All Forum Posts by: Pete Harper

@Tara Piantanida-Kelly

It is unfortunate the inspector made the mistake. I’m curious what were the consequences? Was there something negative in the report?

In California buyers are obligated to share inspection reports. We had a deal fall through and walked away from the deal. We were obligated to share the reports we had paid for free of charge to the second buyer. We saved him a bundle in inspection fees, septic inspection, and well water testing.

@Akhil Parasa Use the Trulia crime maps to help identify the better areas in Killeen. I’d also drive the neighborhood before I purchased anything. Finally ask your PM if they will manage a property in that neighborhood.

@Uyen Hoang

1) No issue with getting cashout refinance on home you own. Shop around smaller regional banks doing portfolio loans for best rates.

2) Hard money is certainly an option. Just factor in you will be paying points plus 8-10% interest rate on short term loan. If your project takes longer than expected the lender can call your loan before you are ready to cash out refi.

3) You can fill the gap with hard money, seller financing, personal loan, credit cards or many other options. Be creative.

@Ari Hadar

ARV = After Renovation Value

Use Zillow to pull comps in your market. If you are buying a C class property and renovating to B class you will want to pull B class comps. I try to find 3-5 similar properties and take an average. Or is you are working with a real estate agent ask them to help you with comps.

@Ari Hadar

I don’t personally use rentometer. It is not very accurate in small markets like mine.

You misunderstood how I use Zillow to determine market rent. Similar to rentometer these online estimates are not very accurate in smaller markets. Instead I was suggestion you use Zillow to pull rent comps. These are active for rent listings in your search area. Then you need to go in and review the comps to weed out the ones that don’t match your target property. For example the A+ property with granite counter tops and stainless steel appliances doesn’t go with the C property with 1980’s Formica. If you are buying a C property only include C comps.

The save search icon is the magnifying glass with heart in the center. If you set up a Zillow account it will send listings that match your search criteria to your email. It also saves them in a Zillow folder with same icon.

@Ari Hadar It is said in real estate you make most of your money when buy not when you sell.

To effectively scale you need to force appreciation. By buying below market you lock in appreciation early. Your other lever to drive appreciation is Renovation. Your goal in BRRRR is to drive enough appreciation in a short period of time to pull out all or all-most of your original seed capital to reinvest in the next property.

@Xavier Williams 1% rule is a metric for quickly screening properties. For example a 3BR 2BA house rents for $1200 in your market. The 1% rule says you should pay no more than $120,000 for this home. This is only a very rough rule, I would not recommend only using this rule to buy properties.

Here is how you can use the 1% rule. Do some research and determine the average rent for a house you want to buy. You can get a good idea using Zillow, Trulia or apartmentsdotcom. Plug in the number of bedrooms, baths, and square footage. Look at photos to get an idea of finishes; granite countertops and stainless steel appliances or Formica. Neighborhood and schools are also important. Now you have a good idea what the going rate is for the market you want to buy in. Now go back into Zillow and set up a for sale search based on the same criteria. Set price 30% below your final target. This leaves you room to get your equity back out after you Brrrr. Say your target is $1200 rent and $120,000 price set your max target price in search at $84,000. Zillow will deliver daily updates to your inbox of every property that meets your criteria. You can also tell realtors or wholesalers what you want. “Only send me deals under $84,000 for 3BR 2BA”. You can screen thousands of properties this way. I purchased my last duplex off a similar Zillow search. I have about ten searches running at any one time.

@Xavier Williams A lot depends on your personal goals. Brrrr is an active strategy. Do you want to be a hands on investor? Chasing after contractors or doing the work yourself? Ready to hustle?

I personally like Brrrr because it scales. If you find good deals and manage them correctly you can keep recycling your capital. Over time you can build a larger portfolio than if you purchased with conventional 20-25% down financing.

East Texas is a good market to start out with $100k. You will find a lot of 1% rule properties under $100k that will cash flow. Ideally look for something close to $70k that needs less than $30k in rehab. Target ARV of $125k plus so you can pull most if not all your seed capital out. AR-rent needs to be $1200-1300. Once the rehab is complete rent it out and let it season 6-9 months. Refinance to pull your seed capital out and go buy another one. The second one is easier.

@Bryan Price Sure thing! Send me your email and I will add you to the invite.

@Shea Spinelli

We would love to have you. I’m interested in Tyler market but know little about it. I’m looking forward to learning more from you.