All Forum Posts by: Mike Rios

@Jenny Roman

Indeed - Im paying cash, but plan on fixing violations before the appraisal/cash out refi!

@Whitney Hutten

Thank you so much for the feedback, there are some gems in your response. In an ideal world I would also be closing on slam dunk BRRRRs, but it just isn't feasible with my criteria and market(Miami) at the moment. I wrote my rationalization for going through with the deal on the comment above. 

The REO due diligence period was fast but I was able to make an informed decision based on several inspections.The house has good bones and didn't see any glaring code violations, but im currently doing a title and lien search so well see how that goes.

I'm courting several GC's now to see there ideas and bids, but getting permits right now is impossible so im thinking about leveraging my handyman, electrician and AC guy that I use for my grocery store. It'll save my money but it will take much longer which will cost me in that end. 

The numbers make sense,I have very conservative underwriting and have stressed them for the worst case scenario, the asset is still very appealing, but as you know numbers aren't everything and I will need to properly execute the rehab for it to work.

Thank you for the tips on forecasting contingencies and rental comps in the area,  I will also be checking out your page for more tips =)

@Luke Ski

Hey thanks for responding I appreciate your insight. I definitely understand your perspective and was really scared about the pandemics effect on the economy and real estate market. I even considered backing out of the deal armed with a similar rationale to yours, but after doing some research I’ve decided to stick to it for the following reasons:

1.I live in Miami, deals like these do not come often, I looked for 3 months and finally got It, right now real estate prices are stable and it isn’t a guarantee I’ll find another deal after the pandemic. (An investor has already offered me 205k to take it off my hands)

2.It’s a wedge deal, I gave myself plenty of room Incase values decrease. Worst case scenario - I hold off on the refinance and just rent it out without worrying about any mortgage paydowns.

3. This recession is different than 08, it was caused by a real estate bubble, people have way more equity in there houses now and the government is offering a moratorium on foreclosures for 60 days which helps.

4. Pandemics don’t last forever, Goldman Sachs GDP released strong growth Q3, Q4 and the beginning of 2021.

5. Real estate values have actually appreciated in the 3 of the last 5 recessions. An average of 3.58% excluding the most recent recession caused by the RE bubble .

That’s pretty much how I rationalized the deal, but I am interested where you got that 30% decrease in home values though, thanks

@Kenneth Garrett

Thank you for the feedback, I was leaning towards a higher quality rehab but I wasn’t too sure. I also don’t want to overdo it either, I’ll have to find a balance 

Sup Folks,

About to close on a 3/1 REO as an owner-occupant for 190k(cash), current county assessment is 220k, ARV is about 325k and I plan on BRRRing. House is from the 60's and has a 15 year old roof. House has an illegal bathroom and illegal room extension. Ive done a sewer scope and normal house inspection and the estimated costs seems to be 20k from the inspection reports( will probably need to do a gut job). The floor plan is pretty bad but I have some good ideas on the rehab, but Its my first one and I'm at a crossroads. Its clear for rentals you don't want to spend too much on the rehab as long as you cashflow, but I don't know what the appropriate threshold is for a BRRRR because you want a higher appraisal and for the cash out refi and still cash flow at the end of month. I also don't know what To do about the code violations and how that'll effect the appraisal. Any advice?

I would try to get a 30-year fixed rate loan product, you will have a lower monthly payment which means you have more cash flow. You don't want to bank on appreciation, I would try to force value before the appraisal. 

You definitely want to be cash flowing after your cash out refi, and use the loan to invest on another property. Rinse and repeat, you will able to recycle the equity you had in your initial house and build a portfolio of cash flowing properties. 

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

@Brandon Roof thank you for taking the time to respond and providing your feedback, this would be my first deal outside a syndication, so I'm very eager to make a deal happen. Gotta just analyze the numbers and trust what I've learned on here. 

I have just been offered this deal. The owner was in the process of selling to their tenant, but complications arose and the tenant had to move out of town. The owner is willing to sell for $175K.

The house is in great condition. A July 2019 inspection report indicates that there are minor and the realtor says the issues have been resolved.

Realtor says the home is worth $185K - $195K as is or $200K if updated a bit. My own research confirms this.

However, he is asking that I move quickly as he knows others will be interested.

I think I used some pretty safe numbers in my analysis. Is this deal good for a BRRR strategy? What other options might I have? What are your thoughts???

View report

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