All Forum Posts by: Eric Miller

Quote from @Chris Seveney:

I would take one over property over 4 all day long. Now I agree the 4 will cash flow better than one will but I also look at it from risk of 4 properties will have higher maintenance costs and lower priced properties tend not to appreciate as well as a higher value asset

I am also in it for long game and managing one is easier than 4

 Thank you, that's helpful.

Quote from @Nicholas L.:

@Eric Miller

I was going to say something similar to what @Greg Scott said, that generally you wouldn't have this as a choice.  but you did say that it "reflects your situation."  are you able to share more about that?

i am just going a deal at a time. i actually have bought properties on seller finance at 95% LTV. i've also BRRRR'd. i'd do either. to go back to my first point, though, i generally can't pick - it can take months and months to find a deal. i then evaluate it and i buy it or i don't. lately i keep getting outbid on potential BRRRRs. I'll make an offer that works for me and then someone else will bid slightly more or way more. i move on to the next one.

what were you looking to get out of asking this question?

My BRRR is in a pretty great location. There are occasional properties in the rural areas around here that I can get 95% LTV on, those areas don't appreciate as quickly but do have decent rental rates. Not sure if it's worth it to gain the extra appreciation while also having to manage multiple properties that are a bit of a drive away and have unknown maintenance requirements. As long my refi goes through ok I think I'd like to hold onto the BRRR and be more careful about what I get into next.

Buy four houses with $50,000 down on each. The mortgage payment is $1,000 on each house, so you earn $500 per house or $2,000 monthly. After five years, you'll earn $120,000 in rent income and $136,000 in appreciation. You've earned $132,000 more by splitting your money and leveraging it.

Since I've been searching for more deals I have seen one or two that might actually cash flow decently but most seem to be at break even assuming normal expenses, vacancies, etc.
I'm just learning my comfort levels with leveraging and trying to take advice from others about managing multiple low cash flow properties vs. one higher value one. 

Quote from @JD Martin:

Correct, I need to apologize for keeping my example too simple when most people on here are much more sophisticated in investing than I am.

Thank you for the answers, I appreciate the insight and it’s helpful to see different perspectives on the same question. 

The example does actually reflect my situation but I tried to keep it as simple as possible. 

I hadn’t thought about the risk of expanding my portfolio by having multiple properties over leveraged, although that seems to be a growth strategy that many use,  I’m not sure it’s one I’m comfortable with. 

I'm working on part of an investment strategy and I'm curious about having one more valuable property that, either through a large down payment or BRRR method comes in at 70 LTV, versus using creative financing to have multiple less valuable properties at high LTV.

So, assuming all properties would be at just above break even, is it better to have one $600k property at 70% LTV, or four $300k properties at 95% LTV? 15 - 20 year hold time.

The rental investment calculators show that the four $300k properties would have a lot more equity in the future and many times the cash flow after a few years, but does the extra maintenance, management time and expense, etc. outweigh the numbers?

Is having more properties always better than one nicer property?

Can of worms opened!

Good points, thank you.

Is there a general rule for how much rehab to do to increase the appraisal value vs. keeping the rehab limited to what would normally be done for a rental?

I've done a couple of flips but I'm closing next week on the first property I plan on BRRRing and I have a question about increasing value.

Most of the value increase will come from normal rehabbing, kitchen, adding a bathroom, and generally updating it from it's current poor condition. It's on a small bit of land with amazing views.

Where I'm stuck is when I should reconfigure the floor plan and also add a dormer to the attic space - now, prior to renting it out? Or wait until I sell it in 20 years or so? If I do it now it won't make much difference in the rental rate, certainly not enough of a difference to pay for the extra $$$ added to the refi, but it will add a lot of square footage, get rid of a strange floor plan, and open up beautiful views of the mountains. It would definitely increase the ARV by 20% or more.

If I was flipping I would do all of the work now.

Any general rule of thumb for a BRRR? Keep it cheap so it pencils out for a rental or increase the value?