All Forum Posts by: Nicholas Lohr

in my short experience there should be no charge for that, at least I wasn't. 

i haven't dealt with a ton of contractors though and it may vary state to state. 

I think the 2 MOST important things about a BRRRR deal are to get the ARV and rehab price as correct as possible before you begin so you're putting the correct numbers into your analysis. Really research those comp sales and get a good contractor, which I know that is easier said than done. Perhaps get multiple quotes from multiple contractors and use the highest bid to be safe. just a thought.

@Brian Garrett sure. 

so I bought the property for 205,000. with 25% down which ended up being about 55,000 out of pocket with all closing costs. So now I have a loan for 155,000 and equity of about 50,000.  I was able to get a 30-year fixed loan on the deal. 

I then rehabbed the property over 3 months and that price for that was 53,000. So now I'm up to 108,000 (55,000 + 53,000) for down payment and rehab.  Add in my holding costs as I still have to pay mortgage, utilities etc while I'm doing the rehab and the total all in was up to about 114,000. 

So after renting out the property and holding it for 6 months collecting rents which is the time frame that some banks require the property appraised at 350,000.  For the refi the bank will loan 70% of the appraised value which is 350,000 * .7 =  245,000.   That leaves me with 30% in equity which is  105,000 (350,000 - 245,000 = 105,000), which is great since I originally only had 50,000!  I then take the 245,000 that they loan me and pay off the original loan of 155,000 which leaves me with 90,000 for my next deal.  I had to pay some closing costs on this refi too. Im leaving a few smaller numbers out of this.

So I didn't get ALL the money out in the end actually.  I put in 114,000 and only ended up getting out 90,000.  But I feel ok about that because I do still cash flow over 1k per month on the property after the refi deal and I have that newly created 105k in equity.  

ah yes got ya. yeah that's why the ARV must be higher. just to share, my numbers on my first deal were the following

Purchase Price $205,000 (put 25% down)
Rehab Cost $52,936
After Repair Value $350,000

If that ARV came back any lower.... well, you can do the math.

you can use the cash flow from the first BRRRR deal and add it into your income for the next deal after you have held the property and collected the rents consistently for a certain amount of time depending on the bank. does that answer your question?

also where is that $72,000 coming from please?

It may seem like old hat but I definitely still use Craig's List. Renter's still use it to find a place to live too. I filled found all my tenants through there. 

There's also this site https://www.rentometer.com/ for another source. 

Also if you want you could call local property management companies and ask them. 

@Account Closed In this case my potential partner is more passive. I am the one funding the downpayment, dealing with the banks, the contractors, the tenants etc.. and he is just taking care of the rehab cost. And this is a buy and hold BRRRR deal rather than a flip. My thought was an equity split according to how much actual cash we each put in, but then me having a much greater share of the cash flow because I am the more active manager in the project. Still think a JV deal is best? thoughts?

@Michael thanks for the thoughtful response! much appreciated. So my strategy is to do another BRRRR deal. Would the JV agreement still work if the partner wanted to roll it over and take part in the next deal as well with the refi money that comes out? Also they would want their cut of the cash flow that comes from the rents in perpetuity.

I just completed my first deal using all my own capital and it is within my single member LLC. For my 2nd deal I have potential partner who is willing to finance part of the rehab.

What is the best way to structure the 2nd deal from an entity perspective? I'd like to keep in all in the under the same original LLC business name yet limit the partial ownership and liability so that the new partner only has an interest in the 2nd deal.

My goal is to not have to start a whole new company with a whole new name etc... Is this possible?

I own a freshly remodeled 3 bed 1 bath right around the corner and was able get 1600 per month without much trouble. If you get it for 215k you'll most likely cash flow about 200-300 per month. Feel free to message me if you'd like more details. good luck!