All Forum Posts by: Garrath Robinson

I received my house through a quit-claim deed after a family member passed away. There was no probate of the estate done but I do have an heirship affidavit along with an affidavit for the quit-claim deed. You look up the property with the state, I am the owner. I have all the legal and state paperwork showing myself as the owner of the property. My friends over at Navy federal CU have dragged the HELOC process out for over 5 months now as I have consistently been given misinformation as to what would be needed on my part to close the HELOC. I was told the heirship affidavit was the last thing I would need for the title company to insure the title to the property. This morning I received an email stating the the title company will not insure the property with the heirship affidavit ( keep in mind, my processor was informed multiple times there was no probate of the estate because the state did not require it when we went through the legal process.)

I am looking for advice/direction on what steps I should take next. I was planning on using the BRRRR strategy for my first 5-10 rentals and I want to keep this property as it will have a ROI of 15%+ after the first year, as well as a ARV of $110,000+ (low side) after putting in $30k in repairs ($5k buffer) and I paid $0 for the property. So I am blessed to be able to have this opportunity starting out and really want to get started on this property.

Does anyone have advice as far as financing the remodel? 

I understand my options, just want to hear what you all believe would be the best approach from here and if you could recommend any reputable companies in the Indianapolis area to work with. Ive been with NFCU for 6 years and believe I just ended up with a disorganized processor/project manager and decided to close out my application this morning. 

Thank you!

Looking to start developing relationships with general contraxtors in the Indianapolis, Indiana area. 

Who would you recommend in this area?

Who would you recommend staying away from (lol)?

What is your goal with the property? 

@Brian Christel So it sounds like we are in a similar situation. I will give you a breakdown of what I am doing and hopefully that helps you a bit. 

I received my house through a quit-claim deed: House has been paid off since the 80's. I refer to my purchasing price as to what I had to pay to get one family member to sign the deed = $10,000.

So:

Purchas price: $10,000

Bank Appriasal: 75,300

ARV based on comps: $140k (this is about $10k lower, i just like to be safe with my numbers)

Reno budget: $30k

All in w/repairs: $40k (this includes $5k for overruns)

I have decided to fund this renovation with a HELOC for several reasons.

1. I will still have about $20k in available equity after the remodel that i can use as down payments on another property or to use as cash for a reno, 2. allows me to purchase that 2nd rental much more quickly, 3. I'm not paying interest on money i still have access to. The goal of the BRRRR method is that if you put that $20k cash into the property, you want top be able to AT LEAST recover that cash on the re-appraisal after repairs.

2. I would really focus on what your strategy is for your first 5-10 properties and would use one strategy until you have become comfortable enough to try other means of financing. 

Also, what metrics will you evaluate your BRRRR properties on?

ROI, COC, CAP, 1%, 2%, etc?

@Brian Christel As a newbie investor myself, I would start off with the Heloc. It is the most straight forward, easy-to-understand option that you are trying to decide from. Best to keep it as simple as possible, build your confidence from there and then move into using other finance avenues. 

@Christopher Reynolds what part of the refi step has your confused?

@Brian Christel If it comes down to cash out refi or heloc, I would personally take the heloc route just for the simple fact I do not want to pay interest on improvements I haven't made yet. It all depends on what your objectives are. 

You all killed it with explaining BRRRR. I am a new investor and was also wondering if you should take into account ARV + Refi $$. Wish I had a follow up questions but looks like everyone in this thread really nailed it with the info...Thanks!!

I guess that would depend on if you plan on accessing income generated from the property out of your 401k. I would put together a spread sheet, run the number and figure your ARV and then figure your annual rental return vs. flipping the property after repairs vs. getting out of the property. If this property is solely used to help fund retirement and you won't be accessing that income for reasons other than investing, then I would see if it makes sense to keep that property until retirement.

Also:

1. what kind of property is it: Multi, Single, Apartments, Duplex?

2. What was your purchase price?

3. What are similar properties selling for in your area?

4. What is your return on spending the $100K in repairs?

I am not a financial expert, but if you give us a bit more detail I bet someone on here could provide you with much better direction than I can. Good luck!

3.8% national unemployment is really unsustainable over the long term, that in itself is a bubble we should all watch.