All Forum Posts by: Jaron Walling

 My thoughts exactly which is why we hesitate buy properties with finished basements unless it was done professionally or has potential do to so. It better be part of the strategy going in otherwise it may not help the appraised or resale value. The details of the sold comps is everything. 

In our market most of the older houses (built from 1910-1950s) have low ceiling heights. I'm 6'2'' and can almost touch my head. It's an instant "no go" for adding value down there. Half bath, full bath, wood bench/storage but that's about it. In some situations it's not even legal build due to egress and minimum ceiling height standards. Most of time it's a bonus room + half bath. There's definitely value for it but it's not living space like mentioned already. 

@Austin Janutol Welcome to BP. There's a lot of resources on the website. The forums are a game changer if you're just starting out. Make it a weekly habit to check the website, read, read, and read some more. It's a free REI education.

You said you work in construction. Personal finances are your site plan. It has to be in order to build a strong foundation, follow a strategy, and then buy investment property. 

Every dime from our paychecks has a purpose (Dave Ramsey). Before I was married I budgeted but it wasn't very good. We automated our budget using Quicken Simplifi. Automate your income, set savings goals, and stick to it! NOBODY will do this for you. NO MENTOR will do this. YOU have to prove it to yourself. The small sacrifices start adding up. Once you're in that mindset you start looking at money differently. If you achieve a small goal the next is so much easier. Once you close on the first property the next one gets easier.  

Set clear goals: Define your financial objectives and risk tolerance.

Build a network: Connect with real estate professionals, lenders, and other investors.

Analyze Deals: Evaluate investment properties by considering factors like location, market demand, and cash flow.

Without a pile of cash, investor relationships, partnership, lucky deal, or a combination you'll grind it out (step-by-step) or find financial success in another way. REI is not for everyone. Creating passive income is difficult! It's a wonderful thing if you learn the process.

Best of luck man. 

@Austin Janutol Welcome to BP. There's a lot of resources on the website. The forums are a game changer if you're just starting out. Make it a weekly habit to check the website, read, read, and read some more. It's a free REI education.

You said you work in construction. Personal finances are your site plan. It has to be in order to build a strong foundation, follow a strategy, and then buy investment property. 

Every dime from our paychecks has a purpose (Dave Ramsey). Before I was married I budgeted but it wasn't very good. We automated our budget using Quicken Simplifi. Automate your income, set savings goals, and stick to it! NOBODY will do this for you. NO MENTOR will do this. YOU have to prove it to yourself. The small sacrifices start adding up. Once you're in that mindset you start looking at money differently. If you achieve a small goal the next is so much easier. Once you close on the first property the next one gets easier.  

Set clear goals: Define your financial objectives and risk tolerance.

Build a network: Connect with real estate professionals, lenders, and other investors.

Analyze Deals: Evaluate investment properties by considering factors like location, market demand, and cash flow.

Without a pile of cash, investor relationships, partnership, lucky deal, or a combination you'll grind it out (step-by-step) or find financial success in another way. REI is not for everyone. Creating passive income is difficult! It's a wonderful thing if you learn the process.

Best of luck man. 

@Bobbie Russell I'd go the HELOC route first. If it's a good deal you'll find money. You could partner with someone to find more cash.

@Bobbie Russell "Needs about $50,000 in rehab" - How are you funding the rehab? If you're funding it cash it that's a great thing. If you're leveraging the purchase (20% DP) and the rehab that's a big difference in risk in my opinion. More skin in the game = more safety. Over leveraging right now is not advisable considering inventory is up and prices have leveled off in most markets. Florida has had declines in prices over the last 6 months. Orlando is pretty resilient but it's still Florida. Something to consider when it's time refinance out of HELOC $$$. 

What's the interest rate and how long have you owned the primary? If you're not selling to take advantage of the $250/500k capital gains exclusion I'm pulling a HELOC to access the funds. Loosing a super low rate is like shooting yourself in the foot.

 As soon as you close, get the keys, move in. When I purchased my first property I did numerous projects my self. From my understanding none of it required a permit or a license. I hired out the roof and some minor electrical, but it wasn't a full rewire, panel, or total gut. The total renovation ended up around $18k. It took 7 months but I saved thousands. BP an YT videos can give you a free education. 

Don't be afraid to get dirty. Yesterday I worked for 3hrs in 90 degree weather mowing and cutting down over grown trees for our new investment property. I'm going to save $3,000 in landscaping costs. I paid myself $1,500 because I'm half way done. 

@Luke Mertz Unless you're pulling permits, doing complete plumbing and electrical rehab, or upgrading the panel you DO NOT need a license. You have the right to work on YOUR OWN property. The moment you work on someone else's property you should have a license. A lot of people will turn you down if you don't have one.

Would I do any of the above personally? No. Beyond installing faucets, vanities, toilets, or doing basic electrical repairs I'm not doing any of it. It's getting hiring out to contractors we have worked with before, ideally with a license, and general liability insurance. 

 That's insane. Sunk cost fallacy at it's finest.  

 Thanks man.

@Matthew Kimmons Interest-only payments occur during the draw period. Meaning, you can choose to pay only the interest on the outstanding balance, rather than making payments that also reduce principal. However, this is usually a specific timeframe within the loan's lifespan. 

Like you mentioned already a HELOC a "bridge" to get from point A (distressed property) to point B (renovated asset). The shorter you on the "bridge" the less it's costing you long term. You can't control the rates just like you can't control the economy/FED. Either way the risk and reward to there for investors that leverage a HELOC effectively.

Ideally you're buying property below market value, bringing some cash to the table, and combining it with HELOC funds. That way you're entirely in cash when you go to cash-out refinance paying off the loan. Most investors keep lines of credit open as long as they can. It's a rainy day, jump on a good deal, money.