All Forum Posts by: Matthew Tyer

Let me start out by saying, this is my first investment property and I have learned a lot about the whole process. I bought it this year and originally I wanted to do the BRRRR method on it but now I just want to get out from under it. It ended up needing way more in repairs than what I anticipated and I should have done more research on the market area to make sure I was in a good selling price point. That being said I am anticipating that I will either (1) break even or (2) have a small loss on my hands (<15k) it just depends on what I can sell the home for. My question is, if I do incur a loss on the property can I just claim it on at 1040 form or will It just lower my personal W2 taxable income? If this happens I will not show any profit for 2021. My business is in an LLC also and this is my first year in business. I know you can claim a loss for the first 3 years in business. I am very organized and have been keeping very good track of my expenses for the home so I will end up knowing my EXACT loss if it should happen.

I have a coworker that owns 10 sfh in the Baytown, Texas area. He has been building his portfolio for a while now (8 years). He pays cash for his homes and then saves up to buy the next. He does not believe in accumulating debt or taking away from his cash flow. Me personally I want to do the BRRRR method by buying a house cash then puling my money back out on a cashout refinance. He is telling me that his method is better but I'm not convinced. If you look at it in the long term having more doors will be a more profitable method wouldn't it? Even if you are in more debt and have less cash flow at first. Am I looking at this the wrong way? At the end of the day, in 30 years I could have a ridiculous amount of homes vs his 20 homes he paid cash for.

As the title suggests, I am in the process of investing my first BRRRR home. I am looking for guidance & suggestions from experienced investors. A little bit about me - I am 28 y/o & live just outside Houston, Texas. Working as an operator in a chemical plant. It is shift work on a rotating schedule of days and nights. This is my main motivation to getting into real estate. I want to break away from shift work completely and eventually become financially independent and invest in real estate full time. I am wanting to scale my business as fast as possible so any suggestions on how to do that would be much appreciated. I named my company DoorMatt Properties and my purchases will all be under DoorMatt Properties, LLC.

The home I'm purchasing is a SFH 3bed 1bath & 816 sqft pier and beam (HUD home). I am purchasing the home for $28,000 from a wholesaler with cash out of my own pocket. In addition to the $28,000 there is a $300 wholesaler fee and then closing costs which I estimate to be no more than $2,000. My total cost for acquisition will be in the ballpark of $30,000. I found a very knowledgeable and experienced GC that is also a real estate investor himself and he quoted me at $30,000 for the repairs which I will also pay in cash out of my pocket. Repair time is estimated at 2 months. All in, I should be around $60,000. The ARV of the home will be in the ballpark of $80,000-$85,000. Rental comps in the area are around $900-$950.

My expenses before the cash out refinance will be minimal. Yearly property taxes around $600. I have not done any insurance quotes yet so any insight into that would be helpful. Still deciding on what utilities I will be willing to pay if any. (Gas, water/sewer, trash, lawn care etc.) I found a property management company that charges 10% of the monthly rent. They will take care of minor maintenance issues up to $300. Should I also be putting 5% away on top of that for maintenance repairs? What about capitol expenditures? Vacancy? With all of these, I will be at 25% of my monthly income getting cut out. The main reason for acquiring property management is the fact that I work shift work and long hours and I will not always be available to help with Tennant needs. I would love to manage the property myself & for the first couple of homes but it is just not practical for my situation.

I found a local credit union that will cash out refinance at 80% LTV. Since I am not taking out a loan to begin with is there a seasoning period still or can I cash out right after I get a Tennant in place? Or should I at least wait a few months to show steady rental income that will count towards the loan?

With this, if the property appraises at the conservative number of $80,000 then I should be able to pull most if not all of my cash back out of the deal with the 80% LTV. ($64,000).

New cash out refinance loan ($60,000 + wrap closing costs in loan) at 5% interest for 30 year fixed with no outstanding mortgage balance. P&I $350 - Property tax $50 - Insurance $80 TOTAL: $480 a month. My expenses for property manangment $95 - Cap expenditures $50 and Vacancy $50. This brings my new total for expenses to $675. If I charge $950 a month in rent this will cash flow me around $275. I am curious if there is something I am missing or if I calculated this out correctly.

How does this above deal sound? I need honest opinions. At the end of the day my main goal is to pull my cash back out of the property. I apologize in advance if my post is all over the place. I tried to make everything as clear as I can.

-Matt

As the title suggests, I am in the process of investing my first BRRRR home. I am looking for guidance & suggestions from experienced investors. A little bit about me - I am 28 y/o & live just outside Houston, Texas. Working as an operator in a chemical plant. It is shift work on a rotating schedule of days and nights. This is my main motivation to getting into real estate. I want to break away from shift work completely and eventually become financially independent and invest in real estate full time. I am wanting to scale my business as fast as possible so any suggestions on how to do that would be much appreciated. I named my company DoorMatt Properties and my purchases will all be under DoorMatt Properties, LLC.

The home I'm purchasing is a SFH 3bed 1bath & 816 sqft pier and beam (HUD home). I am purchasing the home for $28,000 from a wholesaler with cash out of my own pocket. In addition to the $28,000 there is a $300 wholesaler fee and then closing costs which I estimate to be no more than $2,000. My total cost for acquisition will be in the ballpark of $30,000. I found a very knowledgeable and experienced GC that is also a real estate investor himself and he quoted me at $30,000 for the repairs which I will also pay in cash out of my pocket. Repair time is estimated at 2 months. All in, I should be around $60,000. The ARV of the home will be in the ballpark of $80,000-$85,000. Rental comps in the area are around $900-$950.

My expenses before the cash out refinance will be minimal. Yearly property taxes around $600. I have not done any insurance quotes yet so any insight into that would be helpful. Still deciding on what utilities I will be willing to pay if any. (Gas, water/sewer, trash, lawn care etc.) I found a property management company that charges 10% of the monthly rent. They will take care of minor maintenance issues up to $300. Should I also be putting 5% away on top of that for maintenance repairs? What about capitol expenditures? Vacancy? With all of these, I will be at 25% of my monthly income getting cut out. The main reason for acquiring property management is the fact that I work shift work and long hours and I will not always be available to help with Tennant needs. I would love to manage the property myself & for the first couple of homes but it is just not practical for my situation. 

I found a local credit union that will cash out refinance at 80% LTV. Since I am not taking out a loan to begin with is there a seasoning period still or can I cash out right after I get a Tennant in place? Or should I at least wait a few months to show steady rental income that will count towards the loan?

With this, if the property appraises at the conservative number of $80,000 then I should be able to pull most if not all of my cash back out of the deal with the 80% LTV. ($64,000).

New cash out refinance loan ($60,000 + wrap closing costs in loan) at 5% interest for 30 year fixed with no outstanding mortgage balance. P&I $350 - Property tax $50 - Insurance $80 TOTAL: $480 a month. My expenses for property manangment $95 - Cap expenditures $50 and Vacancy $50. This brings my new total for expenses to $675. If I charge $950 a month in rent this will cash flow me around $275. I am curious if there is something I am missing or if I calculated this out correctly.  

How does this above deal sound? I need honest opinions. At the end of the day my main goal is to pull my cash back out of the property. I apologize in advance if my post is all over the place. I tried to make everything as clear as I can. 

-Matt