All Forum Posts by: David Millot

Most HELOC's require you make interest only payments on the amount you've used while you are in the draw period. So you have to account for that monthly interest only payment... you can call it holding costs or debt service, but either way that extra payment needs to be accounted for in your cashflow analysis.

I had the same issue... my first BRRRR was unclear how to input these holding costs. Also, if you use HELOC funds or credit for down payment, rehab costs, etc... there isn't a natural spot to input that either. I found a misc spot to enter those items and it seemed to work fine for rough purposes.

My BRRRR is ready to refinance after 6 months of seasoning, and (surprise surprise) rates went up significantly more than I had anticipated. Add to that the reno took more $$$ than originally budgeted, and my updated deal analysis shows negative cashflow for several years if I refinance now at 7.5% on 80% LTV of $350,000 ARV. Do I 1) refinance now regardless of rates 2) Wait to refinance a few more months and keep an eye on the market (seasoning requirements changing to 12 months?????), or 3) sell now and move on.

@Sean Snizek

Welcome! I’m in the same boat! (New to BP, motivated to get into RE).

@Tiffani T.

I’ve been contemplating the same exact thing… in the Portland area though it is difficult to find a deal within the time constraints so a lot of people have recommended just selling, pay the taxes, then you have the flexibility to find the right deal. Another tip I keep hearing is call as many 1031 exchange intermediaries as possible and ask all your questions to each to glean as much wisdom as possible. Most are more than willing to provide feedback. I’m still undecided personally, but hopeful it works out for you!

@Aj Parikh Thank you!

@AJ Singh Thank you!

@Aj Parikh when you buy and hold for appreciation, what is the minimum cash flow you look for?

@Brad Hammond

I've heard 1031 exchanges have been really difficult to get done within the time frames allowed in the PDX market... The more I process it, the more it seems that it would be better to hold onto this property if I can't make a 1031 work... any thoughts on that? In the Portland market, it seems like 2-4 MF is the best way to get both Cash Flow and appreciate... SFH like my current one seem like unicorns in the current market, lol.

@AJ Singh what are 1031 exchanges like in your market? Are you seeing them happen on time, or falling through? Long term I'd like to have a mix of cash flowing properties and properties that appreciate well. 

Investment Info:

Single-family residence buy & hold investment in Hillsboro.

Purchase price: $215,000
Cash invested: $12,000

Detached Single Family Home, 3Bed 2.5Bath, 1,400sf. Tenant pays utilities. I pay HOA fees which cover lawn and irrigation maintenance.

What made you interested in investing in this type of deal?

I like single family class A/B homes because the tenants tend to be better and longer term, and the rental market in our area for this type is strong with many large companies and urban centers nearby.

How did you find this deal and how did you negotiate it?

We bought this as a primary residence so the deal was a pretty standard.

How did you finance this deal?

Conventional 30year loan as a primary residence.

How did you add value to the deal?

The house was/is relatively new with low expenses already... we were able to get close to top dollar rents for this type of property from Day 1.

What was the outcome?

We lived in the house as a primary residence for 3 years, then converted it to a rental when we needed to upgrade our primary residence for our growing family. After loan servicing and expenses (yes, including capex, maintenance, HOA, etc.) its still cashflowing roughly $100/month.