All Forum Posts by: Melissa Block

@Kevin Smith @Nate Sanow @Richard Needham @Tom Fidrych @Bob Stevens and everyone else. 

I have taken your advice, and I am passing on this home. At such a low price, I thought it had to be me that was wrong. However, I went and looked at the property, and it will take 60-70K of renovation. We couldn't see the roof due to the snow of the electrical unit because it was in a locked room with no access, but the reno estimate is sitting at that price. 

I have done more research and found that homes in the exact same neighborhood are selling for way less than estimated. I was trying to estimate based on what is for sale, but all those homes at the inflated prices have been sitting for 3 months+.  

What is worse, the floor plan in the home I was considering is pretty bad, making the kitchen super small with no room to expand it or even add an extra bathroom so the main level would have a tiny kitchen with only 1 bathroom. These 2 drawbacks are not appealing to most buyers. 

Question: I am curious. If you had an opportunity to negotiate with the wholesaler given these Sold Comps of 406K-529, which are all in decent-great move-in condition and my reno bid of 60K 

The wholesaler ARV was 570K, and their asking price of 389K with a reno estimate of 60K

Would you even bother to ask them to review the data and try to negotiate with them? If yes, have you been successful with that, or does it insult them and put a bad taste in their mouths and make them not want to bother working with you? 

I appreciate all of you. I'm so glad I didn't just jump on it due to pressure and second-guessing the numbers, and betting on what other, more experienced investors are doing. I'm sure they have a way of making the numbers work. It is hard to see it. Even if they swoop it up at 389K, I don't know how they could make it worthwhile with the ARV being so low. I guess I'll learn those tricks of the trade someday but not today. :)

@Bob Stevens in the Denver Metro area it's pretty typical for basements to be considered and listed in the MLS with the basement square footage included. I'm not sure about the appraisal.

Hello, I have successfully connected with a wholesaler. They have found me a property in the Lakewood, CO 80232 zip code. 

Current Details 

1963 Brick Ranch Single Family 992 sqft/3 bd/1 bath 1 car garage. There is 992 sqft in the unfinished basement to add an additional bathroom and 2 more bedrooms. 

We will need to clear the hoard of belongings left behind from the entire home before the demo and rehab can begin. The front lawn has no grass. The previous owner has zero-scaped the entire front lawn.  

The wholesaler has calculated the ARV at 570K and stated needs only a $60K cosmetic renovation to get it to that ARV

I estimate that it will take 74K in rehab and used that higher number and estimated the ARV to be 560k to account for a further decline in prices over the next few months.

Questions 

This wholesaler has sent me 2 other homes that I hesitated on because I felt they were overpriced after I ran them through the Fix and Flip calculator. The wholesaler told me that the homes were both bought by other investors for full asking price. Now I'm questioning if I'm turning down good deals because I'm being overly cautious and overestimating costs and underestimating potential profits. I'd really like some help from the community. 

They are asking $389K and the report shows that I would need to buy at max 310,600 to make a 20% profit if I can sell the home for $560K. 

Am I going about this all wrong? All feedback is welcomed. I will be walking the home today at 12PM MST and they are going to want me to make a quick decision and I want to be as prepared as possible. FYI, I will have a contractor with me but in general, is my line of thinking wrong since other investors are picking these properties up in less than 12 hours of my being notified that the properties are available for off-market purchase? 

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Hello All, 

I just purchased my first 2 investment properties at auction in Louisiana and used cash. I will also reno the properties using my own money. I want to rent the properties out and get a mortgage on the houses to get my investment back out. 

Question 1: I was told I would have to own the homes for 6 months before I could get a mortgage. Is this true if I paid all cash? 

Question 2: Will I need to make a down payment to get the mortgage and pull my cash back out plus 20% more to give me more cash flow for future investments?  

Question 3: What type of financing should I consider? I went to the network section of BiggerPockets, and there are HELOC, Conventional, FHA, Hard Money, etc. I'm not familiar with all of these, nor do I know what type of financing is best for my circumstances. I'm looking for guidance on where I should start to understand my options better.

