All Forum Posts by: Dakoda Spencer

Hey BP family, I'd like some quick advice.

I'm going to look at a house tomorrow that the numbers look amazing on. I have two things to ask people. 

1. What are some things to look out for while walking the property that most people would miss? I don't want to miss little things like are the outlets 2 prong or 3 prong. Any suggestions?

2. Can I do this deal as a BRRR, and then live in it once it's all said and done? The house is an REO, selling for about 50k, ARV of about 120k-130k (will confirm tomorrow), rehab of about 35k (will also confirm tomorrow), have a HML willing to do 80% of acquisition cost and 100% rehab cost @12% for 12 months (with no prepayment penalty), have a bank willing to give 80%LTV refi for primary residences. All I should need to bring to the table is the 20% of the acquisition costs, right? Assuming that I'll be able to refi and cash out my HML.

Any input would be greatly appreciated. I'm going to view the house tomorrow after work. 

Thanks everyone!

@Robert Buck and @David Sohn, thank you for your input! I really appreciate it! 

I'm looking for local investors that would be willing to talk to me. Unfortunately, I haven't had much luck within my area finding someone that is willing to help me. Most investors (Not all, since I haven't met all of them) are not very willing to discuss how to invest since I'm in a pretty small market. If they are willing to talk with me, they have nothing but horror stories and cautions going forward. I'm even having a hard time finding a local agent to assist me while I'm getting started (hence the main reason I'm looking into the appraiser info). I always tell them what I'm doing, what my goals are, and where I'm at right now. They usually say that they are really busy and suggest someone else, who does the same thing, or they stop talking with me all together. 

I don't care what it takes, I'm going to become a real estate investor. It's just a matter of time for me until the pieces start falling into place (because I am super determined and "hustle" a lot).

Thanks all guys for your input! It means a lot!

Hey BP, quick question about coming up with ARVs. 

While I am looking at some potential houses that would be a good flip or BRRR house, I'm having trouble coming up with a good ARV for them. The houses I'm looking at are in relatively smaller neighborhoods that don't have a lot of comps to back them up.

Would it be beneficial for me to consider becoming an appraiser (or at least going through the course material)? I've looked up what it would take to become an appraiser in my state and it looks pretty intensive (minimum of 150 hours of "Qualifying Education"). Would this be worth it?

I plan on taking a course soon that will give me the hours and knowledge to become an RE agent in my state. If I do decide that becoming an appraiser would be beneficial, would that create some sort of conflict of interest if I'm already an agent? 

I'm still new to REI, so please don't make me feel dumb if I'm just talking crazy. I'd rather ask the dumb questions than to be the dumb person that doesn't ask them.

Thanks! Dakoda

@Stephanie Boggs yes that helps a lot! When you say "CE", I am assuming you are talking about continuing education. Please correct me if I'm wrong. 

Could you give me a ball park of what I should pay for a course? 

Again, thank you so much for all your help! You truly don't know how much it means to me that you (and so many others) are willing to assist me in getting started! 

-Dakoda

So I was digging through the site a little bit and was checking out some of the features. I tried looking at the REOs in my county and it says I need to sign up for a free trial to view them. 

I didn't know if I was missing something simple and I wanted to clarify if I would indeed need to pay for access to that. Thanks!

-Dakoda

@Conner Snodgrass, thank you for the resources, I greatly appreciate it!

@Stephanie Boggs, thanks for your input! I'd like to connect with you on here and hopefully keep in touch. I'd like to stay kinda local so maybe we'll run into each other later down the road. 

For both of you, could you give me an estimate of how long it would take to go through the class if I can put about 2 1/2 hours towards it daily? I'm super motivated and spend at least that much time on a daily basis now just researching stuff about real estate. 

Do you have any suggested resources to help me study that are free? For instance, do you know of any good YouTubers that put out great content or anything? This leads me to my next question; Can I use only the material they give me to pass the test? Or do I need to work just as hard outside of the class studying to gain enough knowledge to pass? 

It isn't my intention to just pass the test and not know what I'm doing, but I would like to have a gauge of how much knowledge I need before I go to take the exam. 

Thanks, Dakoda

@Jeff Brown, no problem. I'm glad I can assist some. Yes, please keep me updated. I am very interested in how this turns out. Just send me a message if you ever wanna talk. Thanks!

-Dakoda

Hey @Conner Snodgrass, thank you for posting! I have a few questions about the process.

How can I find a course? Do you suggest any courses? Is this something I could do while I hold a full-time job? Is there an option for online classes?

Again, thanks for your time and assistance! 

-Dakoda

@Jeff Brown. I don't think this would be a good property for the BRRR strategy. The main reason why the BRRR strategy works so well is because you are able to add forced appreciation and pull that money out when you refinance.

I'll give a short example of how it should work: If you buy a house all cash (cash from your HML) for $50k, put $25k in rehab (also from your HML), and the house's ARV is $125k. You will be in the deal for about $75k. I'm excluding all the additional numbers for simplicity sake. Now, most banks will only refinance about 70%-80% of the value of the property. We'll use 70% for this example. For this house, you will be able to go to a bank and then refi for $87,500 (which is $125,000x.7). With this money you will be able to pay off all that you have in the house and have plenty of equity left.

How it could go wrong: You buy the same house for $75k, put $25k in rehab in it. You're now in it for $100k. The ARV is still $125k. Go to the same bank with the same LTV refi rate (Loan To Value- the 70% we mentioned earlier) and they give you the $87,500. You wouldn't be able to get enough out of the refinance to pay off your original financing.

For me, I'm concerned that you wouldn't be able to add enough forced appreciation into the property for it to give you enough to refi out. For BRRR, you need to make sure you are able to pay off all you have in the house when you refinance at the end.

After looking a little more closely at the property, I think 10% Cap Ex would be high enough. It does appear to be in good shape. Again, I don't know the area so I would ask some local investors what numbers to use for that.

As I said before, I'm still learning as well. So, if someone finds something wrong in my thinking, just correct me.

I hope this helps!

-Dakoda