All Forum Posts by: Justin Winn

If you’re here in El Paso and so is your property I’d be happy to meet with you some time. My wife and I are in the middle of a renovation right now. We’d be happy to share some tips on what to look for and even help you look for properties, she is a local real estate agent and we’re always looking for new connections in the area.

I agree with @Jason Hirko that time value of money is a consideration. One way to do that might be comparing your proforma using the rental tool to what options the cash flow from not carrying the mortgage and maintenance would produce if reinvested somewhere else.

Also, you didn’t mention if this is as a long, medium or short term rental. You could potentially make more with a different strategy and be able to cover your expenses. I hope this was useful. 

You could possibly look into some wholesaling franchises, or books. I’m not an expert in wholesale, but the things I am good at have been by studying others who are. The podcast recently had a wholesale franchiser on. 

But to find direction, I would say it’s best to just start connecting with people, tell them what you’re doing and people will start bringing you opportunities to help them out of a bad situation. If you can get good at helping people with a specific problem set, then you’re golden.

Right off the top, @Chris Davidson makes a great point about just put more down to get to a cash flow positive property. Also, @Devin James makes a great point about defining your investment strategy.

Since you mentioned cash flow and that you are cautious I would encourage you to look at your investment risk factors as really 3 things. Cash reserves, cash flow, and equity growth. 

If you pay cash for a condo, and have little in reserves and the condo has maintenance issues, you could be in a high risk environment. If you look at 40% down and it makes for good cash flow, in a good house with little maintenance required and your appreciation is solid and reserves are good, then you’re likely to be lower risk situation. 

Ultimately only you know what the right mix of those three factors will allow you to sleep easily at night, and see the types of returns you want. 

Best of luck

I think this is a great question. Most people won’t consider this until it becomes a huge issue. I think this also depends on if you’re counting vacancy as part of your cost. But a professional cleaning and a few minor repairs should be all you need for around 2-300 bucks. Obviously that’s assuming they didn’t leave six months worth of garbage inside the house.

I’m not the expert on this, but I typically here people talk about this when they have multiple properties they are updating. I’m going to give this one a listen and continue to monitor this thread. Best of luck and I hope more people come along with more good info.

Quote from @Deandre P.:

Quote from @Ryan Braman:

Does anyone have an alternative way of calculating the value of a BRRRR in terms of future income - present value? Annuity, perpetuity, zero-coupon bond with a speculated maturity value? What I'm trying to solve is finding a present value baseline to compare the BRRRR'ing a property vs selling. Am I overthinking this? Does anybody have a simpler way of comparing the two scenarios?

Specifically, I'm in for $230k on a property that will need another $60k to finish renovating. Once completed, I can cash flow without refinancing, around $22k annually. If rates drop I can refi cash out...dependant on rates. A neighbor has given me an unsolicited offer (no $ amount mentioned) to buy the house so they can level it and improve their property value. I'm trying to analyze what the property is worth to me, in order to sell it?

Thank you!

 The analysis you are looking for is a discounted cash flow analysis. Figure out your holding period (typically 5 to 10 years) and estimate the annual cashflow for each year of your holding period.  Discount each year by your discount rate and add the cumulative total.  This will get you the present value of the future income stream. This is a brief summary of how a DCF analysis works. A few things you will need to consider are income growth, expense growth and appreciation.  Also, be sure to include the net sale proceeds in your cashflows at the end of your holding period.  Lastly, your discount rate should reflect your preferred rate of return (consider risk, timing, etc.).

I want to say that I think @Deandre P. gave the best answer to calculate what the money could do and how it may perform with the options you have. Second point that I didn’t see anyone address is your time, and how you value your time. Once you have completed the DCF calculations if they are relatively close, I think I would then consider which one gives me more time back to, find more deals, spend with family, hang out at my hobby spots…

Best of luck.

I think that depends on how aggressive you want to be. If you’re investing in Dothan I would look to roll your free and clear home into a loan on a bigger property that could easily rent to the pilots that are constantly rotating through there. But that’s because I’m working a similar strategy in Oklahoma. 

But I would encourage you to go talk to a few local lenders, and see what products they have for your particular strategy. They may even help you come up with some new varieties of that strategy, because it benefits them if you take out a loan.

I hope this helps and best of luck.

I might encourage you to look at volunteering with habitat for humanity or other similar organizations. I’ve seen them do tile, siding, roofs… pretty much everything. Also, the big box stores like Lowes and Home Depot usually have some kind of a class on a regular basis, you may check with your local store. I will tell you though, some jobs are cheaper to pay someone than to buy all the tools necessary.

Best of luck with the move and investment.

Quote from @Paul Moore:

Hi @Joel Lazar! It looks like you are on a great path! And I would highly recommend getting coaching or mentoring along the path. Or at least listening to every podcast or reading every book you can. 

In the short-run, I would recommend going to the max small local banks and getting the highest equity lines you can possibly get. Right now it's a little easier to get credit than it might be if the economy falters. Having those lines of credit could provide you with a golden opportunity to scoop up deals if the market goes south. This is probably the best thing you can do in addition to the education above. Good luck and happy investing!

Couldn’t agree more. Some of those small local banks will allow you to take property”A” and roll it into a new loan with a new property as long as it has 20% of the appraised value of both properties. So definitely go talk to those local banks and talk to the business loan lender, and the home loan lender.

One word of caution though is to spend more time researching your strategy since you’re low on cash. You can use your HELOC for your reserves if you need to, but I’m not a fan of that. The more assets you acquire, the more reserves you need as well.

Best of luck as you expand your growth.