All Forum Posts by: Fred Buechel

Anyone dealt with fire damaged properties? I'm looking into one now but I cannot access the property until the seller's insurance settlement comes in..It's a 3/1 house with a brand new (undamaged) 1 car detached garage. If I can get it for next to nothing, do a lot of the gutting myself and pay contractors to renovate, I think I could be on the good end of this one. 

Here's the kicker...this is my first investment property, so it's a big undertaking.. I'm not sure of renovation costs, and I can't get in there right now to bring a contractor with me for estimates. I just see this could be a great one to start with..

I would be doing the BRRR method..Current asking price is $19,900..I have no clue what it would cost to renovate a 1000 sq ft 3/1 ranch w no basement.

Also, if ARV is $100k, and rentals are going for $1200-$1400, I would need repair costs to be around $30-$40k to really win with this one.

So I understand correctly, I would then refi and take the equity (in cash) out to pay off repair costs, have some left over to purchase my next property, and have a tenant into pay off the refi? Can someone correct me if I'm wrong on that?

Thank you!

Hello. 

This is my first post in BP Forums. I really want to get into the investment World. One of my first questions is regarding the best way to finance or fund my first property. I really don't want to dip into my equity in my house as I've done that in the past few years for some home improvements. I don't have a ton of cash, but I have access to a Roth IRA that I can withdraw money I've put in without penalty. That would be around $20k, and the way it's performing recently, it seems like using that money to purchase my first investment property may be a better long term option. Any opinions, thoughts or suggestions for this eager newbie would be appreciated. FYI I'm located in suburban Detroit, but love SW Florida as well.

Thanks in advance!

@Scott Matthew C.

Would Forming an LLC and putting the houses in the entity's name be one way around it?

@Jason D.

Sounds like what I thought.

So you just endlessly have loans, which are being paid off by the tenants, which builds equity, plus your monthly cash flow from each property, and all the while you’re accumulating more properties (compounding monthly cash flow) which is the name of the game.

Sound correct?

New to the investor world. Plan on using the BRRRR method.

I'll be using funds from a HELOC on my primary for a cash purchase and to pay for rehab.

My question is, once I refi after the rehab is complete, I use those funds to pay off my HELOC balance I used to purchase and rehab, correct? I would then have the HELOC money plus excess equity (leftover from refi) available to use again to purchase another property, correct? I would then have a HELOC and conventional loan to pay back (from tenants of course), correct? Just repeat this as many times as possible?

If I have this wrong, please correct me because I am somewhat confused by this part of the process.

Thank you.

@Eric P. Yes they do. But we don’t. Love oceans. Hate mountains.

We are new to the RE investment world, just trying to decide how we want to get this thing moving. We are looking to purchase a vacation rental in Florida, Hilton Head Island, or Myrtle Beach. We would like to keep the pp in the $200,000 range or cheaper. I know the market is saturated with these STR's, but it seems like a better option right now than buying multiple local SFH's for what seems to be top market value, and not seeing a significant enough cash flow or chance of appreciation. We're in SE Michigan, and most of the homes I would consider purchasing as investment homes are currently at their max value. Not a lot of good flip possibilites around here right now either. I don't wanna buy a $30,000 house for $50,000, and that's where we're at right now in this Metro Detroit market. The margins are just not good enough right now.

That being said, we've decided we may want to go the vacation rental route instead, and at least have a nice place to show for it, with hopefully reasonable ROI. We love SW Florida, especially Sanibel Island. However, you cannot get anything on the island for less than $400,000, and that's a 1 bed/1bath condo at 500 SF. It is oceanfront. I know the oceanfront resorts (Sundial is our favorite) do have solid returns, so it may be worth the extra money we would shell out. If we decided that was the best place to invest, we could pull it off with a history of strong returns. The other options we considered were other oceanfront properties in Florida (Vero Beach, Cocoa Beach, Clearwater Beach, Destin, etc), or oceanfront on Hilton Head or Mrytle Beach, SC. The prices in the areas other than Sanibel are way cheaper for oceanfront condos. Just not sure about the weather year around, as we know it's beautiful all year in Sanibel.

If anyone has any advice, tips, other locations to consider, or any other information on investing in a STR in any of these areas, please feel free to respond.

Thanks

Thanks Tom.

On a cash purchase, there is no appraisal, I'm a realtor, so I don't need an attorney, no mortgage, so no escrow, and the seller pays title. Therefore, none of those fees apply if I'm paying cash for the property. The only closing costs would be pro-rated taxes and a small closing fee charged from the title company. 

This would save me approximately $2,500 per purchase on a $50,000 home, per my lender. Granted, the $2,500 would roll into the mortgage, so it would essentially be paid by the tenants. 

The flip side is, on a financed purchase, I would be able to dip into my HELOC for the down payment on multiple properties (in the $50,000 range), and have multiple small mortgages, but they would be paid down by the tenants. Not sure what the cash flow difference would be on multiple small loans VS one large HELOC payment if I purchased one property with cash.

Hope that's not too confusing.

Hello BP!!

I'm just now getting into the rental world. I'll be getting my initial funds from a HELOC on my primary residence. I have access to about $70k. I'm looking to purchase my first investment property, looking in the $50k price range. Hopefully I can get it for slightly less.

My question is.. am I better off (long term) using the HELOC to pay cash for the property, or using it for the 20% down payment, and getting a small mortgage.

My thoughts are leaning towards paying cash, and avoiding closing costs, as well as having the HELOC and mortgage to pay down. If I pay cash, I would only have the HELOC to pay down. Also, by going the cash route, I'm thinking I could then leverage the rental (by obtaining a HELOC on that) to purchase another rental property in the same price range, and within a relatively short period of time.

Any advice/thoughts/direction on this would be appreciated.

Thanks in advance!!

Good advice..

Any thoughts on the basement or not?