All Forum Posts by: Jeshua Patrick

If you have large amounts of unused capital or live far enough below your means that you can save up a new down payment in 12-24 months then a BRRRR might not be the best strategy for you. If you want to grow your portfolio faster and/or the two scenarios above do not apply to you then "going it slow" will frustrate you. In my experience I see a net cash flow loss of about 50-60% when calculating for a BRRR but a recapture of equity in the 75-100% range so in theory I should be able to buy at least 3 properties with the same capital I would have left in 1 and see a net cash flow gain of 20-30% over 1 non-BRRR deal plus additional equity as well.

@Israel Palomares how familiar are you with Dayton? Have you looked at any crime mapping? What class of property are you looking for? I only ask because Dayton has a lot of rough area with pockets of good mixed in and the lower the price the more likely it is to be rough. Also, there are a lot of investors starting to flock to that area so if you are unsure of your numbers and go too low you will probably lose but make sure your numbers work for you. As for the particular property you didn’t really give us much to go off of so more details would be needed before commenting on what you should do.

@Todd Powell not too bad. I wasn’t trying to imply that stocks are inherently bad either and, being younger, my tolerance for risk and need for a higher return is much greater I’m sure. I recently moved most of my 401k assets into a Self-Directed 401k to give myself more freedom to invest in RE but also have a brokerage account to help me keep those $$ earning even when they aren’t tied up in a RE deal. I definitely have much to learn on the stock side as well. You have certainly given me much to think about with your post and replies. Best of luck to you and go spend time with that grand-baby sooner than later.

@Todd Powell I thought you said your stocks were in a tax-deferred account? Is this a different kind of account than an actual retirement account? I wonder if there is a way to redirect into a higher performing asset without getting dinged on the tax front but I certainly get the diversity side for sure and also the passivity. I do think you can be very diverse in RE much like the stock market as well. Have you thought about performing notes as a way to become more passive instead? The HM guy I referred to sells his performing notes with a 10% return attached. The one big possible downside for someone like you would be that all his notes are shorter term (12 mo notes) so you would be turning them over fairly consistently. I can personally say that I have done quite well in the stock market inside my 401k historically but also saw how badly people at or close to retirement got irreparably dinged when it crashed and, as I become more educated in RE, I am starting to see a real value in having investments that are tied back to hard assets vs just a piece of paper or a line of code in a computer although one might argue that there are hard assets at the end of the paper trail somewhere. Unfortunately for us those hard assets are a little too hard to get our hands on. I loved reading your story and hoping I can come close to replicating it in the future.

@Todd Powell you keep referring back to a $3k monthly dividend on $800k in retirement funds. With your RE experience why not take the time to get a little more education on how to become a private or hard money lender and use that as your seed money. You already know how to analyze properties so you are over half-way there. That money would earn you a minimum $65-80k annually at 8-10% interest vs the paltry 4.5% you are earning now. If you went truly hard money you could double or even triple that. I know a successful HM lender in Dayton, OH that has a similar amount of funds and never has enough money to keep up with loan requests at 12% and 4 points. He sells many of his notes at 10% interest just to free up capital to re-lend. Work another 3 years while learning the ropes and you could take early retirement while still earning $100k plus/yr in interest. 

I don't think, as many have said, you have to have cash reserves if you are willing to work hard and get creative. My first two primary residences were HUD foreclosures that qualified for FHA's $100 down program. My first house was a 2/2 that needed less than $1k in work and only took $1600 to close. I took the $7500 tax credit available at the time and when I sold 4.5 years later I walked away with a $2k check at close. The next one required about the same to close although we put about $40k into it over the next 4.5 years and walked away from closing with $35k NPAT. Our next property we lived in just less than 2 years 😢 but is now a rental. We purchased that one at market value for $123k. It is now worth $145-160k and we are looking at doing a cash out refinance into an interest only loan to pay off some debt while holding for a few more years and doing a 1031X.

@Abel Santana with your credit score you could probably go conventional with 5-10% down. The PMI will be less and it will only take 5% of the purchase price to actually get 5% down. With FHA it takes 5-6% to get 3.5% down and then it costs you a lot more in PMI that you are stuck with until you sell, pay the loan off, or refinance. In addition to the rent you get, save the difference between your mortgage and the cost to rent in a separate account and you will be ok.

Quick update: Tenant has elected to move out. Said they will provide a move out date sometime this weekend. Now I just have to decide whether to re-rent or sell but leaning sell due to my wife’s job situation.

@Emir Dukic HOA won't allow it and board members lives next door.

@Soh Tanaka definitely not.