All Forum Posts by: Heath Ryans

@Donald Muschany 

Absolutely. Get in there and check out every single unit. Make sure you have an Inspection period written into your contract as well as an inspection period. Also, review their leases and make sure that it's the real deal.

You don't want to find out after the fact that one of the tenants is a horder and has ruined an entire unit that's going to cost you an extra 15k to reno. Or that the owner just stuffed a bunch of people in there last minute at a dirt cheap rate just to sell the property. Verify everything.

@Brandon Ribeiro just be cautious of HOA fees. They've killed every condo I've looked at.

@Kimberly Walker

1) you determine you own worth. 

2) your the only person in the whole world who cares about your title.

3) If you hate your job and it's taking that big a toll on you both physically and mentally, it's time to leave no matter what.

4) Your health, relationships, mental status, ect, ect should probably be more important than your ego.

5) If you take the pay cut, you might get closer to a lower tax bracket and keep more of what you earned.

6) You don't even need an income to get into, or grow in, real estate. (believe me, I know that for a fact)

7) As long as your saving and putting money into real estate and not trying to show off with it, you will be just fine taking the pay cut.

8) More imporantly, you will have more time and focus to learn and grow in the real estate space.

9) Your entire life will improve by getting out of the role your in.

@Matt Stevi

Your on the right track. Here's a few thoughts.

Make sure you account for all expenses. Both actualized and future. What i mean is, make sure you are setting aside cash every month for future cap-ex, yearly taxes, repairs, ect. In your example, I would expect the numbers to not work so well when you move out.

House hacking isn't necessarily to live for free. Granted that's a huge win if you can, the goal is to minimize your living expenses while adding another investment property into your portfolio. 

As long as you are acquiring properties that will cash flow well when you move out, you will make a good investment.

@Lynne Garris

Brief summary of wholesaling

1) You do some marketing to a predetermined group of home owners who, for whatever reason, you believe would be in a situation in which they would sell their home for a significant discount

2) When you receive a reply from an interested party, you do a walk through of the property and make note of it's condition and any needed repairs.

3) You determine the After Repair Value (ARV) of the home. Essentially its expected market price at resell.

4) Take 70% of the ARV, subtract the cost of repairs, subtract a small Assignment Fee (your finders fee) for yourself.

5) That number is now your MAX offer. Make an offer to the owner below that number in order to give yourself a bit of wiggle room.

6) if the owner accepts, you will fill out a Purchase and Sell agreement between the two of you.

7) Market the deal to your cash buyers

8) if one of them likes the deal, you will fill out an Assignment of Contract for a price that includes your assignment fee. That assigns the full rights of the contract to them.

9) Do everything you can to ensure the deal closes so that you get paid.

Example:

You market to Jim because his house looks terrible. Jim gets your letter and calls you back. You do a walkthough of jim's house and note that it needs 20k in repairs. Your research indicates that Jim's house is worth 100k.

100,000 x 70% =70,000 - Repairs of 20,000 = 50,000 - Assignment fee of 2,000 = $48,000

You now know that the max you can offer is 48k for the home. You offer Jim 45k to be safe. Jim negotiates a bit but you come to agreement at 48k (good thing you gave yourself some slack). so you fill out a Purchase and Sell Agreement. 

Now you go to your cash buyer and say "Hey, I have this deal for 50k (48k contract plus your 2k fee)." Your buyer agrees so you fill out an Assignment of Contract.

The deal closes smoothly and you pocket 2k.

@Nathan Witte 

The purpose of the BRRRR method is to gain cash flowing rental properties without permanently tying up your own cash. By the time you get to the Refinance part, you should already or be close to having a paying tenant in place. That allows you to then pull all your money out and Repeat (buy another property).

Your hold time is completely dependent on you. If you go through this process, the point is to hold the property and collect the monthly cash flow. You hold the property for as long as you wish to continue collecting the rents. There is no recommended time, just depends on your goals. But after 1 year, you won't pay capital gains taxes if you sell so you should atleast shoot for that.

So when should you sell? Also depends on you and your goals. Maybe you believe the market is at it's peak and it would be a good time to get max value from the home. Maybe you found a bigger multifamily deal and need the extra capital. Maybe you just hate that property and want to redirect your capital. Maybe it doesn't perform like you thought.

It all depends on you. I know I've said that a hundred times now, but it really is. 

@Lynne Garris also, 103k for a 140k property is NOT a good deal unless it was in perfect shape and ready to resell or would make a good rental with zero work. Make sure to understand what your buyers are looking for in a deal.

@Lynne Garris if your trying to wholesale, that's not how it works. YOU have to go make deals and get them under contract yourself. Then you send the deal to your cash buyers if it meets their metrics. If you flood their inbox with every listing on the market that they can already see and probably already get from a zillow email, your causing them more work than anything. It's your job to make those calls.

To wholesale. You find deals. You negotiate deals. You place great deals under contract. Then you mark up the price slightly and present it. If the buyer likes it, he/she will fill out an Assignment of Contract with you. That;s where your fee comes in. If the deal closes, you get the difference between what you put the property under contract for and the price your cash buyer paid.

Otherwise you are not owed anything.

@Teddy Black where at in Tennessee?

I'm not sure about rates for owner occupied, but I use American Modern insurance on my 4plex. It runs about 500/door annually.

@Account Closed no one really cares what you call yourself. Generally, you would chose a name that allows people to atleast somewhat identify what you do, but it really only matters if your looking to attract attention from the public. If you plan to do business in private or with partners and don't much care for public attention, name it whatever you want.