All Forum Posts by: Jaron Walling

@Brody Veilleux I'd encourage you to research the FHA (203k) loan process. I did the same before buying my first house. My budget was so tight. After reading and talking to my lender which didn't offer it (similar to what @Drew Sygit said) I went the conventional route and used cash for the remodel. 203k loans have hurdles, payment draws, specific contractors (grosssss), and other requirements that slow you down or cost money.

Investors have found success with (203) loans it but consider your overall goal, budget, and timeline. That's just my 2 cents. 

 Bought a distressed property that still qualified for a conventional loan. It even had a bad roof but still qualified. I was already banking with this lender before applying. It was much cheaper than what I qualified for. Lender had access to my savings account, DTI, credit scores, etc.

I put 3% down and used the rest of my savings for the rehab. I bought some tools, watched YouTube videos, and saved thousands on the remodel. Painting in the interior saved at least $4k. Installing quarter round trim saved $1k. Doing a tile backsplash saved $600. Replacing the garage door opener, and adding new lights saved $$$. These small projects add up quick. Investors love talk about leveraging contractors but when your starting out DIY something, get the ball rolling, and learn. I'd use vacation hours from my 9-5, and pay my future self by completing the easy projects. Hired contractors for the heavy stuff. 

Today that property is a LTR and rented to family. The numbers were so good (cheaply bought, BRRRR, different market conditions) it cash-flowed until 2024 with NO RENT increases. We're starting to cash-flow negative but it's been 6 years. A $50 per month increase would bring us to cash-neutral but that's way below market rate rents.

House-hacking and BRRRR go hand-in-hand. That's how I bought my first house and completed a remodel. It's like free REI school and it's gets easier once you do it. Find a property that's challenging but nothing too scary. Hopefully the market keeps creeping up in your favor which helps a future appraisal. 

Trust the process and trust your numbers. 

@Kyle Lam The best to learn is by hands on experience. Remodeling real estate is just as much art than science. I created spreadsheet from previous remodels but every deal needs tweaked. Labor costs of gone up. Estimating material costs is easier but the labor is tough. Your SOW, challenging projects, expensive stuff, can be tricky unless you have experience and an established team. 

Take lots of pictures and share them with contractors. Ask them general questions but take as little of there time as possible. We have a plumber friend so I get advice from him. He installs our water heaters for $260 + the tank. It's a win-win. You need people like this so you can budget for projects. 

Level up. Talk to more contactors. Hire them for smaller projects and build from there. We just looked at a distressed property last week. It's a good location but an overwhelming rehab just beyond my experience; sorta a full gut/ or the basic kitchen, bath, flooring and paint remodel. Our estimated budget and ARV didn't command the investment so we passed. Another investor may see it has a homerun. We don't care. Don't get "stuck" on a property. Focus on what YOU KNOW, leverage your team, and control your exit strategy. That's how you avoid risk if you're buying distressed RE. Best of luck.

Everyone has mixed opinions on the 0.5 or 0.25 FED rate cut. I don't think it's a sign of bad things to come with residential. Can't say the same for commercial, with no equity, and loans coming due. There's silent battle between corporations, employees, and remote work policy. As an employee that works a hybrid 9-5 job it's not my fault cubicles are empty, and it's not my responsibly to pay for it. Take away remote/hybrid jobs and you'll loose employees to companies that already pivoted. My wife is one of them. She's worked fully remote environmental consulting almost 3 years and gets work done. Her billable hours are higher. That's the point in consulting right? 

I think were in the a soft landing but people don't want to admit it. Last I checked prices are creeping but not making big jumps causing negative ripple affects. Rents have flattened out or dipped in over priced areas which makes sense. 

Anyone sitting on the sidelines is probably missing opportunities. Big or small opportunities add up. My wife and I have not been buying but we're doing other things. You can read more books, network with contractors, improve your current properties (overdue repairs/capex), make connections with investors, and build a team for future deals.

 No. 
Read some real estate books, copy/paste, and build your own. It takes time but that's how you learn the numbers and apply it to your market.  

@Constantinos Zavos It's tough out there right now. There's multiple strategies that work but the reality of 2024 is you'll end up in two camps, 

1. Grass roots marketing/networking/free social media 

2. Spend LOTS of MONEY on mass marketing

The "rate locked affect" is limiting a large portion of the market and stopping transactions from happening. People can't afford to sell and buy by another house. This affects opportunities for buyers. I have friends that routinely complain about it. They want to move but can't. They're not investors so the market prices and FED rates control them. That's how the majority of homeowners "invest" in real estate. 

We had success with choose grass roots and stuff listed on the MLS. I've had success with letters, driving for dollars, and off market deals. Haven't had any luck lately but the market has gotten harder to find deals. We don't time to hammer the market for leads. If it's listed on the MLS there's motivation. An agent/broker/wholesaler found them and needs paid so it's probably not a homerun deal, but base hits can add up. Negotiate the base base hits and make it worth your time.

The BP forums are full of useful marketing information. Search for it and read. Get creative if you like but end of day a property is only worth what someone will pay. That's the reason we target distressed properties. New or remodeled stuff rarely works for LT rentals and never works for value add/flips. 

FED is reducing rates another .25% at the next meeting. It's a small step to "unlocking" more real estate and more transaction volume. Best of luck. 

@Bryan Liu "The repair for foundation and earthquake retrofit comes to $97,000." - How much experience do you have repairing and remodeling RE? 

"Currently, asking some of my close friends to help sign a lease agreement with me. I provide them with the rent amount and they write a check in their name." - So a fake lease agreement trying to show rental income? This reads like fraud. 

You shouldn't drain $200k from a stock portfolio to get this deal done. Unless you bought a homerun deal I'd never consider it. Retirement account? Early withdraw taxes really hurt. 

@Steve Dora You have come to right place. The BP forums and blogs are full of useful, free, information. I encourage you to search in the forums, connect, and learn about your market. You're local to some good markets for both rentals and flipping real estate. 

READ, READ, READ, and research your backyard. Look at what other investors did before you and try aligning it with 2024. We know it's challenging because so much has changed post COVID, fed rate hikes, etc. but that's how you avoid rehab mistakes, bad neighborhoods, and terrible deals. 

Never buy in an area you wouldn't live in. 

Your former boss (retired) inspired you how? What REI did he do, can you learn from him, does he have anything for sale? Every contact you know that actively does REI is your new best friend. I have good friends but very few actually own investment properties. None of my parents ever owned rentals. They're homeowners not investors. Big difference.

What are your strengths? Leverage the h**l of them ASAP. When I started out it was swinging hammers, DIY projects, and managing local contractors for heavy lifting. I'm a people person and ask detailed questions. Find/buy/create opportunities that align with your strengths. If something is outside of your knowledge, contactor support, or understanding walk away. Everyone levels up. Very few people start out with an 8-unit apartment, and 3 SF flips going all at once. 

Get to the finish line on a property and be proud. I remember my first cash-out refinance like it was yesterday. My brother and I made it through a 6 month live-in flip and put $10k into my checking account tax free. Know your numbers, strategy, and block out the noise. 

@Corina Eufinger Alternating lights on night is something I do when working on property. It's worth it and takes no effort.