All Forum Posts by: Ken Virzi

Originally posted by @Andrew Frishman:

One comment I want to make regarding this BRRRR podcast:

The assumption being:

The average single family "newbie" investor / Average Joe" is not going to want to BUY/cash! ...a fixer upper" for more then $150- 200K..without loosing sleep at night....maybe...(a hard money loan would only add to the stress on a Newbie).

Therefore....I/ most investors would have to shop in Housing markets with homes under 200k...

In my case...living in the northeast....I am restricted to the southeast (NC, FLA, Tenn, Georgia)/ maybe...Midwest.)

I would have to long Distance Invest....

Then I would have to get a team/"Core 4" in the market. I would have to travel.. ..to be boots on the ground to network with contractors //bankers...etc..

If I overcome the above hurdles ….. I would have to place all of my  faith in my contractor.

I need to get in the right mindset to take this leap of faith!! and put on a set of Brass balls...lol

Any Feedback appreciated...

Yes, the talk is great, but the reality is totally different. I think most people who are doing BRRR well are doing it as a full-time job not as a side investment (like most of us on here are trying to do). The original capital seems to often come from selling your house or investment, but some have jumped straight into hard money.

I think the only way to really get into BRRR investing while having a full-time job is starting local, but like you, LA would require a ton of money to get started. Good thing there are many paths to investing and I think even you buy a few with conventional loans and if things like cap ex and maintenance and utilities kill your cash flow that you had calculated, you will have an asset or three that you can eventually sell and start the entire process as perhaps your main job.

Willing to give time and money to it is way under talked about. I think you need to be willing to spend a few thousand finding a deal. Be it marketing, inspections, travel, etc. That is also not talked about either, the sunk costs. 

Good luck, and find a strategy that works for you.

Originally posted by @Michael Kiley:

Originally posted by @Andrew Frishman:

Im inspired by stories of Brrring ….outside of David Green and Brandon Turner...have any BPr's BRRRd a property?

Please share...

Sure. It's done all the time. The last one I did was in Old Brooklyn, a neighborhood of Cleveland. Got it for 35k. Spent 25k on the rehab. It appraised for 100k. Refinanced and got all my money back out and have $584 monthly cash flow. 

Awesome, did you find it through marketing? wholsesale? MLS?

Originally posted by @Melissa Nash:

@Clarence Johnson The team that I work with lines up the hard money lender and the end lender for the refi, they bring me wholesale properties with the scope of work, their contractors do the rehab and then place the property with the property manager. I just put down a 10% downpayment on the ARV and then they do the rest. When the property is done - I work with the final lender to close that and then take the 80% LTV and payback the hard money lender and carrying costs and then I end up with a nice property that has some equity and I only put down about 10-12% total including closing costs. Vs the normal 20% down plus closing costs. Its a great way to buy more. DM if you want an intro to the team that is doing these in Montgomery and Birmingham. I call it a hybrid Brrr program- its really a low down deal too.

Melissa, have you gone out and inspected the finished work? What sort of premiums are you paying for the wholesaling and the rehab work? How long is the work taking and how long before tenants are usually placed? I would be curious to talk further with you about your team.

@Jay Hinrichs I bought my first condo in LA 2.5 years ago and inherited a section 8 tenant. She has 5 kids and is a single mom, looked like she took great care of the place and I knew she had nowhere to go. Section 8 in LA is not easy to find so the landlords can be picky, and seeing all those kids means less desirable. They do not know she has everyone take off their shoes and loves being zen. With that said, I have raised rents twice already. From around $1800 to start to $2200 now. I have to be careful as the way section 8 works in LA is you put in a request and it has to be fair market value, if it is not they will not only reject your request but lower your current rent for the year. Obviously, this is a different situation being section 8 and all, but in LA the tenant still must pay a portion of the rent. With that said, an extra $400 a month in one year pays for two months of vacancy in itself. Turnover costs are minimized in some ways, but if she left some of the stuff I would fix is stuff I will do anyway in the next year or two with her or without there so it is already spent costs. 

I bought a condo in Gardena (closer to the 110 than the 405, for $210,000 in summer 2016. The place has shot up in value and worth about $350,000 maybe more now. The complex is getting better but still not great by any means (empty swimming pool for example), and my tenant is section 8, but more and more owners are moving in, another rehabbed unit recently sold for $399,000, and places a couple of blocks away are selling for $600k. When the Rams stadium and housing complex get built I think it will just speed things up. I am not sure where those who can't afford the rising rents will go though. Compton is also in value and so I am guessing south LA?

@James Wise as a long time investor, when you first started buying in Old Brooklyn was it a D-class area? Have you seen it go from D to C? Also before gentrifying, were the Tremont,  Ohio City, etc D class? Were the houses selling for under $30k as well back then? Just curious if the starting point was similar in Clark Fulton as Old Brooklyn or Tremont etc. Thanks.

Is there any way to get a basic range (no matter how large the range) based on pictures and city? For example, I’m thinking of making an offer on a property in Philadelphia but trying to get a general idea of rehab costs. It is a depressed property for sure. Also being a rowhouse I wonder how that affects cost?

@Paul Shepherd is with Jorge?

@Joseph M. Those factors show up too late. Affordability is a key that people tend to ignore. When the affordability for homeowners and the value for investors dries up, prices might go down. Lower prices means you are underwater on your 3.5% DP FHA loan and you walk away, foreclosure.

First crash was obviously coming for years based on two things. The crazy loans and free money combined with the expectation that the move from single income households to dual income households was a trend as opposed as a one time event. 

We still have had a period of cheap money, but the loans have been less out of control, however much of the appreciation in certain markets have come from investors. A combination of foreign cash investors and the growth of things like biggerpockets have increased the demand artificially. If that is the case in your market it is more of a traditional pyramid scheme in that once that foreign money runs out or the local investors tie up their capital, or the prices get too high where cash flow markets stop working (looking at you Cleveland), than at that point the demand drops. If you buy at this high point and the driving factor was investors, if the investors stop coming you may see a stubborn market that corrects or even crashes.

I do think many markets are bloated and have been for some time. Others are more protected. But there does seem to be a commonality of outside money in those markets (be it foreign purchase, relocations, or investors such as us).