About me 1: I don't own my own home at this time. The market where I live is super pricey, so I have invested in another state to get my feet wet with investing, so the mortgages will be ones that I can get in a different state than I live in.

About me 2. I'm not a first-time home buyer. It has been less than 2 years since I sold my home due to uncontrollable circumstances.  So first time home buyer programs aren't an option for me.

About me 3. My goal is to build a portfolio using the BRRR methodology and position myself to where I can buy my own home. Moving to a more affordable state or area isn't an option for me.

About Me 4: I plan to attend my local Auctions so that I can buy my own home cash at auction within the next 6-8 months, reno it with my own cash, and take a mortgage out and house hack it. I need to position myself where I can buy a house, so the financing I use on these first 2 investments can't hinder that. (I hope this is possible).

About Me 5: If you are wondering why I didn't get these financing questions answered before I purchased the homes, it's because I'm new to real estate investing, and I didn't find BiggerPockets until last week, so I was maneuvering through this world with little direction and sheer determination. What is done is done. I can't look back now and focus on the should've. I have to focus on what I can now control. 

About me 6: I have a great credit score, and I don't want my credit impacted to the point where it will prevent me from my personal home-buying goal.  

Hopefully, this is enough information to help point me in the right direction. Thanks in advance for your time! I look forward to hearing from you. 

@Apsu Hamilton Thanks for the information It's so helpful. The refinancing piece is what is still so unclear to me. Another person replied that I wouldn't be able to get a mortgage to pull out my investment for 6 months. Is this true if I paid cash for the properties and I will pay cash for the renovations? Do I have to still wait six months? What has been your experience?

@Drew Sygit Thanks for the heads up on that. This is really helpful. The good thing is my partner is a contractor and will be in state managing the project with me. I bought a couple of properties at auction, so we will run the projects in parallel using local subs to make good use of our time there. Hopefully, we can build some strong working relationships with them during that time, so we can continue to invest in the area and not have to always stay the entire duration of the projects. 

With regards to your question about why we are doing this after. We did this up front but not so formally. I will tell you that no matter the direction we move in, we will come out on the right side because we didn't overpay.  We spoke to local agents in the area to get a feel for the market, and we also did a ton of online research on our own, and we made sure our purchases would account for heavy reno if needed. However, I don't think that is the case.  Hopefully, I'm right. If not, we accounted for it, and if we didn't account for enough, then it will be a big lesson learned as we move forward. I didn't know about BiggerPockets until last week. I dove in and started watching their YouTube videos, and I realized how important this in-depth analysis is upfront. This is our first time investing, so we are learning and ready to invest the time needed to ensure success. We already made the investment, so there is no looking back now and wishing we would have done it differently. That will only distract us from what we can control now. 

@Nicholas L. I received the rental estimates from a local agent, and yes, they based them on similar rentals in the area. If it turns out the duplex is 3 bedrooms per unit, as shown on various sites, the rent would be closer to 2K/month/unit. 

Regarding insurance, I just went on a site that gave me a quote for insurance that included flood protection. I entered the property address, zip code, property details, the fact that I would be renting it out, and information about myself, and that is the rate that came up for State Farm. I'm sure I can shop around but I used this number for now. 

Since I already paid for the property, my goal here is to educate myself as much as possible so that when I can finally go into the property in a couple of weeks, I can be prepared to decide if I will flip or BRRR based on the condition of the interior. It isn't a decision to buy since I did this all backward by buying before I ran the numbers. I'd like to understand how to determine what the best move is because I'm so new.

What do you typically look for when you decide if a property will make a good BRRR investment vs. a flip? Do you look for a cash flow over a certain amount?

@Nicholas L. ignore my last reply. I realized this is the duplicate thread that I created because I thought my post wasn't saving. So sorry to everyone for the confusion. Here is the link to the other thread. 

BRRR Analysis Help on First Investment (biggerpockets.com)

I'd like to consider this one closed. I'm unable to delete it. 

@Nicholas L.

Hi! Thanks for the reply. Our messages must have crossed. See my last reply. I've updated the report based on feedback and attached the link to my last reply as well. I don't want to duplicate it here to confuse anyone trying to provide feedback. My comps are from realtors and current rentals on market in that zip code.