All Forum Posts by: Michinori Kaneko

@Amy Zhang welcome to RE investing! I am an investor from NY that invests in Ft Wayne, and the REIA group that @Simeon Miller mentioned and @Drew Wiard manages has been a big help and great resource.  If you are looking for surrounding area as well, try huntington.  there are a lot more MFH in that area (although most of them are in not so great shape so it requires some work).  I can refer you to an agent I use if you are interested and want to PM me. 

@Bill Goodland BRRRR = Buy, Rehab, Rent, Refi - yes you can technically do it. But negative cashflow means everytime you buy a property you get less and less capital because you are paying out of pocket every month to cover the bill. the point of BRRRR is to recycle your capital so you can build a portfolio. You are depleting your capital in this case. I'll give you an example. I'm looking at a STUDIO in Manhattan. It's asking price is $700k, and and estimated monthly rent is $3300. Your PITI is over $5800, not to mention the capital expenditures and repairs, vacancy, property management, utilities etc so you'll probably bleed about $4000 a month on average. You refied all the cash you put in at 75% LTV, which is $525k you keep that property for a year and you've lost 10% of your capital that you refied. How does that work well as a BRRRR? I can bet you REITS don't BRRRR in NY. They flip in those areas and roll the capitals into the next project. Like I said, it defeats the purpose of BRRRR because you are losing your capital even if you successfully refinance. Way better off to flip than to BRRRR in those markets.

https://www.zillow.com/homedetails/246-Spring-St-3003-New-York-NY-10013/97514453_zpid/  

@Bill Goodland BRRRR does NOT work in every market. Here in NYC you can find the best deal ever and it would still not cashflow (which defeats the purpose of the BRRRR strategy). You can't do a BRRRR in a market that has really low rent to price ratio like NY or cali.

@Jordan Rhoads

Well, but here's the problem on the flip side. most banks/credit unions don't lend for properties worth less than $50k (or some banks loans under $50k) so you still need the property to appraise at least around $70k-$75k or so. Which means you need to find a property that you can buy and rehab for around $50k so you can pull out all the cash and do a successful BRRRR. But hey, what if you spent $60k and it only appraised for $70k? effectively, you've still purchased the property with 0 money down since you used heloc to fund the $60k. It may take you few months to pay off the heloc because your cashout out refi won't cover the entire heloc payment, but you can pay off the remaining over few months using the property's cashflow, and after the HELOC is completely paid off now you can truly cashflow after paying off your bills like mortgage/taxes/insurance, etc. It just delays your start date of cashflow, but you are still buying the property without using your own money. You are 100% financing the deal.

BRRRR is great when you have cash. If you have HELOC its better because you aren't using ANY of your cash to buy these cashflowing properties. You can always 1) cashout refi after rehab is done, 2) pay off HELOC as much as possible using the cash, 3) refi again after few months since now you have lower HELOC balance and thus you can get better rates. Yes it will cost you double closing costs, but you will get access to cash faster to look for next investment and hopefully you will get even more cashflow from that 2nd property to cover all your expenses/mortgages.

i will say it can also work against you though.  things CAN go wrong and you CAN lose money.  you want to make sure you have enough reserve if things do go wrong you won't be left with a worthless property and a lot of debt you can't pay off.  Like  @Dave DeMarinis said, having the reserve is essential, especially in the current environment with lots of uncertainty. As much as you hear all the success stories here on BP, i'm sure there are 20x more landlords who've failed and given up in the real world. invest smart, do a lot of due diligence, and when the numbers are right don't be afraid to jump into the deal.

just a note, 82k heloc is great, but when you refi out and your HELOC is maxed out, expect your credit score to be much lower than your normal score and thus your rates are much higher so keep that in mind. I went from 800 credit score to under 740 by taking out about 90k out of 140k HELOC (also depends on how much other credit lines you have too, i think i'm around $250k including the HELOC).

Try reaching out to Bippus bank. I haven't really used it but they mentioned to me before something about 1 year loan at purchase where you can bring in a contractor and appraiser, have the appraiser do an appraisal based on what contractor envisions as appropriate rehab (including what materials he/she will use). Then they loan you based on that appraised value and then refi you into a conventional loan after 1 year. you will still need an upfront down payment if the appraisal doesn't support your purchase + rehab cost. Bippus usually does 70% LTV for multi families.

Try AG Rental and see if they do apartment PM.

@David Rosenbeck if i were you i would get Kathy's info from Cami and ask her to help you. Kathy helped me with my first 4 properties, and I can tell you no other realtor will go as far as she does in giving you the full picture/analysis of the property.  She is no longer providing her service to out of state investors so i had no choice but to find other agents, but i can tell you that if you are local and shes willing to help you, you are in very good hands with her. 

@David Rosenbeck welcome to BP and also to the FB REIA page. FB REIA page has lots of local landlords that are very knowledgeable. if you look to grow in fort wayne, then that might be a better place to ask questions.

And also, thanks so much for your service in the medical field.  i know things are really hard now, but we are all grateful that people in the medical field are working hard for us.  Not sure if its a local thing (I live in Queens, NY) or if it's done everywhere else, but 7pm every day everyone makes noise and cheers here to thank the medical workers from their house.  I join that almost every day :) Let me know if i can help in any ways.

one bank account, but i keep very detailed data on every cashflow which property, date, who the counter party was, what was it for, how would it get classified for tax purposes, etc.