All Forum Posts by: Brian Larson

It looks good if the repairs are minimal and she has not delayed a lot of maintenance (hvac,  roof,  water heater,  etc) 

Hey Jim,  

I can definitely relate/understand your scenario and questions.  You asked a lot of questions so let me try to answer them as such. 

I think your current situation is solid.  Keep in mind that many on here preach rent rule (some say 1%, others 2%) and I think they are valid but just a sniff test.  Only you can say if you are cash flowing today.  I would suggest you are not once you add in taxes,  insurance,  vacancy allowance and capex/maintenance reserves.  With all that said,  I would say this looks pretty solid for a first purchase. Solid equity,  rent return.  You will just get more picky about the deal as you look to add more.  So,  onto that.... 

I invest in the Midwest for the same reason as your new acquaintance.  Can add more with better cash flow for less.  With that said,  you also likely won't see big appreciation like your CA property may.  Of course people said that about Dallas until a few years back so you never know (we will all have to move somewhere when CA completely dries up with no water :) 

As for heloc,  some will say no,  but if you can get a heloc at a solid rate and invest confidently in something that will bring a greater return then do it.  Many call this arbitrage (borrow at a low rate,  invest in higher rate). With that stated I saw some people do this in 2005-2007 and didn't have a solid investment.  It ended badly.  I personally use my heloc as a short term cash buffer allowing me to buy all cash,  rehab the  refi out to get it back.  I am a bit risk adverse and don't want that to be my DP $

Lastly... Havasu? Seriously? :) I am from AZ and just don't see that as a place for an out of state investor for SFR long term rentals. Vacation rental maybe but I wouldnt do it. If you want to buy a place with triple digit heat, pick a growing city like Vegas, Phoenix or Dallas. Just my take. Of course I once sunk a Jetski and nearly melted one summer trip there.... Ha

Goof luck and welcome.  You won find a better place

I have had a few folks ask for my latest version of the file. I am actually a bit surprised at how many downloads this has, I hope it helps people. 

The file is in my fileplace and is version 1.3. There are many updates so if something is odd feel free to ask.

 Congrats on the purchase and rehab.  I will definitely be following along. 

A couple of questions/thoughts.  

Can you find private money to cover the costs so you can rate and term refi sooner than the 6mo seasoning? Jerry P can help you there if so. 

Next,  this looks like a lot of labor on your part and I get why you are tackling it but have you factored in what it would cost to fully hand this over to a GC to run?  I only ask because I did my own flip2rental at one point and yes,  I saved cash but it was so much work I burnt out... During the prime buying time in Phoenix.  If I was just a little looser with my $ I could have done more than  just one and had quite a bit of profit and/or equity right now. 

I am not saying don't do the work,  I just suggest budgeting full offload of rehab just in case (burnt out,  injured,  etc).  This is what many on the forums suggest for prop management as well.  Sure,  you can do it yourself but make the numbers work with it and the rest is gravy. 

Good luck! 

Thank you for the comments Mike.  I have seen many of your posts and definitely would like to (maybe I am starting to) hit the scale you have found. 

I agree,  the financing is easier but the deals are harder to find.  It's funny,  but I now see how you can 'win'  when the market is hot and when it's not. 

Thanks

B

Here is the latest news. I am trying to be better with updates.

I picked up another in Indy. nice little house that is old....much older than i usually buy and we know we have foundation issues going in but the team is confident they can makes this place shine within a slightly inflated budget.

other deal still pending but i should hear more shortly.

KC is just happening right now and its not for a lack of trying. i hope to get one picked up soon.

update on goal: 2 of 6 picked up this year thus far (note i am in 3rd month of my fiscal so on track for 8)

update on mindset: it dawned on me the other day when chatting with my wife just what a surplus of adds/year means. every additional add shaves 2months off retirement goal date (45th bday). so if i can stretch to 9 additions this year and next, i will be looking at a 44th bday. if i really scale up then i can knock this way down....love it!

 Austin, first, congrats on being at this crossroads. i have so many colleagues/friends that cant get to this point....even when i spell it out. either way you go, you will do great with that dedication of time.

now, onto my thoughts. i personally say BRRR is the only way to go due to what you are trying to do. i was at this same crossroads about a year ago. i couldnt figure out how i could add the units i needed to add with the "extra" income/savings i compiled.

so what i did was run 2 flips in order to generate cash. i did straight flip, not brrrr. then i took that money, along with savings to have my cash egg that allows me to buy, rehab and rent. then i get my cash back through refi (conventional and private)

results? old model 2 rental adds/year, this model 4 adds since september and 2 in past 3 weeks. fyi, i manage this out of state and pay quality people to rehab, rent, etc. good teams are worth the $ and you can bake that into model

you can see more details under my investor diary post of goals and progress and find my brrrr calculator that i live by in order to purchase.

that reminds me, i need to update my journal with the latest.

b

 you nailed it Karim. SoCal is not a place for cashflow unless you hold a very long time and even then....

i live down the hill from you and invest in AZ, KC and Indy for that reason.

your best chance in SoCal would be to buy a dumpy duplex to live in and rent out one half. that would allow you to build up sweat equity as you would fix up your half then switch sides and repeat. you could raise rents and likely sell for good profit (depending on market of course) upon exit....or just use increased rent to have a nicer unit paid down faster

good luck

Hi @Ben McMillan

it sounds like you have some experience here and opinions on which way to go already.In my opinion the BRRR (you state as buy, fix, rent, refi) model is a very good way to grown your rental portfolio 'fast' even though you have not had success so far (I would be curious to know what hasn't worked)

Either way you look at it, you are doing this out of state since you have IN/OH as your target markets and live in Kentucky.

To me, you have a great start with $100k where you should be able to find deals (purchase+rehab for less than 70% of ARV) buy with your cash, get fixed up and rented before refi. I totally understand doing this out of state is hard but you are going that route either way. You need to find a team you can trust (a. deal pipeline i.e. agent, wholesaler, other, b. construction crew that can be on budget and on time, c. strong property manager, d. good lender network of portfolio and conventional)

As for seasoning and fannie, I wouldn't worry about that until you get to 10 properties but you will want to find a private money lender that can loan you your money back for short term (3 months) while you find either conventional or portfolio lender to refi to.

MFR is great, syndication is great, etc but to me, right now, with the limited capital you have, the most value and velocity you can create is by using BRRRR. I of course am biased as I am doing this myself right now.

 Ha,  they always do! "Lower interest rate is better... Forget the fees!" Ha