All Forum Posts by: Kyle Shankin

I'm most grateful for my family. They're my why and I love spending time with them!

A point is basically 1% of the total mortgage amount. It's just a cost involved with taking out a loan. In some cases, paying a (few) point(s) will lower the interest rate that you have to pay down. In my example, my loan ended up being $45,500. I had to pay 2 points ($910) as that's what the lender required. 

 Yes I have BRRRRd, and running numbers through the calculator is something I do as part of my deal analysis process. I put that calculator through a lot of use!

My last completed BRRRR was a 2bed,1bath SFR in a C market. There were a TON of challenges, but here's the overview and rough numbers:

I bought the property for $22k and put $37 into it. I was anticipating that the house would appraise for $75k, which would allow me to get back $56k of my initial investment. My target cashflow after all expenses at this point was just under $100/month with a nearly 70% ROI. Not bad in my book!

Unfortunately, I made a crucial mistake in my analysis and the property ultimately appraised for $66k, meaning I would have to leave $13,500 in the deal. On top of that, the loan that I took out was now under $50k which meant a larger interest rate AND 2 points added to my costs. With those setbacks, the deal was now cashflows at $137/month with a 13% ROI.

Not the home run I was hoping for, but it's still a good deal. Just because you suffer a loss, doesn't mean you haven't won. 

Yes, that is the BRRRR strategy, you buy a house, fix it up and then take out a loan against it to get your money back, then repeat. Regarding the risk, if you analyze your next deal properly and manage your cashflow properly, then that risk becomes much, much smaller. If you haven't already, it'd be a good idea to play around with the BRRRR calculator to get an idea of what you should be considering when analyzing a deal.

@Korey Ranson As others have already stated, go through the analysis process with your wife. If she's not interested in that, then give her the important numbers in some form that she can look at. Maybe being able to see where the challenges are with turn-key will allow her to start thinking about other solutions. You can also ask her why she thinks turn key is best and have her defend her decision. Or if she agrees that the numbers don't work, ask her what she thinks a good solution would be. She may come up with something brilliant! 

On the other hand, have you considered checking alternate markets? If you could find a turn-key deal elsewhere, would that be worth investing in to you?

@Samir Womack How about driving for dollars? Drive (or walk) around the neighborhoods that you're interested in doing business in. Note the houses that you want to market to and either knock on their doors and start the conversation about buying their house or mail some letters. 

There are boilerplate contracts that you can find for free online, you could use those to secure your deals. 

With 199 replies to this thread I'm almost certain that this topic has been full covered, but here's my take:

The concern about going deep into debt for a college degree is a valid one, so it makes no sense to waste money. Having said that, it might be best to search for the happy medium. Why not explore getting into the business of real estate as you suggested while still pursuing some type of formal education? A $10k general studies associates degree is a lot less commitment both in time and money, and it gives you the option to make a more definite decision two years down the road after you have some experience with both real estate business and school. 

Best of luck to you either way!

Can't put it any better than what @Colby Hager has said. 

I'll also add that if you're concerned about inspection costs, find out what they are before you move forward. Keep in mind though, the inspection is going to be a constant among all of your deals. It's best if you decide that a deal is worth pursuing before putting any money into it. Also, be aware that there will very likely be a time when you inspect a house and something comes up in the inspection that makes the deal not worth getting. You'll be out the money for the inspection, but will have saved yourself from a greater loss. 

One other thing worth mentioning is that there are no hard and fast rules for wholesaling, it's not regulated. At least, it's not in my area, I get the vibe that's the case in most other places as well. You're free to try and work out whatever terms you want with the wholesaler. There's no harm in asking the wholesaler if you can send an inspector in before you give an offer...they might not go for it, but you never know, it always depends on their situation. If less people are interested in their property, then they'll be more likely to grant you certain requests.

Again, bringing up the example of the house that I'm closing on tomorrow. I had initial contact with them, told them I was interested and asked to see the house. Wholesalers give showing preferences to buyers who offer first, but in this case, they were fine with me walking the property because it's vacant. After walking the house, I gave the wholesaler my offer contingent on the inspection results of one potential problem area. In this case, the wholesaler was fine with that. What's more, they want to close quickly and told me that I could get my inspection done ASAP. I was able to get my inspector in the house before I had even signed to take over the purchase agreement. 

Focus on what you need to make the deal work for you and be sure in your numbers. 

HELOC's are meant to be used for home needs, however, it's a pretty common story that an investor will use a HELOC to finance their deal(s). I'm not sure how they get around that, they may just ignore the stipulation. I'm interested to see what other folks have to say on this.

Hi @Erica Gregory. There's nothing that says that you can't negotiate with a wholesaler. I'm in the process of closing on a house where I was able to knock a few thousand off the asking price. 

If a wholesaler is experienced, then they'll likely have their own forms and processes. If you haven't reached out to them yet to ask what their requirements are, that would be a good start.