All Forum Posts by: Michael Scott

Start attending your local REI meetup https://www.biggerpockets.com/.... You will meet people in your market doing exactly what it is you want to do. Provide value to them and I can guarantee you'll be able to connect with someone who can help you! 

 I would highly recommend listening to the BP Real Estate Podcast episode 636 https://www.biggerpockets.com/... and episode 637 https://www.biggerpockets.com/... These are a great resource on private money and how to implement a strategy in telling people you're looking for money to fund real estate deals!

Quote from @John Daniels:

Hi All,

One thing I need clarification on in the BRRRR method is the refinancing part more specifically how much cash I should pull out of the property. Property will have a ARV of about $250k and rent for about $2k. If I get cash out of the house to cover the rehab cost, $60k, then this would cash flow nicely. But if I get the full available cash out of the house, say 75% LTV then this increase my mortgage payment which reduces my cash flow on the house.

So here is my question but it is difficult to ask. If you reference the chart it shows a co-planar relationship between cash out loan and the payment and profit. Is there like a sweat spot or financial balance to which the cash out loan amount? In the BRRRR process what do most people do? 75% LTV or just enough to get and rehab another house?

On the current property I have used about 1/2 cash and 1/2 credit card for rehab. Do people use 100% credit on rehab and use the cash flow from other property and use minimum credit card payments to the end of the project? If so then I can see not getting out the whole LTV cash out.



With regard to the question how much should you take out... depends on your investing goals. You need to know what your goals are and stick to them. Are you confident in appreciation and willing to sacrifice current cash flow? Do you just want to get the money out that you have into it to maximize cash flow? Are you just concerned with appreciation and building wealth, not concerned with cash flow? Get concrete with your objectives and you'll know the answer. 

I would also not recommend financing with credit cards. There is way too much risk. Not saying that it can't be done but you're playing with fire, especially if you aren't able to refinance for what you need. If you don't have the money for the purchase and rehab, focus on getting private money or hard money lenders. Best of luck!

 I have used Google Voice and best of all it's free. Just starting out you really don't need to pay for a service. Once you get into marketing and tracking campaigns then you might want to look into Ring Central, Vumber or another service like that. 

 Welcome to the forums! Keep learning as much as you can. I am also from Pittsburgh (east of the city) if you need anything please feel free to reach out!

 If this is the path that your family friend truly wants to take, have them immerse themselves right away. I don't believe everyone needs to go to college. There are plenty of success stories of those who never went to college. Get a mentor and dive in! 

 This is a great list! @Jordi Valado now it's time to start doing the work to find which of these areas fit your investment goals. Start by looking at the Census data and see which areas are growing in population and which ones are decreasing in population. Then really start drilling down into the data and looking at the real estate for sale. Contacting a local investor friendly agent is crucial, as they will know the pulse of the market https://www.biggerpockets.com/... Then it's time to pound the pavement and find the right people to add to your team that can help you achieve those goals. That's the hardest part. I invest where I live and its not always easy to find the right people, but it can be done. I would start to plug into a local meetup group in your area: https://www.biggerpockets.com/... You can build some great relationships with local people who can help in your journey. Additionally once you do find that market, go to a local meetup there as well. It's important to connect with other investors to gain more knowledge and help you find the path that's right for you. Best of luck! 

P.s. Pittsburgh (on the list) is where I'm from and a great place to invest. Meets a lot of the criteria for a good investment. If you would like to reach out I would be more than happy to answer any questions you have.

@Joseph Savant

Congratulations on getting started! You've already got the hardest step out of the way, purchasing that first property. With regards to the market, I cannot speak to Raleigh but my overall opinion is that we wont see a crash like we did in 2008. There may be a correction but I don't believe there will be a crash. Generally speaking even with the rise in interest rates if you were to look historically, we are still on the lower end. So that shouldn't scare you on continuing your real estate investing. 

There are several strategies that you can use to jumpstart into the next phase of your investing. For example, you could partner with a more advanced investor and invest your money into a bigger deal with someone who has the experience in apartment buildings you're looking to get into. There are plenty of people out there who would love to teach what they know. You would also have skin in the game to give yourself the motivation to learn everything you can. Next, your could focus on owner finance deals where you could bring little to no money down and build your rental portfolio. I know several people who have built a nice rental portfolio focusing on owner financing. You could also look into private money partners. I have done a few deals where a private lender financed 100% of the purchase of a cash flowing rental. They hold the note and mortgage as collateral, my renters pay that off and I collect the cash flow. There so many way to get creative in real estate, that what makes it so much fun!

I would also really try to focus on what your real estate investing goals are. Take an hour out of your day and really think about where you want to go. Once you decide, create a plan and execute every day. Best of luck on this next journey!

 I would say a good start is 3-6 months of the property's expenses including the mortgage. For example if you had a mortgage of $1,000 and monthly maintenance and utilities of $250, then $3,750-$7,500. As the property cash flows however, I would then add to that fund until you get to the $10,000-$15,000 that others have commented. You just want to be sure you can cover the costs of messy turnovers and vacancy. 

Hey @Greg Larson I would echo others here in saying that you need to have an agent that intimately knows your target market. At least when your just getting started and learning. They would know the trends and how to comp your subject properties. They should even be able to help you understand how to pull your own for a quick analysis. 

With regards to interest rates and timing, now is always the best time to get started. Continuing to wait "until the market corrects" is just an excuse not to start. If you're worried about rates be conservative about the rate when analyzing a deal. It should always be baked into your numbers. Best of luck!!