All Forum Posts by: Guillermo Perez

@Guillermo Perez I'm looking to get into my first BRRRR soon. How did you go about finding your contractor? My lender and realtor don't seem to know who I should contact so I'm on the hunt in my area of Michigan.

My wife's friend's husband is a handyman who has a lot of experience. I had him redo my shower in my primary home and I liked his work. I got him to do the rehab on the investment property and his work was very good. The only problem is that he was working on the house for almost 4 months. I think he started getting burned out. The kitchen became an issue towards the end. I had a coworker who's brother is a contractor. I hired him towards the end to finish the kitchen. Both were referrals

0 Votes

Houston, Texas

Does anyone have experience with seller finance? There is a house near mine that is abandoned. I got a hold of the owner by looking up his information on the county website. I asked if he was willing to sell the house cash? I was planning on doing a BRRR. I would use my HELOC to make the purchase and rehab. The owner said he would sell but at a very high price. Here's the details:

ARV- $210- $220K

Rent: about $1,900/month

3 beds/ 2 baths

Needs: New roof, New HVAC, New fence, Minot touch ups inside like paint and cabinet touch ups.

Rehab- About $40k

I offered $140K and he countered with $190K. Should I stop pursuing or is there a way to get this deal through seller finance?

0 Votes

Houston, Texas

Quote from @V.G Jason:

Also wanted to add. You took criticism like someone who is looking to get better, and realize it's not personal. Strictly advice to move forward in these ventures.

Your attitude may be the best thing about your ability going forward.

Thank you, V.G. It's my first deal. I know for a fact it wasn't going to be pretty. I'm willing to take any advice to get better deals and make a better future for my portfolio and my family.

0 Votes

Houston, Texas

Quote from @Jake Baker:

@Guillermo Perez

Positives:

- Equity Built: You now have $70K in equity, which is a solid result for your first deal.
Cash Flow Potential: If the property rents well and covers your debt service while providing some cash flow, that’s a win.

- Experience: You've successfully navigated a purchase, rehab, and refinance, which are the core components of BRRRR.

Considerations:

- Budget Overrun: Being $27K over budget highlights the importance of tighter cost estimates and contingencies. Future deals should include a 10-15% buffer for unexpected rehab costs.

- You should consider some other lenders. You should be able to get 75LTV.

Thank you, Jake. As far as lenders, if I don't get the numbers that I'm looking for, can I go with someone else even after they have done a lot of work like appraisals and surveys? I felt bad going with someone else after one month of waiting.

0 Votes

Houston, Texas

Quote from @Jonathan Klemm:

Awesome stuff @Guillermo Perez!

What exactly happened with your contractor that went sideways? Did you have a clear detailed scope of work? That's often what I found to be missing...

I ended up using two contractors because the first one was taking too long, but the price was great. I got someone else afterwards to finish up the rest. One mistake I made was thinking that they knew what I wanted. I assumed that when I said I needed to rehab the kitchen, I didn't need to remind the contractor that we needed electrical outlets. Somehow it was my fault for not stating that. Lesson learned. You need to be very clear on the scope of work.

1 Vote

Houston, Texas

Quote from @V.G Jason:

Quote from @Guillermo Perez:

Quote from @Jonathan Klemm:

Congrats @Guillermo Perez! Great deal!

Those deals are rare and starting off with such a good experience is amazing. What was your top 3 biggest lessons learned?

With respect to paying $44k off on your HELOC, I personally think that is totally fine and a great start. If anything, at least wait a year so you don't pay short-term capital gains on the sale of the property.

I need to find some more deals like that here in Chicago...where in Houston was this property?

Top 3 things I learned

1. Contractors will make or break your rehab.
2. get 3 quotes for everything.
3. closing costs for refinancing is not cheap and you definitely need to take that into consideration when running your numbers.

The house is on the east side of houston near 2 universities but it is a rough neighborhood.

You bought near UH in the ghetto?

Overall not terrible on your first BRRR, but the cost of the reno is almost the same there and the same in the Heights, West U, etc., obviously the barrier to entry is different but so is the ARV. My only remark to make is really focus on quality locations next time. Otherwise, think you learned the other stuff and your systems will refine as you go.

I didn't think about it that way. I purchased this house because it was so cheap. It makes sense to try to go in a better neighborhood next time. Thanks for the advice.

0 Votes

Houston, Texas

Quote from @Greg Kasmer:

Guillermo - What is the cash flow based on the new loan? What I'm thinking is that you may be able to pay the remaining $44k HELOC balance based on your cashflow. You're first deal is never your "best deal", but is likely your "most important" deal if you continue to invest. Good Luck!

Greg,

You just blew my mind! I never thought about it that way. My cash flow should be around $380 a month.

1 Vote

Houston, Texas

Quote from @Jay Hurst:

Quote from @Guillermo Perez:

Quote from @Jay Hurst:

Quote from @Guillermo Perez:

Can someone please let me know if this is ok for my first BRRRR.

I got a $200k HELOC on my primary residence to help fund my first BRRRR. I bought my first investment property cash, for $101K. After closing costs, it was about $107K. The ARV was believed to be around $235k so my agent told me to try to stay all in around $176K. The house was a 3 bed one bath. After adding an extra bedroom and bathroom and rehabbing the house, I was well over budget. I was all in for $203K. I am in the process of refinancing. The appraisal came in at $245K, but they are only loaning me 70% of the ARV. After refinancing, and all the closing costs, I'll probably get around $156K cash to pay back my HELOC. I did save some money to have as back up. I will be paying about $44K out of pocket back into my HELOC. Is this ok, or is this a terrible first BRRRR?

P.S. I do not want to sell because my profits after closing costs will be about $15K. If I keep it and rent it out, I will have around $70K in equity

@Guillermo Perez Just curious on why 70% instead of 75% loan to value?

The appraiser gave the house a low score so the bank said it is a risky investment for them and gave me a 70% loan. I think part of it is the neighborhood.

Maybe you mean the SSR score? That would not be from the appraiser but rather a score the appraisal was given by an automated system.

That’s what it was!

2 Votes

Houston, Texas

Quote from @Jay Hurst:

Quote from @Guillermo Perez:

Can someone please let me know if this is ok for my first BRRRR.

P.S. I do not want to sell because my profits after closing costs will be about $15K. If I keep it and rent it out, I will have around $70K in equity

@Guillermo Perez Just curious on why 70% instead of 75% loan to value?

The appraiser gave the house a low score so the bank said it is a risky investment for them and gave me a 70% loan. I think part of it is the neighborhood.

1 Vote

Houston, Texas

Quote from @Jonathan Klemm:

Congrats @Guillermo Perez! Great deal!

Those deals are rare and starting off with such a good experience is amazing. What was your top 3 biggest lessons learned?

I need to find some more deals like that here in Chicago...where in Houston was this property?

Top 3 things I learned

The house is on the east side of houston near 2 universities but it is a rough neighborhood.

3 Votes

Houston, Texas

All Forum Posts by: Guillermo Perez

Guillermo Perez has started 2 posts and replied 11 times.

Post: Rate my first BRRRR

Post: Seller finance question

Post: Rate my first BRRRR

Post: Rate my first BRRRR

Post: Rate my first BRRRR

Post: Rate my first BRRRR

Post: Rate my first BRRRR

Post: Rate my first BRRRR

Post: Rate my first BRRRR

Post: Rate my first BRRRR