All Forum Posts by: Igor Avratiner

You can think about this more broadly as progress, not perfection. Anytime you make an investment where 1. You don't lose money and 2. You earn enough of a return to be in a position to keep making "base hits" over time all of these "base hits" will add up to a home run investing career. From time to time you will run into a few "grand slam" investment opportunities, but I think David Greene is saying not the let waiting for "grand slams" only to come along stop you from doing the base hits. Sometimes it's hard to even recognize a "grand slam" unless you've done a few base hits. 

Sorry for all of the bad baseball references :)

In our financial system, monetary inflation and asset appreciation are related. Assets purchased at one point in time appreciate over time compared to the value of money over the same time period. Since nothing exists in a vacuum, it's hard to look at RE appreciation without comparing that to the appreciation of something else. 

With owner financing, you and the seller are going to have a relationship for a long time and the success of each party is connected with the success of the other. If the terms of the loan put either party in a bad spot it could wind up hurting both parties involved. If you feel like the balloon opens you up to significant liquidity risk you should openly discuss that with the seller up front and try to collaborate on new terms that remove that risk. 

Just because the seller is offering you financing and you don't have to go to a bank, that doesn't automatically make it a good deal or one you should do. On the other hand, problems always come up anyway and you will have to solve them so if the location is excellent or there are other compensating factors don't allow fear to stop you from doing the deal. I heard the term "Preparation over prediction" so be prepared for several scenarios when it comes to the balloon and do the deal.   

@Rhonda Greenhaw Some things to think about:

- How many nights per month would need in a worst-case scenario to cover the extra $600/m (net of AirBNB, cleaning fees, etc)? 

- Is it possible to lock in the HELOC rate somehow in case go a lot higher and the $600 increases a lot?

- Worst case could you rent it as a long-term rental and would that rent cover the additional expense? 

- What is the minimum you would absolutely have to spend on the house to be able to rent it as a STR compared to the full list of upgrades you described? What is the difference in costs between minimum and full list and what is the ROI on doing the full list of upgrades compared to the ROI for the min?

Good luck!  

Zillow and Apartments.com have good tenant payment portals. You can create an account and it's no charge to you. The tenant registers and makes a payment each month and the funds get deposited in your bank. And of course, all of the digital payment options like Venmo, Cash app, Apple Pay, Zelle, etc work fine. Good luck and congrats! 

@JonPaul Kessinger It can be hard to figure out ARV in a smaller town since there aren't that many sales happening frequently. If you are having a hard time finding comps the appriser for the refi loan might have a hard time may as well. Hopefully, the bank you will use for BRRR uses a local appraiser who is familiar with the area. I'm assuming that you have the Zillow app and that you zoomed in on the map search and filtered by "sold" to see all of the sales of homes nearby? You can also see most homes that are currently listed on Zillow and see how long those homes are on market. The Zillow app is a good tool if you are not already familiar. If you have the access to the local MLS you can check comps there as well as off-market sales via the public records search. If you still have limited data try gradually expanding your search farther out (i.e from .25 miles radius to .50).

Another way to think about value is in terms of replacement cost. How much would it cost you to buy a lot and rebuild the same house from the ground up today? This won't help you for BRRR purposes, but hopefully, the price you are paying is less than the replacement cost. Good luck!

PFCU and Spring Garden Lending are good. Ukrainian Self Reliance Federal Credit Union also has a good rate/term program. Check out Anthony at Dominion Financial as well. Good luck! 

@Steve Babiak

PHA pays a utility allowance directly to the tenant monthly. Not all tenants receive a utility allowance, my understanding is that it’s based on income and whether they are responsible for utilities in the lease. I’m not familiar with an appliance allowance.

@Marc Possoff

That rate is the max they can pay for a 2 bedroom unit based on the location category it falls under. If you have not already gone through the landlord certification process you can use a 3rd party to complete the process in your behalf (realtor, PM, someone else with certification).

You can request that amount when you fill out the voucher but the rent determination comes after the inspection. They use rental comps, condition of the house, and tenants income to determine your rent. It depends on the area, but you can expect to get close to market rent +/- amenities your unit has (ceiling fans, fridge, washer/dryer, central air, etc).

@AP Horvath do you see yourself spending time involved with all of the details of RE investing ( finding deals, doing walkthroughs, negotiating with sellers, getting estimates, working with contractors, putting out adds and screening for tenants, dealing with property/ tenant issues, applying for loans, booking keeping, etc) ?

If yes, the margin of safety rule I use is - A deal that you can refinance and get 100% of what you put in (purchase + repair costs) and still cash flow every month likely has a strong margin of safety.

Other advice is take what the market gives you. For example I’m find it difficult to find properties in decent areas for a price that meets the margin of safety rule above. However I’ve been finding that even though these deals won’t cash flow they can work as flips.

If your answer is no to the first questions above, then maybe consider checking out syndications, turn key rentals, private lending to experienced investors, REITs, etc.