All Forum Posts by: Jon Kelly

@Marian Smith I appreciate the point you're making with your post and think it's something people should certainly consider when they're deciding to use a PM or not. 

One of the biggest barriers to entry into REI I've noticed is people saying "I don't want to deal with tenants." There are many people who don't have the personality or skill set to deal with tenants, especially bad ones. Hiring a PM removes that barrier and keeps your attention on the financial aspects to REI and frees up to time to find the next one!

@Kevin Mahoney, @Samuel Pavlovcik, Loan interest rates ~10-12%, refinance rates ~5%. I've used commercial loans, which is why my rate is around 5%. You should be able to get a residential rate for low 4%. 

Obviously when you refinance your cash flow decreases by the amount of your mortgage payment. The rule of thumb to think about is, can you earn higher than ~5% (interest rate) on the money you are able to pull-out in the refinance? The idea is that you take the loan from the refinance (e.g. $80k) and buy another BRRRR ("Repeat").

If you don't "Repeat" the process, then you just have a BRRR... BRRRR > BRRR

@Joshua Lafferty I just had a very similar situation happen to me. I inherited a property with a washer/dryer and didn't consider pulling them out of the apartment. Within 2 weeks of the tenant living there, the washer broke and I'm out $399 for a new one. Unfortunately, if your lease is a bit murky, it's probably the landlord's responsibility. I agree with @John Underwood, you should update the lease language at renewal to clarify the issue. The joys of being a landlord!! 

@Kirk R. I don't think an "extra" $1,200 or $600/wk unemployment would all of a sudden make tenants "cash rich" and want to own a house. There's a lot of unknowns and in certain states they are only allowing virtual showings. I haven't seen many tenants jumping at the opportunity to leave and buy a house. That being said, there's still an opportunity for rentals because despite 30+ million in unemployment, people are still receiving gov't funding. I agree with @Scott Passman, you may not see better deals until late 2020 or early 2021. 

@Kayla Jobes It seems you've put plenty of thought into the idea of a flip and envisioned a property "JUST like this," so go for it!! It will be a challenging but fun experience and you will learn a ton. I would be extremely conservative in your projections given: (1) this is your first flip, (2) it requires a complete gut renovation, (3) preparing for a wedding / honeymoon. I would add 3+ months to the estimated time to complete, 15-20%+ to rehab costs, and decrease the ARV by 5-10%. Also consider additional stress of wedding/honeymoon/moving. If the analysis still checks out, take the plunge and good luck!

@Anthony Martin There are many strategies and all can work if you stick with it. I would suggest choosing one and focus solely on it. I agree with Craig, I would use BiggerPockets and find others in your area that have some success in the strategy you choose. You may want to find an "easy" flip to start. Try to make $10,000, instead of $50,000. You'll begin to understand the process and build a resume 

@Anthony Martin, it sounds this may end up trapping your money and potentially discouraging you from doing any future deals. Who will pay for the rehab? When will the rehab be completed? You are expecting an ARV of $140-150K, but it's very difficult to predict what real estate values will be in 6-12 months.

Why not take the $20-25K in cash and buy a $100K property that you can begin renting on day 1? Start making $200/mo in cash flow and you will be on your way!

See below...

@Jared Smith - has to be option 1 or 3 and would go with option 3 as long as you are not breaking your financial analysis criteria (e.g. ROI, CoC return, monthly cash flow, etc). I'm not sure what option 2 gets you, other than maybe peace of mind, but what fun is that?

It sounds like you're off to a great start, keep it up!  

If the ROI on your investments is higher than your interest on debt, then invest away. Use the investment income to pay off debt.

Earning 15%+ ROI on an investment property is better than paying down student loan debt at 6%.

If you believe in real estate investing, then go for it. Don't let obstacles or doubt creep in.