All Forum Posts by: Christina J Allen

The first thing I got lost is on how much to offer for the buyer. For flippers I see ARV*0.7 - rehab cost. Is that going to be the same for the BRRR also. As I mentioned the house does need a whole lot of renovation. I am not planning flipping, I am planning to live and rent out part of the rooms.

Right now I am planning to ask 70% of the ARV of the house. And to get my renovation money, that is where I am kinda lost - like how and how long does it take?

For BRRRR to work:

Ask 2 Questions:

1. Will you Cash Out after you Refinance?

Calculate the Max Offer Price, to ensure you get all your Inital investment $ out:

ARV X 70% = Maximum amt Refinance lender will Loan you.

MAX Offer Price = Max Loan amt - Rehab Costs - Soft Costs.

Soft Costs = Closing costs + Holding costs

If you offer more than MOP, you will inevitably leave some of your inital money in the deal & not fully cash them out during the Refi process.

2. Will I Cash Flow after Renting it out?

Cash Flow = Rent revenue - Operating Exp - CapEx - Vacancy rate - PITI.

IF Yes to #1 + Positive CF for #2, then you should do the BRRRR.

This is amazing! Thank you!! Thank you so much for this.

0 Votes

Germantown, Maryland

Quote from @KC Pake:

Quote from @Christina J Allen:

HELLO EVERYONE!

I have been given the vision of providing housing for the needy. I have been identifying houses that could work with the BRRRR method (or close to it) and I plan on getting 10X traditional rental prices by creating cooperative living environments where I charge by the bed.

I am new to this journey and I have identified a house close to me. I am thinking about putting in offer and I am looking for guidance as I go. I have been blessed with tenured help in the real estate world and I am posting in this forum hoping to have accountability as I face my fears of the unknown. I am currently here:

House purchase price : $125K max (preferably lower)

Renovation costs : $125K (overestimation)

ARV: roughly $300K minimum

Refinance: ---- pending analysis---

If you have time, please click the link to see the house and give any insight or things to consider. As always, I appreciate any assistance and guidance in advanced.

https://redf.in/MEeRV0

Hi Christina,

It's great to see you're considering a BRRRR (Buy, Rehab, Rent, Refinance, Repeat) property for investment, especially providing housing for the needy! This strategy can be highly rewarding, but it's wise to approach it with some key considerations in mind.

Firstly, regarding the potential structural damage, I noticed in some of the ceiling pictures. It is essential to get a thorough inspection. Roof repairs can be costly, so knowing the extent of the damage upfront will help you budget accurately. Sometimes what seems minor could be more significant upon closer inspection (mold, new code rules for insurance purposes "hurricane clips", etc. Speaking of insurance, make sure you do some shopping. Florida has become very difficult and expensive for property insurance.

Another critical factor is the lead time for contractors. Currently, the demand for skilled contractors is high, which could mean a longer wait time before starting your rehab work. This delay could impact your timelines and carrying costs, so it's something to factor into your overall budget and strategy.

Here are some key points to keep in mind:

Budgeting: Ensure you have a realistic budget, including potential structural repairs, and large appliance replacements. Also, include a cushion for unexpected expenses.

Timeframe: Be prepared for possible delays in getting contractors. Plan your finances to account for a longer holding period before the property generates rental income.

Market Research: Understand your local real estate market well. This knowledge will be invaluable in making informed decisions about renovations, refinancing, and renting out the property.

Exit Strategy: Always have a plan B. In real estate investing, it's essential to be prepared for various scenarios.

Best of luck and keep us posted on your progress.

This is valuable thank you. I am unsure of how to account for the holding costs and the unexpected costs. If we can get the house at 125k we estimated 50K for unexpected charges but I, that doesn't take into account extra holding costs. Any rule of thumb you follow for holding costs?

0 Votes

Orlando, Florida

Quote from @John Karg:

Hi Christina,

I would reiterate most of KC's points above. This project will definitely not be an easy rehab, and will require having good contacts for workers to get started right away.

Separately, if you are running a home rented by the bed (such as assisted living), you will generally need a license for this and potentially a zoning exception to be made by the city. I'm seen them require all sorts of upgrade be made to the home to accommodate this, such as installing a sprinkler system and enlarging the driveway for extra parking. Just make sure to check the city requirements beforehand to make sure there are no surprises.

