All Forum Posts by: Micah Watson

@Dave Spooner

Thanks, Dave. Do you have any short term rentals?

I agree that the analysis seems optimistic, or atleast hard to understand. It would be nice to at least know what factors it’s taking into account.

I’ve been analyzing deals for a couple years now and have both a brrrr and a flip under my belt. I’m very familiar with the 70% rule, 1% rule, 50% rule, etc etc for rentals.

Are there any rules of thumb for analyzing an Air BnB? I’m interested in getting into the game but not sure where to start with analyzing how expenses, vacancy, etc

@Tom Jr. Sterl, where do I get cabinets for $1600? Sounds like a steal!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $44,500
Cash invested: $3,000

Purchased as our first home with minor fixing up to do. Converted into rental property in 2018. It rents for $949/mo so it’s a little better than the 2% rule. On the lookout for more deals like this!

Update: Just reappraised for 78k and our tenants just requested to sign on for an additional year. 🔥🔥🎉🎊

What made you interested in investing in this type of deal?

My bride and I were renting a studio apartment and realized we could own a house for a smaller monthly payment.

How did you find this deal and how did you negotiate it?

We found it on the MLS through our real estate agent.

How did you finance this deal?

We used a lesser known loan called a rural development loan. 0% down on a 4% 30 yr mtg.

How did you add value to the deal?

When we moved in, it had belonged to someone’s grandma and it looked it. We lived in it for 4.5 years and did little things gradually to bring it to life: new carpet in a bedroom, new bamboo floor in another bedroom, patio area with a pergola, seal coated the driveway, etc.

What was the outcome?

At this point. We have roughly 40k of Equity and it’s cashflowing about $300/mo after all the expenses present and future.

Lessons learned? Challenges?

We learned the power of a little cosmetic love and, more importantly, buying low in a rising market.

Thanks, @Ryan Murdock!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $72,500
Cash invested: $110,000

Just landed this one! The cash invested is an estimate, as I am just now planning the rehab. I will gain possession 4/10/19 and I plan to have it rented by June 1st. This one will be a BRRRR project so the cash invested ultimately should be pretty close to $0. The instant equity is the main appeal, as I am confident I could immediately sell with an ARV of $160k. The cash flow will keep things moving, but it will probably be just under a 1.5% deal.

What made you interested in investing in this type of deal?

Having gotten my feet wet on my first deal, I've come to realize the repeatability of the BRRRR method. I want to accumulate as many of these with 20% or more equity ASAP. :)

How did you find this deal and how did you negotiate it?

My good friend was sent the deal by an agent and I was able to get an inspector in there to see the place within 24hrs of the listing going up, make an offer the same day with no contingencies, and closed 10 days later.

How did you finance this deal?

I used cash that I pulled from an old promissory note and I am funding the rehab with two HELOCS on my two other houses.

How did you add value to the deal?

This was a diamond in the rough. Worst house on a very nice quiet street. I will be sinking 30-50k into it and building 30-50k of equity above all of my cash invested.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My agent is Mandy Green from Greenville, MI Coldwell Banker. She is an investor herself that is no longer hunting for deals, which makes her an incredibly valuable and unbiased source of insight.

I am considering starting a monthly direct mail campaign. My deals so far have been off the MLS, but it may be time for some marketing. What list sources do you recommend? Does it very by region? I'm in west Michigan.

I have more clarity now. My uncle gave all his living relatives, via his company, 4 gift notes or promissory notes. They were held in a local financial institution and the interest earned was 1% below prime with a custom maturity date set at each recipients 60th birthday. Because they weren’t technically retirement funds, the company was able to offer early payment, with a 20% penalty attached. The only taxes owed are personal income taxes on the earned interest. 

I decided to take the payout, and incorporate the funds into my BRRRR strategy to get a better ROI.

My great uncle was a multi-millionaire who took his own life roughly 20 years ago. He left all living family members individual trust funds/retirement accounts conservatively invested in some sort of mutual fund. For me it was always a novelty thing but nothing to hang my hat on, being that I wouldn’t have access until retirement age. After all, who knows if this fund would zero out completely before then or simply fail to yield much of a return. I never bothered to study up on it. 

I found out today that until March, I have a one-time opportunity to access my account to withdraw or roll over into an IRA, and pay some sort of penalty. I need to get my hands on the notice to see what the details are, but I'm curious what you would do. I believe my account has somewhere just shy of 100k. My initial thought is that I would pay less in penalties if I rolled it into a self-directed IRA and I could use that IRA to invest in real-estate.

I'd love to hear the pros and cons on this. For instance, would it be virtually impossible to use leverage in an IRA? Or could it be done if the loans were non-recourse? I don't want to trade a low performer for an average performer, if I could instead leverage and get 20%+ through creative investing.