All Forum Posts by: Jonny Morris

@John Leavelle

My mistake sorry (long day)!

Thank you for clarifying. It’s residential ...triplex

@Chris Sellers

Thanks Chris. What does the 50 represent? If I used that it comes out about 25k less than the county tax assessment. 

Evening all, 

I am getting lost in NOI and Cap rates. What is the formula or points of reference to calculate investing in a multi-family?

Can I work backwards from a projected rent? Lets say each door rented for $700. It would generate $2,100 per month. Tentatively estimate (for convenience) the 50% rule for expenses. Plus mortgage. Im left with cashflow. Obviously, how much I throw down for deposit and rehab would allow me to calculate the ROI.

I would like to BRRRR but am aware that being a multi-family it would be appraised by either market value or income.

Can someone slap some stone cold formulas or knowledge down please? 

Update: 

Plumber offered to add mixing section and charge me for “materials only”. In hindsight this seems an admission of guilt...why only charge materials if he did nothing wrong? 

Materials cost: $315. I haven’t paid yet and don’t want to!

Question: should I be contacting inspector or plumber again? What key points should I make?

@Dennis Vo

Unbelievable isn’t it? Especially when the city charges us thousands of dollars for permits and inspections.

Jerry W. Thanks for your detailed input. Do you foresee a system without both being members of the same LLC? I’m not against it just looking to explore options. Has anyone had experience of the cash side of the deal? Rent comes in...to a joint bank account? Cap ex/repairs etc ...from the joint bank account? Looking to create a transparent system between us so it’s all out on the table!

Short and sweet... Just connected with a local investor and looking to partner on a deal. I have a HELOC (cash) ready to go. He will probably get a loan. Going in 50/50 on the purchase and rehab. Strategy is BRRRR. We’d both purchase through our LLC 50% each. Thinking use a joint account between us to collect rents and hold funds for repairs and cap ex funds etc Any thoughts on how to structure?

I wouldn't put BP in the same category as FB and Instagram etc. I detest the fishing for ego massaging and likes. 

When I discovered BP, it began to change my life. My mindset, my outlook on my future. It has been immensely powerful. It is a densely populated network of fantastic, successful, hardworking, creative and inspirational people. 

My FB however...average people sharing memes, recipes and selfies. Or was...I since 'snoozed' that population and added Grant Cardone, Property rehab groups and other inspirational folks. 

I love this site and community!! 

Example: 

ARV is $100k.

You buy for $60k. 

Spend $10k on the rehab. 

Property appraises for $100k. Boom - you're on target to get a mortgage and LTV of approx. 75%.

This means you can potentially pull $75k from the deal and leave 25% equity in the property and benefit from the cash flow/appreciation. 

@Michael Smith

Hi Michael, 

A fantastic strategy if your numbers are good. The first is to buy the property...during this process you will/should have a home inspection. This should uncover any issues re: lead paint, asbestos. 

After that you need to make sure that your rehab numbers do not exceed the ARV (after repair value).

I have read a basic formula ...and evaluate to see if you are happy with the numbers but...

1) Buy at 40%-60% of the planned ARV. 

2) Rehab should cost you between 10-30% of the ARV.

3) All money in to the deal should not be more than 70-80% of the ARV.

Then you get the renters in...if using a conventional loan, go through a 6-12 month seasoning period. After this you can take the property to the bank and say "Hey look how good this property looks, it rents for $_____ per month (for a year)", the bank will appraise it, then you can take the mortgage and pay yourself back. 

Make sense?