What happens if values drop and it's necessary to move to cash or a different market segment? There should be enough equity in the asset so that sales can be made even if values decline.

5. Avoid Concentration Risk. This is the risk that everything is tied to one industry. If a real estate agent is investing in stock with their brokerage and their investments are tied to real estate then it's not hard to see what is possible if the market does significantly decline. We saw this in the early 2000's with the tech bubble burst. Startups paid lucrative stock options to their employees that all imploded when the market shifted. Not only did people lose their source of income, they also lost their entire retirement. 

6. Have a real plan. Model your projected cash flows. Know what your goal is and know your exit strategy. Understand what opportunities are in line with these goals so evaluating opportunities becomes much easier. This is something I've started doing for our clientele - we walk them through a risk analysis and goal-setting session to discuss and help plan how their portfolio needs to look now and into the future. 

@Eric Samuels If you're running a renovation business then yes, I'll agree that the ability to keep a pipeline filled is an essential skill. That skill set, however, is required to run any business! If we're talking about being successful in real estate I would say the most essential skill is the ability to plan and act according to the plan. 

I've built a portfolio that could allow me to retire in comfort where all but one purchase was an on-market deal with fair valuations. Knowing what you're trying to build and knowing what's required to get there (planning) and then the ability to act on the plan are the two essential skills that I've seen missing from at least 95% of investors. 

It's easy to get caught up in the deal's numbers but with a plan of action, investors can eliminate waste, pay the business better, and structure a successful operation that can last for generations. 

An LLC is all about liability protection. Generally speaking, an LLC for each separate property with all LLC ownership being held by a holding company will give a liability shield between properties (ie. a suit on 123 Main St, LLC will not have repercussions on 789 America Ave, LLC)

The holding company can further give additional tax benefits if its ownership is held within a trust or other form of ownership that gives you financial benefits within the ownership/estate structure. 

At a minimum, holding the asset in an LLC can allow for pass-through income, business write-offs, and legal shielding of your other assets (providing that the corporate veil is intact).

I would highly encourage you to meet with an attorney and your CPA. Both should be in your team if you are ready to acquire a property. Discuss your financial structure and tax liability to determine what the best structure is. The structure should be in line with your retirement plan and your investment plan. 

Welcome @Rakesh Balavanthapu! 

I'm here in the metro area and work with investors to help them reach their goals. One thing that I do a bit differently is approach investment advice from a financial perspective. Being a former stockbroker I work with individuals to help them create a strategy that matches their risk tolerance and retirement objectives. Then, once the plan is in place we get to work on building the portfolio. 

If you're looking for assistance please feel free to reach out. I'll send you a DM with more information. 

@Austin Janiszewski if your current primary (Property A) is renovated and will generate positive cash flow after renting, consider this scenario:

Instead of selling, utilize Property A as a source of supplemental income to offset the higher interest rate environment. Interest rates will eventually come down to more favorable terms, but let's say we're looking to pay an extra $350/month to buy Property B just due to higher interest rates. 

We can rent Property A and use the positive cash flow to offset that higher payment on Property B. This is a hedging strategy that uses physical assets by leveraging existing debt at a lower-than-market rate to offset the current debt rates. 

The benefit of this method is you keep the second property which will double the work your portfolio is doing on the Market Appreciation capture side of your balance sheet.

I'm sending you a DM with more information on how my wife and I did this.  

@PJ Boxel Welcome to our market!

Ideally, one of the best markets to be in right now is Medical and Warehouse NNN on the commercial side, but the budgetary requirements for that are going to be more substantial.

Your lending options change based on the number of doors in the states. Single-family loans work for all 1-4 unit properties here. Once you have 5+ doors the loan will be classified as a commercial loan with higher interest and shorter amortization rates. 

For that reason, I'd aim for a 1-4 unit play. Interest rates are not favorable now, so if you come across a deal you can run cash, do it. You can always pull equity as needed by refinancing after a 6-month seasoning. 

House hacking isn't out of order, but it depends on how you use it. My wife and I have two duplexes next to each other in Alaska. One of the 4 units is ours, but we Air BnB it when we're not there and one side of the rent pays for the whole building. This setup allows us to get paid to take vacations to Alaska. 

I'd recommend starting with small, low-risk projects until you get a good crew in place stateside for your renovations and management. Then take on the riskier/bigger projects later once the trust has been built. Best to not risk it all on an unproven horse, so-to-say.