All Forum Posts by: Kenny Buyers

@Christopher Lane there has been a ton of great responses in this thread, and I commend you for your openness and transparency. I want to just offer a little suggestion. If you are making $160k a year, is it possible that you provide for your family and still put away 4-5k a month for a year to invest your "own" capital into a BRRRR property? This way you are the one making the sacrifice to save the money, and taking on the risk. This is a perfect opportunity to prove to her that you are capable of doing it and you will earn her trust that way.

Last thing. I would partner with an experienced investor your first deal or two to lighten the load and minimize the risk. Best of luck to you!!

@Andrew Postell yes I messed that up! Thank you!

The goal behind the BRRRR strategy is to pull all of the money you put into a property out when you refinance it so that you effectively bought a property for nothing, but still have 25 percent built-in equity to reduce risk. Most lenders will finance 75% the value.

Investors have what they call the "70% rule"  (the extra 5% missing is built in to account for refinancing/holding costs)

Hypothetically (single family house)

• ARV of $200,000
• repairs $30,0000

70% Rule:    (ARV*.70) - repairs = Maximum purchase price

70% Rule:     ($200k *.70) - 30k = 110k 

So you are all in for $140,000 (purchase price/repairs) + $10,000 (refinancing/holding costs) =$150,000

But the bank will cash out refinance you %75 of the ARV 200,000*.75% = $150,000

With that cash-out refi you are able to pay off (original loan/hard money) and you have 25% built in equity in the property with none of your own money in it. Allowing you to go repeat the process on another property. 

I tried to keep it short and I know I left out some details about the seasoning period and things like that but here is a great article to help bridge any gaps.   

https://www.biggerpockets.com/renewsblog/brrrr-buy...

I am curious to what some of your favorite real estate crowdfunding sites are? I'm a non-accredited investor and am looking to diversify a little money. Probably in the 5k range. I would love to hear some positive and negative feedback about different sites. Thank you!

I like where your head is at, however I'm surprised you can't rent your townhouse out for more than $1,100 with it being estimated to be worth $178,000. You should read up on the 1% rule that BP talks about all the time. 

I don't think your townhouse will cash flow with a $760 mortgage while collecting $1,100 in rent. Other expenses to consider: taxes, property management, repairs, and vacancy will eat away at that margin. 

I rather take the equity you've built and use it as two down payments for properties closer to where you are moving if the market is fitting. 

Hey David, I see some of the concerns others have voiced but I feel like you have done a lot of good research on the property and area. To me it seems like a solid first deal. If you get $700 for both doors that's $1,400/mth which definitely beats the the 1% rule. I think if you secure a better rate and they credit you a fair amount for the repairs then I would be pleased with this deal. Best of luck!!