All Forum Posts by: Mark Gauger

@Kyle Parcell As has already been mentioned, a live in flip is another method to "house hack".

If you purchase right, you can buy a single family house that you build equity into while you live there. After improvements are complete, you could either get a HELOC to access the equity for investing elsewhere, or you can sell after 2 years with likely no capital gains tax and then repeat the process again.

If you buy right and are handy and can do most/all the improvements yourself, this can be just as effective at wealth building as the traditional 2-4 unit house hack. I believe I've seen @Mindy Jensen post about using this strategy.

@Marco Morkous It sounds as if you've already had one success without it, why not continue with that pattern for a couple of more? Not only will you gain more experience, but if successful you'll have a stronger portfolio to share with a HML lender in the future if you still feel the need to go that route.

There is a lot of risk associated with HML, and it sounds like your heart is telling you that they are outside of your risk tolerance. It's hard to put a price on getting a good nights sleep, and is it really worth it to possibly accelerate your goals if it means have that extra stress over your head?

 Jim I hope the other side of BP you're experiencing doesn't turn you off from the site. I can tell you the words of wisdom from the steady investors doing the work are what keeps me (and I'm sure many others) coming back here again and again.

@Jim K. Congratulations on the new windfall! I'm going to send you a PM on an amazing opportunity that is just too good to keep to myself.

I'm running a venture that syndicates flipping yurts using the BRRRR strategy as medium term rentals to traveling nurses with dogs on the 4% rule in A class hoods out of state using seller financing on pre-foreclosures with no money down and 20% cash on cash returns plus over 12% appreciation per day. With you as a new equity partner in my series LLC we can both velocify our money faster than Starman's orbit around the sun!

Your Greek retirement will be just around the corner!

@Henri Meli I have no experience with it at all, but there exists a process for removing a property from FEMA's floodplain maps. LOMA or LOMR-F would be the terms to research to learn more and try to determine feasibility for this property.

@Joe Young Talk to more local banks and credit unions. If you called 25 I would be shocked if you didn't find at least one who could handle a loan for this.

Umbrella insurance is really cheap. Why is it so cheap? Because lawsuits are rare. If they were not, an umbrella policy would cost much more.

Maybe 999 out of 1000 landlords go their entire life without being sued, but who really wants to be the unlucky one who gets wiped out because they were too cheap for inexpensive umbrella insurance coverage? The risk may be small, but the consequences can be huge. This is exactly where insurance works best.

Any landlord with any sort of assets to speak of should really have an umbrella policy.

There's many other valid reasons for an LLC, but in regards to asset protection there really isn't much value there until your assets exceed what can be economically covered by an umbrella policy.

I'm sorry to hear this one didn't work out for you. Maybe in 2 years you get it back in a further improved condition and a different world where the sober living plan can be pulled off after all.

Thanks for sharing how a project can go sideways in entirely unexpected ways and the dangers that HMLs could pose if that happens.

Best of luck on the next one.

@Logan Vierstra Homes like you described worth $360k are most likely in appreciating areas. You won't find many BP investors who are excited about numbers like those, but there are investors who do buy for appreciation. Or just for a stable place to park cash. Some areas of the country never really saw much if any of a decline during the Great Recession. You pick up a house in an area like that with an A+ tenant and there's not a whole lot of downside risk. Returns aren't great, but they're better than a Treasury bond even without factoring in rent appreciation and potential tax benefits.

Hi @Benjamin Papet. I think you're getting lost in your own numbers a little bit. I'll walk through the steps of your own example a little more.

1) Purchase a house for $100k with a $20k down payment and $80k mortgage. (20k out of pocket, 80k mortgage)

2) Spend $30k on rehab. (Now 50k out of pocket, 80k mortgage)

3) Rent house and initiate refinance, house appraises at $150k.

4) Complete refinance at 75% loan to value with a new mortgage for $112.5k. $80k from the new mortgage goes to pay off the first mortgage leaving $32.5k as cash back to your pocket. You still have $17.5k cash left into the property out of your total $50k outlay.

The "infinite ROI" you'll see people mention with BRRRR where you get all your cash back can only occur if you increase the spread in some way. For example if your Purchase Price + Rehab = ~70% of the After Repaired Value (ARV). In the above example if it only required $10k in rehab to achieve the $150k ARV you would have been able to fully cash out. Or with $30k rehab but a $80k purchase price to achieve a $150k ARV.

All these examples are of course quite simplified. You would have transaction costs and lending fees to factor in as well. Also, don't define whether an investment is "good" by whether or not you can BRRRR and get all your cash back. It is just a strategy and being able to execute it does not necessarily mean you got a good deal.