All Forum Posts by: Jon Kelly

@Glenn I. Barlow this is where your goals/strategy comes into play. Hard for the BP community to provide input here without knowing what your goals. 

Do you have a larger property identified that you want to scale up towards? If nothing is out then there keep the cashflow on the current property. 

@Cheng Chu you should have no issues refinancing whether it's in an LLC or not. You should also discuss your intentions with your lender and they should advise the best option/loan for your situation.

Always make sure you communicate your plan/goals with your lender. 

@Andrew Rellinger a lot of people will tell you to wait because you're running too thin. With only 3.5% down you still only have $4k left... 

However, if you are fully set on continuing then you have a couple of options. 

1. Sell your personal assets for extra cash

2. Borrow from family/friends. Borrow $20k and agree to pay them back $22k in 4 months. 

I'm assuming you have a job to help repay the small loan. 

@Account Closed I stopped reading after your first sentence, "I’m considering / planning to get into rental real estate over the next few years.." 

Considering to get into real estate over the next few years... Read that 10 times and you'll realize how crazy that sounds. 

Nothing else matters unless you commit to take action. 

@Marcus Auerbach I appreciate where you're coming from. It's likely more frustrating for you because you're dealing with new investors expecting a massive list of deals with infinite returns. 

However, BRRRR days are not gone. The idea of buying a distressed property, rehabbing, renting, refinancing is a strategy that will never go away. What should change in this market is the ROI expectations. Some people think the only way to BRRRR is by refinancing all of your capital out of the deal. Your return in that scenario is infinite. However, even leaving 5-10% of cash in the deal still makes it very attractive and you can achieve 30%+ CoC ROI.

For example: purchase for $150k, rehab for $50k, ARV is $250k. At 75% cashout you pull out $187.5k. You only have $12.5k left in the deal. Assuming it cashflows $300/mo then you're making 29% CoC ROI

 @Enoch Li that's something different. That's the lender calling the loan due, which is EXTREMELY rare. Whoever had the loan did not find the right property or the right lender. Don't let one "story" scare you away! 

@Enoch Li you're asking two different questions: 

1) What do investors do during recessions

2) What happens when your home price drops below the borrower amount 

1 - savvy investors will be more conservative in their underwriting guidelines. Save as much cash as possible. Be ready to take advantage of discounted properties 

2 - It depends on the condition of the property and your personal financial situation. Is the property rented and cashflowing? Then, keep it and wait for the market to go back up. Is the property vacant and in need of repairs? It may make sense to have the lender foreclose on the property. Be very careful with what this will do to your credit and put future deals at risk. 

This recession is nothing like the 2007-2008 crisis. A lot of properties have built of equity (hopefully) 

@Sequoia Pedersen HELOC is not cash, so I would not include it. It's equity you tapped into. CoC ROI should include your actual cash in the deal.

I would include the $25k cash and the carrying costs of the HELOC (e.g. monthly payment). MAYBE include the fees/costs associated with securing the HELOC.

@Christian Jones these are your tenants so you have every right to know their information. Just because you screen them doesn't mean you need to take any action. If any are below your standards I would likely wait to see if they miss one rent payment before taking any action 

@Patrick Britton be honest, did you choose the cheapest property management company you could find? 

That's what I did when I first started and it was a terrible experience. I realized you need to pay for quality property management. I've not transferred most of my units to a very strong property management company and it was the best decision I made. I have 60 residential units and 13 storage units, so the time to manage isn't worth it to me.