All Forum Posts by: Matthew Porcaro

Hi Mary - of all of those questions above (they're all great ones!) which one do you think is holding YOU back the most?

Analysis paralysis is the killer these days in real estate. I paralyzed myself with the details for years. I finally just had enough courage to bite the bullet, and get after it, and I'm so happy I did. If I didn't I'd still be asking questions each day.

The moral of the story is, you need to take the initial leap of faith. All of those questions you ask get answered along the way. But you need to conquer the FIRST obstacle.

So again, which of these is holding you back MOST? Which is the next step on your list, and why do you feel like you can't do it? 

You're putting the cart before the horse. The first deal is the hardest. My first BRRRR was the hardest, things just start to fall into place after that. I could sit here and explain to you a bunch of reasons how and why, but sometimes you just need to take a leap of faith.

There's a reason so many of these posts are big on taking action. There is no clear cut 100% way to do something. If there were zero risk and the steps were crystal clear, everyone would do it.

Nothing worth having comes easy. I was in the same spot as you. It took me 3 years to build up enough confidence to just put an offer in on a property. In retrospect, I wish I started sooner.

 Hi Brendan - 

So my strategy was to use a 203(k) to buy a foreclosure (typically the only 'mortgage' you're allowed to offer on a bank owned property with). I then wanted to refinance as soon as I could, move out, and rent both units. 

I found a duplex that was in foreclosure. I real disaster of a house haha. I got pre approved for enough to pay for the house, plus the $100k it needed to get it back in. I put 3.5% down (about $10,000), and then hired a contractor I knew to do the rehab. 

It was a full gut, everything brand new, but it was needed. I did the math, and knew that when I was done I was able to get more than enough to cover the mortgage with rent. 

The Rehab took about 7 months. Once that was done, I realized I had enough equity to refinance. I refinanced immediately, getting rid of the PMI, and the 203k requirements for me to live there.

I then put it up for rent, and got two tenants in both paying $2450/mo. It now cash flows $2000/mo for me. 

In addition to that, with the equity I built in during the rehab, I've been able to leverage that cash to get into a few flips I've done since. I'm closing on my current flip  next month. 

If you have any questions about this, please feel free to reach out here or by PM. I love helping people with this. 

Devin - a lot of this stuff doesn't need to be scary. When I did my first BRRRR, I left a lot in the hands of my mortgage broker.

Make friends with your mortgage broker! A good one will always look out for you. Repeat business for them feeds their kids. 

My mortgage broker told me exactly what I needed to do for the refinance, appraisal, etc. 

Also, there are plenty of refinance products out there where a good mortgage broker can tell you the best one to go after. 

If you need any help please reach out some more! I'm happy to help. 

There's really never a reason to drop a cash flowing property. The quick cash seems nice, but unless you intend to roll it into another, larger, higher cash flowing property, I would just hold it!

@Paul Jurczyk

Hey Paul - these are great questions. This is exactly how I broke into real estate investing. You’re on the right track.

To answer your questions:

1. Start by looking on BP for recommended lenders, some that have been mentioned above. You want a lender that is WELL VERSED in 203k loans. Ask for references even if possible. Most will say they know them, but have never actually done one. I learned this the hard way.

2. The contractor selection is way overhyped. It’s just paperwork. Find a good general contractor through friends and family. If not, find one with good reviews and let them know what you’re looking to do. There are some stipulations, but it’s well worth it in the end.

3. Yes you can absolutely refinance a 203k loan, and you should ASAP. There are no penalties. Just additional closing costs, but most times they can wrap that into the new mortgage.

4. In my opinion, no. 203k is the best bang for your buck. No conventional lender will compare.

My first flip was a 203k BRRRR/househack. I was able to rehab the duplex (building 130k of equity) this , then moved out after refinancing. I now rent both units for a $2000/mo cash flow.

If you have any specific questions, please feel free to reach out here or by PM!

@Theo Hicks

Haha - I was one of the lucky ones that used a 203k for my first house hack. My house hack turned into a BRRRR deal. I no longer live there, but it's a duplex that cash flows $2000 per month, and has a large amount of equity.

That equity I use to get into new deals. I’m now on my 3rd flip in under two years. It’s all because of that 203k.

Research 203k’s, and if you have any specific questions or get stuck, feel free to reach out!

@Gary Miller

Hi Gary - my first flip/house hack/brrrr was using an FHA 203k. It takes some grit, but if you stick through it's the best deal out there for people looking to start their investing career in my opinion.

In my case, I bought and flipped a duplex, which I then was able to refinance and rent out both units and move out in less than a year. That property now cash flows me $2000/month, and I have $130k equity in the property to use any time I need seed money for another deal.

If you have any specific questions using a 203k, feel free to ask or PM me. I love to help on this topic!

As much as it's very possible, I think doing your first BRRRR far from where you live is not the best idea. You want to be in front of the process, to ensure that you're learning as much as you can about all the nuances of doing a flip, rehab, and rental.

I also suggest being your own landlord up until you hit 5+ units. You need to understand how to be a landlord before you trust someone else to do it for you. 

Have you ever looked into FHA financing? 203k or HomeStyle loans? You can do a BRRRR with these to a degree, and it's much more accessible than using a conventional or hard money loan. It's actually how I did my first BRRRR.

Sam - I would use a 203k loan for this property, or any property like it. This was the way I did my first "flip" and essentially did a BRRRR. That property now cash flows $2000/mo and I built $130K of equity into it after the rehab.