All Forum Posts by: John Kesner

@Account Closed

Well I guess I could just make the rent slightly higher to cover the cost. But it seems like a nice gesture to offer this service at cost.

Again, why should the landlord shoulder this cost? I thought the idea of owning investment properties was to have the tenants pay the bills.

@Account Closed

Why should the landlord pay the fees? It's not like money orders are free. At least with online payments tenants are getting convenience for their money. 

@Sonny H.

@Patrick Howe

Sonny, from your example here is how I see the process working for you.

Purchase house $220K

20% down $44K

Rehab $90K

Payment on $176 for 30 yrs @ 5% = $945

(Add in your taxes and insurance, plus other holding costs like utilities or HOA fees)

For this example lets say your total holding costs are $1500/mth and your rehab and seasoning time is 6 months

6 x $1500 = $9000

Total investment = $90k + $44K + $9K = $143K

Refi and get a new loan at the new appraised value of $450K,  ($450K x .75 = New loan $337,500) that pays off your old loan of $176K leaving you with $161,500. 

So you get back all of your inital investment $161,500 - $143K = $18,500 profit.

Now you new loan payment would be about (30 yr at 5% on $337,500) $1812, plus taxes, insurance, etc.

Hopefully you can now rent the property for enough to cashflow ($2200/mth +) and you have a nice stabilized rental property that you have no money invested in (in fact you have already taken $18,500 in profit out of it). Essentially, you got paid to do all this and own a property with 25% equity (loan to value of 75%).

You can now take your original investment of $44K + your profit of $18,500 and go buy another property and do it all over again.

If you can pull this off it would a home run!! 

If you add a hard money loan in for the rehab the cost would go up dramatically

$90K @10% interest only makes a payment of $700 + 3 points (3% x $176K) = $5280 (typical hard money terms) 

So total hard money costs would be 700 x 6 + 5280 = $9480

This approach would eat up some of your profit but and add some risk but the numbers still work. 

Sounds like a good deal to me. Just work hard to hit those numbers!

@Angelo Goodwin

Zillow, realtor and various other apps work but I like to cross reference to the county assessors records. I find fairly often that apps show a recent sale, only to find on the county record that it was just someone changing title to their trust or something. This can sometimes be the reason for a really high or low "recently sold". Also be careful that the pics are there so you can have some idea of the condition and upgrade/remodel status. 

Another option is call up a real estate agent and ask them to send you the report from the MLS. It still requires you to verify the condition and upgrades relative to the property you are interested in.

I always like to see it for myself so I have my agent send me comps with the criteria I ask for. I like to think I know best what the plan is for the property and I really know my market so I feel I can figure it out myself. Lots of people have their agent figure it out. Of course the risk is that the comps may not be as good by the time your remodel and seasoning period are over.

Sonny H. No, the point of brrrr is not to end up with a paid off house. The point is to get the cash you put into the deal back out to buy the next house. There are a couple tricky parts I have found with brrrr 1. Refi appraisals are usually very conservative compared to a purchase appraisal. So don't assume that the property will appraise the same as if you were purchasing the property. There is lots of research you can do on BP about how to help an appraiser get to the number you want/need. 2. Cashflow after cashout. Once you do refi, you have a higher loan amount and therefore a bigger payment. Will your property still cashflow with the new bigger loan? 3. Knowing the ARV accurately. You need to be sure the work you put into the property is actually going to raise the value to the value you require to be able to cashout you initial investment. Many folks use this strategy and are only able to cashout some of their money not all. Good luck, its a great strategy if you can make it work for you.

John Alba Keep shopping, there are lots of lenders out there. Just keep calling different ones until you find one that will do it. Be sure to tell them up front about the % of rentals so you don't waste your time. You'll find one, just keep on looking.

@Jordan Schoonover

I'm in Reno doing buy and holds. I would love to connect with a local wholesaler. We should meet up for coffee sometime and talk.

@Tucker Scozzafava

Sounds like you have a great goal!! I also wish I had started at your age. You have a lot of time to figure out how to make your goal come true. You can do it, I have no doubt. Your in the right place to learn and make things happen. The best part is, it's all free!!

@Palmira Angelova

Reno is like most places. Neighborhoods can change dramatically by crossing a street. That said, there are some areas to avoid and some that are over priced. What type of property are you looking for? Watch out for HOA's, there are lots of them around here, but there are some good areas where you can avoid them.

To answer your question, it depends. Are you looking for a stable 3/2/2 in the burbs (if there is such a thing in Reno) or an older home with a great, trendy, walk-able location.

Give me a little more detail on the type of properties you like and maybe a price range and I can give you a better idea of where to look (and where not to look).