All Forum Posts by: David Vaughn

 Hey David!

I think you got a lot of good things going on as you are your own contractor and most likely be able to cut cost in your rehab..

I believe your questions is pertaining to how it cashflows and what are some things to look for as you continue to BRRRR.. Not sure your area that you're investing in, but the perfect BRRRR are kind of hard to come by now in the recent years.. so have the expectations to leave some type of money in the deal..

Big thing that I've ran into and I've seen other investors run into is running out of money doing the BRRRR.. as some or most times you have to leave a bit of money in the deal, folks usually run out of cash to continue to do deals.. especially in the recent years..But good news is.. as you're holding and cashflowing on the deals, there is always opportunity to recapture the equity, not to mention tax benefits etc..

I also see some pitfalls in investors getting desparate for deals, so they get lenient on their number etc.. as they do i see some get backwards on some deals... (or tell themselves $50 cashflow is fine but their standard was $400 kind of thing..)

Hope this helps! LMK if i can help in any way!

Hey David -

Impressive work building over 50 doors! The BRRRR method is a powerful way to scale. Generally speaking, ensure your ARV estimates are conservative to avoid over-leveraging, screen tenants thoroughly, and having a buffer for unexpected repairs or vacancies is essential. Happy to chat about the refi side of things as well. Also, as a GC, you're well-equipped to manage rehab projects efficiently. Best of luck and happy to connect!

Why are you so worried about what the wholesaler thinks? You'll both forget about each other in a few months, but you'll still have the property. One thing that has been consistent in all my years of real estate is that everyone only really cares about their own self-interests. You've got to look out for #1 and that's it. Buying from a wholesaler isn't really "off market" in my opinion, you have to really source the deals directly and not go through a middle man for it to truly be off market in my book. Wholesalers are just like agents who take a fee for connecting buyer and seller. They just might not be licensed, might not be ethical, usually don't answer to a broker or a regulatory body (unless they are licensed) and use a different sales process where the EM typically goes hard earlier in the transaction and the buyer is on their own with fewer contingencies and less time to do their due diligence. The property is still shopped around to the highest bidder so it's still being marketed. Some wholesaler "deals" are actually just pulled off the MLS and marked up. Direct to the seller is the only true "off market" IMO. Frankly it doesn't seem like you're ready to pull the trigger on this deal. 99 out of 100 "deals" from wholesalers are bad IME. I wouldn't recommend working with wholesalers until you've got the experience to identify that 1 in 100 deals that isn't bad, and can rule out the 99 that are bad. You should know the contracts and the closing process, construction costs and all the potential money-pit issues to look out for with properties, so that you feel comfortable with your EM going hard without a proper inspection, etc. You probably need a few dozen "normal" deals with the usual contingencies before jumping in the savage ocean with the sharks IMO. If you were ready, you'd be offering 20% under their asking price since they have no other offers. If that deal hasn't been snapped up already, it's probably one of the 99 bad ones and not the 1 very rare good one, so proceed with caution. Good luck!

@David Vaughn

In general I agree with what you have said however I have had this happen......house sitting for 6 mo, make an offer at asking, be told there is a new interested party, not adjust my offer because I think they are blowing smoke, loose the deal because there was another offer.

I think it is common place for agents or wholesalers to re engage tire kickers when they get an offer.

At the end of the day I tend to offer what I am willing to pay no more no less. So when I loose a deal I don't loose any sleep over it because I feel content I would have over paid if I got it.