All Forum Posts by: Brian Larson

I have uploaded a file that you might find useful. This is similar to my BRRR Calculator but trimmed down due to notes being a little more straight forward (at least from a variable/output perspective).

I have certain things I want to know about a note before purchasing so this allows me to enter the details (bold items) and get a good picture of its value and return over a period of time. 

Here is a screen shot (note that there is also an amortization data tab that has the raw details):

Please note that I have my own stoplight thresholds that you can change to meet your needs. I also only calculated the first 10 years of average cashflow all up in order to get a picture of what it will look like. 

Last note, I come from the position that you do not calculate the principal as cashflow so that is not included in the calculations. 

Would love to know what others use or factors they like to have in and I can evolve this over time. I hope someone finds it useful. 

The file is here

I am part of BGNF (what @Jeff Brown mentioned above) and the preferred return is there every month. I have not yet bought a note as they have been slow to roll in (I am particular about performing first position) and there was a hiccup initially with my setup but i have seen a few come across in the past month. I can update once i buy a note. 

Best bet for short term is to secure private money, interest only. Then immediately start a refi with a conventional lender. By having the private loan you are now doing a rate and term refit and seasoning is not an issue.

Good luck

 good luck with it.

if i found the right property, then it is all but under contract with multiple offers.

if your numbers are accurate, there is a good chance this was priced to get an investor bidding war

good luck nonethless

Hi Jackie. I am definitely not a lawyer and I am sure there is a valid counterpoint to what I am about to write, but in general, I agree with Byron's comment above. It might be a bit premature to get an LLC.

I totally understand wanting to protect your assets. I would be more worried about your cars, other property, etc well before your 401k/IRA. Those are protected by nature of being retirement accounts (or at least that is how it is has been explained by my lawyer to me).

I just hate to see people get so wrapped up in all of the side work to not actually go and do something. 

Note that you can always buy a property yourself then deed it to an LLC later. This allows you to finance it as yourself (use your credit, get a conventional refi) then put it in your LLC. You are still on the hook for making the payments and technically the bank could call a 'due on sale' clause but this is done all the time with LLC, Trusts, etc

To get to your original question....whatever way you can get enough cash for the purchase and rehab for as cheap as you can...thats the answers :) If you can get a HELOC on your primary home and use those teaser rates to pull out cash, buy/rehab/rent then refi into conventional loan then go for it.

Note that commercial/portfolio loans are definitely available but the terms are not as appealing as conventional and sometimes they want to see more of a track record with rentals. 

I like the idea of maxing out my 10 loans with Fannie before going to a portfolio lender. 

Here is what i do at each stage (what type of money i have out there)

BUY - Cash (either from savings or pulled against my HELOC)

REHAB - Cash (same) then immediately get it into a private money loan (1 yr term, interest only)

RENT - its usually in the private money loan at this time

REFI - do a rate and term refi out of my private money loan into either a conventional or portfolio loan (depends on amount, timing, rates, etc)

I try to have my cash back in my bank account within 30 days and the private loan refi'd within 90 days

I hope that helps

 Kent,  great points all around.  I see #3 as a MUST. This is a reference call and is required in almost any business transaction (my clients demand it of me in my day job) 

Some say references are useless because we can all come up with a friendly person or two.  I try to make the most of mine by finding someone that is as similar to me as possible... also out of state (preferably in LA),  same type of deal,  etc.  I then reach out to them to discuss their goals,  the transaction and their experience with the vendor.  Did the deal meet your expectations 100%? Did it fall short anywhere?  

This of course is coupled with me meeting the team and driving the city before anything is under contract.  

These steps can help protect you

 man. you only have 3 posts and already you have a post titled after your name! congrats :)

 I always put in 0% gain. I figure if I can make a rent plateau with cost increases work than I will be happy when the rent does appreciate. 

Do note that i am not looking to hold my rentals for a long time. I generally plan to acquire, rent and sell in a 5-7 year window.

 and you will definitely find it...so much info here. One file in particular to check out is here:

https://www.biggerpockets.com/files/user/wklose99/...

This allows you to drop in multiple units and has a ton of variables to help analyze a deal. The rental calc in the tools area is solid but not as focused on MFR so this is a good one.

b

 Hey Patrick.  Sorry if I wasn't clear.  I use my own cash to buy and rehab.  I then get private money asap secured by the property.  Once it's rehabbed and rented then I will refi to conventional or portfolio lender. I

 hope that helps