All Forum Posts by: Jake Thornton

As a recent transplant to Washington State, I've recently bought two investment properties to use as STRs in the Mount Hood area that I had my father-in-law co-sign on. I'm currently in the process of selling an STR in SoCal, and need to find a lender who can deal with a fluctuating income on my part. I had success in working with portfolio loans in the past, but all my SoCal contacts aren't licensed in the Oregon area. Looking for referrals!

Thanks

@Tony Freeman Thanks anyway! Yes I agree the lessons learned have been invaluable. The old saying rings true. You either win, or you learn...

I’m all ears! :)

So, last year I bought my first BRRRR property in Memphis, TN. I've learned a TON of lessons, and the lessons keep on coming! Here's the info on the deal.

I bought a 2/1 for $29000 from a wholesaler. Having done research, I felt that the property would be worth about $65k after the rehab was done. So for the BRRR to work most efficiently, I needed the rehab to come in at around $18000.

Ultimately, these costs crept up and I ultimately ended up paying about $21,000, slightly over what I wanted but I was okay leaving a bit of money in the deal.

We got it rented, and got over what I was hoping for. 

However, once the tenant was in, the water heater broke down, and needed replacing, and then it was revealed that the furnaces were no longer any good, and it was either buy new furnaces for $6000 or get a whole new HVAC system for closer to $7k. Despite having bought wall units, I went with the latter option, figuring I could use the wall units on another house. So anyway, all including various taxes and closing fees etc, I am $60,500 in. At this point it wads clear that the full BRRRR wasn't really going to work at the $65k estimate, but I was still happy to leave some money in and have the cash flow.

I began down the road with a lender, and had my appraisal done. It came in at $57,000. Ugh. So I'd put more money in than the property was worth right now. 

So I had a few options. 

1. Sell and take a loss. 

2. Refianance for less than I put in, leaving a bunch of money in the deal ($57,000 - 25% = $42,750). So I'd be leaving about $17,750 in the deal, and making a modest COC return of about 15%.

3. Keep it as is, leaving all the money in and making about a 13% COC return.

I decided to take as much out of it as I could, and have been trying to refinance. However, it is hard to find a lender who will write a loan for less than $50,000. I have found two who are willing to do it, however, my debt to income ratio hasn't helped, and I got another rejection from one of these lenders today. I own two very successful airbnbs which provide me and my family with about $4000 a month cash flow, but a lot of lenders won't consider these properties as they don't have year long leases...

I'm starting to pull my hair out with this. 

Soooo.... what would you do? 

@alex 

@Alex Bekeza Thanks! I’ll reach out tomorrow. 

@curt Davis Yeah I have his Info. I’ll reach out. Thanks!

I'm looking to refi my first BRRRR property in the Memphis area. I have another being worked on right now, and plan to buy more in this market in the future. I'm looking for a loan that will use the projected rent as the qualifier as opposed to my income (which fluctuates due to my line of work).

Ideally looking for up to 25% LTV, seasoning period of around 4 months.

Please reach out if you can help. 

Thanks.

@Jake Garrity, fantastic, thanks for the detailed overview of your process and what you learned along the way. I'm in the process of doing my first 2 BRRRRs, and all the info you laid out in your detailed post was really helpful. Onto the next!!!

@Chris Risi I’m in the valley, near Northridge.

@Chris Risi Me too... It's wild. My home is up for sale here now for $950k for a 4/3. 

I'm putting into practice what I've learned from reading Long Distance Real Estate Investing by David Green. It was invaluable.