All Forum Posts by: Darren Budahn

I disagree very strongly with blanket statements saying Milwaukee and Madison are the worst cities to invest in and that you should stay away. Madison is a very liberal city that has strong protections for tenants. Kind of like San Francisco or New York City or many other areas throughout the country.  I'm sure nobody has made any money in those markets either. Lol. 

And I believe you can only "loan" (its not technically a loan) yourself the money once a year. And obviously be careful and make sure you have the resources to put the money back into the IRA within 60 days to avoid the penalties. Could be very risky.

@Tony Blessings

It all depends on what area of the city you are operating in. If you're in a lower income neighborhood with old housing stock, there's a good chance your repair costs may run fairly high. 

With that being said, if they failed to tell you about an eviction, I would certainly be done with them. And this happened on a tenant who they just placed seems like another red flag to me. I'd cut ties. 

The amount you charge for rent is in no way correlated with your purchase price, rehab costs, and appraisal. You charge for rent what the market will allow you to charge. The point of the BRRRR strategy is to buy a property at a discount, rehab it, and then refinance it to get all or most of your total cash outlay back. This allows you to use the same money on the next deal.

I know you said your example was hypothetical but I think it will be extremely difficult, if not impossible, to find a listed property in this market for 110k that needs 5k in rehab and has an ARV of 180k.

If you do find those numbers I wouldn't mess around with renting it. I would sell immediately and make 65k. 

I would not pay $100,000 more than the comps under any circumstances. I think it's a terrible idea. Not to mention, you won't be getting a loan from a bank as they will require an appraisal. (Unless you want to bring $100,000 in cash to closing)

Great information from Andrew. Delayed financing can be very useful if you can buy at a significant discount and don't want to wait months to get your money back. 

It depends if you are looking for conventional financing or not. If you want a 30 year fixed with lower rates you are going to have to wait 6 months. If you want to cash out right after renovations and an appraisal then you are going to need to find a portfolio lender. Terms will not be as good as conventional.

The person who does the appraisal for the bank is going to be the one responsible for finding comps. If they simply won't do the loan because they can't find good enough comps I would look for a different lender.

@Jason Sperling

I would look at local "business" banks or commercial/portfolio lenders.  They will be your best bet. You can't leverage retirement accounts but you can use non retirement accounts. My lender does up to 70% of the value of the accounts and the interest rate is prime plus 1.