All Forum Posts by: Joseph M Limpert

Part of the power of the BRRRR strategy is its ability to benefit from the forced appreciation you are doing by rehabbing the house and then refinancing and being able to pull equity back out because of the higher appraised value. While the strategy is built around the idea that cash offers will allow you to get into properties at a deeper discount the strategy can work to a lesser extent on something that could be purchased with conventional financing or even private or hard money avenues if you have the ability to quickly refinance once the rehab is complete. If you are a first time home buyer it may be worth looking to buy a personal residence and do a live in flip. You should be able to get the property with low money down (3.5%) and at a more attractive rate than something that is strictly a rental or a flip. You will now be taking what you would have been spending in rent and putting towards your own equity, and after a year you could look to refinance what you have gained in equity to buy another live in flip and put a tenant in the first to start building up a snowball . It may not be as "quick" but it gets you started much sooner and conceivably by year 3 you could be up to 3 properties instead of just getting to the point of buying one.

Quote from @Account Closed:

My best guess is that the 8% does not include fees such as tenant placement, renewal fees, inspection fees, onboarding fees, maintenance markups, etc. In our management agreements, the % we charge is all-inclusive with no other fees. 

8% was just a stab in the dark, I think it may have been on a podcast or something, but hearing that I am light there is good to know. Early on it will probably be me so I hadn't really done much work figuring out the real number just wanted to be somewhat in the neighborhood.

Quote from @Raymond J. Rodrigues:

Are you working with a good agent? I recommend reaching out to @Josh Green. He may be able to help you source some deals. 

I am. He worked with me on the property I have right now and was a great sounding board for me when I needed it. He is an investor himself and was also who put me on to bigger pockets.

Thank you so much to everyone that has replied especially those of you that are also trying to make things work in this local area.  It is both encouraging and reassuring to know that what I am struggling with, that others have already been there.  The input opens up how I am going to go about finding and evaluating deals.

I wish I had known about BP and gone all in 7-8 years ago when I was buying my first house, I definitely don't regret that purchase, it is by far my single greatest asset, but hopefully I can look back in another 7-8 years and be glad I am taking action now to put more assets on that balance sheet.

Quote from @Nathan Gesner:

100 / 5 = 20
150 / 7 = 21.42

175 / 3 = 58.33

Should these numbers be familiar from the podcast?  Or was this more to say that if I change my inputs, and expectations, I can change my outcomes? I am willing to get in with low, or no cashflow, (or as I mentioned originally considered negative cashflow).  The play would seem to leverage equity/appreciation over time (or force that appreciation), refinance as rates change to improve my cashflow, and keep grabbing new properties as I can.  It certainly is slower than what I think most folks have done over the last several years but it at least gets me started.  I need to go back and see if I can find the Seeing Green you are pointing me towards... replaying 741 and 744 hoping it was one of those.

Quote from @Patricia Steiner:

Tampa Bay has the highest net migration in the entire country.  They keep coming!  And, we simply do not have the housing to support it. I recommend looking at what you're using as market rent, using real maintenance numbers - while making sure you have your insurance cost figure in correctly (the rates are 40% higher this year than last).  The prices will not be coming down and year-over-year rent is in excess of 20%.  Time is not on your side in Tampa Bay.

That is really helpful input.  I do try to gut check the insurance a bit off of what I pay for my personal residence (pre 2000 with no wind mit) which probably aligns with most of what I am looking at.  I will start looking into putting together a sliding scale for maintenance based on age and what has been newly renovated, may not make for a huge swing but will hopefully help bring some more truth to my numbers.  For a while there the market seemed red hot, but I feel like I have noticed a lot more properties are sitting around on the MLS in the last few months as rates climbed, I see some properties coming back on market, and now some even seem to be chasing the market down a bit.  It could just be most of these were overpriced to begin with but there feels like a lot of uncertainty in the near term for folks wanting to buy or maybe just being priced out of buying. As for the longer-term market trending, you are saying exactly what I was thinking, I feel like I am working with a limited window because as soon as rates go back down, I suspect things heat right back up and I need to be ready to jump in before things get snatched up.  It's part of why I am trying to swim upstream so hard right now.

Quote from @Nathan Gesner:

Do you listen to the BP podcasts?  If you just listen to the "Seeing Green" with David Greene, he answers questions from users. Go back and listen to the last 5-6 episodes and you'll hear him say it over and over: the market conditions are difficult! Prices skyrocketed in just a couple years. Mortgage rates doubled in a year. You can't change two of the three major factors in an equation and expect the same results.

Listen to his podcasts and think about. The market has changed, so our strategy needs to change. You can't get around that.

I've listened to that episode and another recent one where I heard Dave Meyer suggest that the Tampa Bay market was balanced for appreciation and cashflow which is why I was trying to figure out what I am missing because I 110% agree that properties have been appreciating and we have tons of people moving here but I haven't seen the cashflow reflected yet.

@Brian Penter that makes sense and aligns with Patricia's point that I should probably establish "real maintenance numbers" or a sliding scale based on age to really more accurately reflect what my anticipated maintenance is instead of evaluating everything as equal.  I own a 50+ yr old house now and know what I spend to keep it looking good (albeit a lot of what I have spent is on renovations) but that can definitely give me a good baseline to work from.

Quote from @Brian Penter:

I'd actually say your assumptions might even be a bit low (depending on age of property, 15% might be closer to CapEx and maintenance and property manager is likely closer to 10%).

Are you saying combined CapEx and maintenance might be closer to 15% or are you saying 15% for each. If it's the later then I would really be in negative cash flow territory.

Thank you all for the insight and encouragement. Message received on the negative cash flow.  The only reason why I even considered that as a potential was for a small few the negative could be negated by removing the percentage for property management which I realize would mean I'm not paying myself for my time and I also would never have the option to move it to someone else to handle but also why I was willing to give it up just to be into something.

For the time being it seems like I will continue to increase my savings, start networking with local wholesalers and investors to see if there are any off market leads that might bear fruit, and keep getting my reps in.  I've poked around looking at distance investing but I don't know if that's what I want to do for my first investment property just yet but I won't close that door either.

Are there any good resources out there for medium term rentals? Or would you suggest holding off on that path if there isn't necessarily a fall back strategy available?