All Forum Posts by: Account Closed

Originally posted by @Account Closed:

@Account Closed congrats! I am currently looking for my first BRRRR at the moment. Would you mind me asking if you REI full time of fund it with a second job? I am currently looking to change careers and Im researching the idea and possibility of being a full time investor. Some say it's not possibly right off the bat and others say it is. If it is, Im looking for the best ways to go about it. Your story is inspirational and just wanted to see how you exactly went about it? Thanks!

Thanks for the comment Lino, both my partner and I have full time jobs to fund/back our deals.  It's definitely possible to go full time right off the bat, but it's difficult to borrow without a W2 income.  Currently we're just putting every dollar back into the business to fund the next deal. Good luck!

Originally posted by @Lesley Resnick:

BRRRR is an amazing approach. The challenge I have seen is getting conventional financing for the refi. The banks are looking for w2 income to cover the mortgage. Some will include part of the (net) rental income. The banks are looking for 40+-% dept to income. If you are not able to qualify then you are back in expensive money.

Yes, it can definitely be difficult to get the refi after you've purchased, rehabbed and found a renter.  My partner and I both have W2 income, so we were able to qualify for conventional financing.  We did however have to purchase the house using private money up front.

@Jay Hinrichs - how much would you recommend keeping in reserves for each property?  Is it a standard number or do you suggest a % of the property value?  Thanks!

Originally posted by @Laura H.:

Originally posted by @Ryan K.:

Congrats on the BRRRR! Any chance you can share more detail on your numbers and cash flow? PITI, maintenance, vacancy, capex, PM? I'm having a hard time wrapping my brain around the fact that monthly rent amount of $595 per month can cash flow over $200 with a refinance at $52k?

That's a good point...

By my guestimates I'm having a hard time coming up with that much cash flow:

$52k@ 5% = $280/mo Payment

Insurance & Taxes: $150/mo (total guess here...)

Low est of 5% each for Vac/Maint/CAPEX = $90

$280 + $150 + $90 = $520

$595 - $520 = $75

Even if you take out the $90/mo for Vac/Maint/CAPEX, it's still only $165/mo cashflow.

What am I missing here?

@Laura H. & @Ryan Kelly, thanks for asking the hard questions. This is our first BRRRR so we are still working out the numbers and how much to allocate for each of the main expenses like Vacancy, Maintenance, & CapEx. Here is the simple breakdown:

$390 for P/I/T/I

$615 for rent (we've had this house for 2 years, and have been able to raise the rent slightly)

We only save about $25 monthly out of the rent, because we have $15,000 in reserves for vacancy, maintenance, and CapEx. We have 2 properties and figured $15,000 was a good safety net, and to clarify this $15,000 is not being used for investing. So that is where we came up with about $200 in monthly cash flow... Is this a bad idea? We figured if we had to dip into our reserves then we would build that account back up to $15,000 before we used the rent proceeds for new projects. Please chime in as we are still figuring out our process and want to be as smart as possible. Thanks!

Jay - you're right, we didn't technically make $15,000, but we did turn our initial investment of $15,000 into $30,000 to reinvest which is a win! Kristopher - thanks for the kind words! Rich - So I live in Florida and my partner lives in the Charlotte area. We have a small team in place, but he is our boots on the ground when needed. Clint - The house is still cash flowing just over $200 a month after pulling all of our equity out. We've been fortunate to have a great long-term tenant in place. When we did the refi, we used conventional financing... We would have preferred to originally finance the property with conventional financing too, but went with private money because it was difficult to get a mortgage for $20,000.

Thanks Roy!  We used a local broker in the Charlotte area.  The closing costs were just above $3,000 but if you send me a PM I can give you the details & contact info.  Thanks!

Thank you, yes both properties actually came off of the MLS. I haven't done any marketing or found any wholesales that we've been able to work with.

This month I successfully completed my first BRRRR project, and want to thank BP because until recently I've never heard the term BRRRR. We purchased a house in Charlotte, NC just over 2 years ago (November 2014) for $35,000 in cash - $15,000 down with the other $20,000 from a private lender. The property didn't need much, but we repaired the sub-floor in the master bath, HVAC / duct work, replaced some appliances & the rest was cosmetic work. All of the repairs were handled as they came up and actually paid for with rent proceeds. We rented it right away for $595, and after loan payment & expenses our net cashed flow was just over $200 per month. The house recently appraised for $70,000 and we closed earlier this month on lucky Friday the 13th, pulling out $52,500 in equity. After paying off our private loan, and anticipating our closing date we were able to get our next house under contract exactly one week later on the 20th! Here are the numbers below:

$52,500 Cash from refinance
- $6,000 closing costs ($3,000 from original purchase and $3,000 from refi)
- $16,500 private loan balance
- $15,000 initial cash investment
= $15,000 extra to reinvest!!!

We were able to double our original investment amount and will hopefully be able to close on 2 properties and continue to repeat the process.  The best part is that the house we are buying next will be almost fully funded by the first.  We got it under contract for $78,500, and are putting 20% down ($15,700).  With another $3,000 in closing costs, we will be all in at $18,700 and $15,000 of that came from house #1. 

Thanks BP for all the inspiration, I would love to hear about other people's BRRRR success stories!!!

Hi BP,

I'm currently looking at a multi-unit deal in Florida that is part of a local government subsidized neighborhood stabilization program.  The deal is for 12 separate multi-family homes, and the seller is saying that there is no mortgage, but after the "holding period" there will be no mortgages and the homes will be paid off.  Obviously the first question is regarding the holding period, but I wanted to see if anyone has purchased a deal like this or has any experience with these programs. 

I'm working through the financials now, but the deal at first glance looks way too good to be true, and I'm very skeptical as to why they existing owner would be selling. 

Please share any experience with this type of deal, and any questions to ask that I may not be thinking of.  I am working up the numbers now, and can answer those specifics as I get to them. 

Thanks!

Hi Jonathan,

I'm not in the military myself, but my dad was and we know a lot of families that employed this type of strategy.  Basically, they bought a house at every duty station, and when they moved, employed a management company and slowly grew their portfolio that way.  There is a lot more to it, but there is a great podcast about a military investor who is killing it in Pensacola, FL... I would check that out and go from there.  Hope this helps, good luck!