Good luck bidding on this one--let us know if you get it!

Thank you! I have a lot to account for. Its gonna be a beast. I most likely will be paying someone seasoned to help me with this process. Holding costs will be a definite factor and I am trying to account for that but I am honestly not sure how. I will certainly get a thorough inspection prior beginning renovation.

Finding the contractor will be a challenge. That is what I am currently networking for.

And your correct about the ALF strategy. I have found a way around this by serving only those who are independent. This way I dont need a license. :) Basically my home will be a MTR/LTR by the bed and the tenants will be "leasing the space" rather than renting. It creates a win win for both the renter and the home owner. Hopefully one day Ill go the licensed route and be able to care for our elderly or disabled.

0 Votes

Orlando, Florida

HELLO EVERYONE!

House purchase price : $125K max (preferably lower)

Renovation costs : $125K (overestimation)

ARV: roughly $300K minimum

Refinance: ---- pending analysis---

If you have time, please click the link to see the house and give any insight or things to consider. As always, I appreciate any assistance and guidance in advanced.

https://redf.in/MEeRV0

1 Vote

Orlando, Florida

Thank you for the insight. I know many are also becoming private lenders by using business credit and lending out the money in the short term. I know they exist, I just have to find them.

I will certainly check out those two groups.

0 Votes

Orlando, Florida

Hello everyone,

I am a new investor with a unique group home/cooperative living model looking to purchase my first home to serve my community. I currently have waitlist for (10) people who need housing and are willing to live together, with guaranteed rent! My goal is to have my first home up and fully filled by December 2023. My next battle is securing funding to purchase and renovate a home. How do I find private investors? Advice is greatly appreciated.

P.S. I am currently planning to attend meetups in my area. I know I'll meet many there :)

Thanks,

Christina

1 Vote

Orlando, Florida

Quote from @Denver McClure:

Hi @Sidney Flood, I'd recommend connecting with @Christina J Allen. she is working on a group home strategy as well.

Thanks for the shout out! several people have reached out to me with interest.
I’m super excited to start working with you!!! Prepping for my reno! I’m def gonna need your guidance lol Thanks for all you do #rockstar

1 Vote

There is so much to tell you about group homes. But I would be doing you a disservice if I didn’t refer you to the ones who are teaching me everything I know.
go to the the website : www.grouphomeriches.com

It's a shame that more REI aren't doing this. But I sense a change is coming especially with the affordable houses CRISIS we are experiencing right now. I will be opening my first home in December and I didn't even need a license to do it! Happy hunting everyone and i'd love to talk about it if anyone is interested.

3 Votes

Quote from @Denver McClure:

Hey @Christina J Allen, I'd recommend reaching out to @Jeff Nash for Tax Planning. He works with several RE investors across the U.S. with similar objectives.

Thank you! I will reach out!

0 Votes

Orlando, Florida

Quote from @Michael Plaks:

@Christina J Allen

Florida does not have state income tax, so there's no FL tax law to be knowledgeable about. Here is a BiggerPockets directory of tax experts, we all work nationwide. Warning: it's the peak of the tax season, and all of us are quite busy at the moment.

Here're some general questions to ask, and here're some questions to test technical competence. Another warning: I would advise against approaching this process as you interviewing your future accountant, like you would do with a babysitter or a gardener. It's a two-way street.

Michael,
Thank you for the advice. Yes I understand FL does not have state taxes. I was referring to my FL properties, and income how they will be taxed and laws regulation specific to FL for consideration. I also will be investing with a FL LLC in and out of state if possible, so I am looking for guidance all around. I appreciate the heads up about the busy tax season and I hope to build a mutually beneficial relationship with whomever I choose.

0 Votes

Orlando, Florida

All Forum Posts by: Christina J Allen

Christina J Allen has started 4 posts and replied 20 times.

Post: How much is good asking price for BRRRR method

Post: GROUP HOME BRRRR - Found a house

Post: GROUP HOME BRRRR - Found a house

Post: GROUP HOME BRRRR - Found a house

Post: How to find private investor - Volusia county/Florida

Post: How to find private investor - Volusia county/Florida

Post: Group Home Experience Anyone?

Post: Group Home Experience Anyone?

Post: CPA / Tax Strategist

Post: CPA / Tax Strategist