All Forum Posts by: Nicholas L.

Hi @M. Anthony Contrascere under the scenario above, you have $20,800 in cash as @Gil Segev points out, and you've paid off your original loan and are in a new loan.  You've still spent the $105K that you used to buy the property, you just have $21K in cash back from the re-fi (actually less, since there will be closing costs on the re-fi and another miscellaneous expenses). That's why BRRRR works better with an all-cash purchase as @Jaron Walling pointed out.

Hi @Paul Chae to give us a sense of what's at stake, can you tell us (1) what the purchase price is, and (2) how you're paying for it?  It seems like you're paying all cash - is that correct?  Do you have your own team in place - agent, attorney, property manager?

@Rudy Necoechea here are a few I like:

• Rental Income Podcast with Dan Lane
• Afford Anything with Paula Pant (she mixes FI and RE, I tend to listen to the RE ones)
• Kathy Fettke Real Wealth Show
• Passive Real Estate Investing with Marco Santarelli

Hi @Blake Dailey congratulations. Can you share any additional details on the refinance - did it appraise as expected? What LTV did you get?

@Sylvia B. did you see the latest update?  The owner of the house agreed to sell the house to a non-profit, which to me doesn't seem like the worst possible outcome.  I saw in one article that the company has done "160 flips in 9 years" - which might seem like a lot, until you realize Oakland has 170,000+ housing units.

Hi @Matt Werner here are a few comments:

-Closing costs look a little low, even for a cash purchase

-Is the monthly rent estimate based on actual recent comps?

-Your refi is 77.8% of ARV; is that based on an actual work-up from a lender, or is $175K just what you're hoping to get back when the rehab is done?

-Your cashflow is significantly negative after the refi

Hi @Jock Tilghman another important consideration is how you plan to pay for the property - for example, will you owner occupy by living in one unit?  Will you pay cash?  Will you use conventional financing?  Cash flow is going to be different in each situation.

Hi @Tony H. makes sense.  You could always try renting for a couple years and see if the cashflow matches your calculations.  If it doesn't, you could always sell then and move on to the next thing.

Hi @Josh Blakey welcome.  A few questions and comments for your consideration as you decide what to do:

-When you say you have $75K, is that in addition to some reserves, or is that literally all of your cash?  I would not recommend spending 100% of your cash, because...

-You'll need cash for closing costs when you buy, for holding costs during the rehab, for any unexpected expenses or overages, while the property is vacant waiting for its first tenant, for closing costs on the refinance... cash every step of the way.

-To do what you're proposing requires that you have everything set up in advance of the initial purchase - you need contractors lined up for the rehab, an agent lined up to help you get a tenant, yourself or a property manager lined up to manage the property when it's ready, a bank lined up to do the cash-out refinance, etc.

-To figure out whether you can net $150 is realistic you'll need to calculate your cashflow based on an actual property, actual comps, actual rental rates, etc.  A real estate agent can help with compas, and you can get an actual loan work-up from a bank without committing to anything.

I don't know the Indianapolis market - lots of others on BP do though.

Hi @Tony H. there are a lot of different factors in play here and so I think the answer... depends on what your goals are (although I don't think 1 is a great option - read on).  You mention both that you've outgrown your condo, but also that you'll "make a lot less money" if you move.  So, would you be moving because it's the right overall decision for your family, or just because you don't have enough space?  Are there other possible options?

You state that PITI on the house is about $3100 and that your cashflow is negative $200 - is that because the house rents for $2900 a month, or have you truly done an all-in calculation taking into account repairs, vacancy, capex, etc. to determine your true cashflow?  Same question on the condo - would you truly be cashflowing $700 a month right out of the gate, or is that just estimated rent minus PITI?

If you pick option 1 you'll consume some of the equity of the condo just to sell it (realtors fees and closing costs), and then you'll consume the rest paying down debt.  This means you won't have the asset anymore, either (1) the equity (if you have any) or (2) as a source of potential cash or leverage for future investing (if more investing is what you want to do). There are also costs associated with refinancing - it might take years to recoup the amount that you'd "save."  There are some great BP threads on this question.

So...it depends.  =)