Hey Adam, welcome to Bigger Pockets! I recently just joined myself. There are quite a few FREE resources here on the site you take advantage of, under the LEARN tab for example. In real estate, there are so many different ways you can involve yourself to be successful and learning about all of them will take time. Before I got in the game, I listed to audio books on audible on many areas of real estate, personal finance, etc for 4-5 years. This has helped me become successful and move forward at a much faster pace than if I had just gotten started with limited information. On the flip side, I wouldn't necessarily recommend waiting that long to get started but Instead, take some time to learn about what is available and figure out in which area you'd like to focus when starting out. Pick a strategy, learn as much as you can about it, commit, and don't give up. BP is a great place to ask for advice as you encounter obstacles along the way. The biggest piece of advice I can give you is to educate yourself as much as possible. Audio books are a great way to do that. I listen to books when I'm at the gym, in the car driving around from property to property, and at home. They are a great way to learn and give you an inside view to the world of Investing.
Good luck and glad you're here!
It sounds like you are off to a great start!
One thing to think about, right now, is what you want this business to be. You are crushing it, and clearly have a formula that you are confident in. But, as you note, scaling the business takes capital, dramatically increases complexity, and will change your life, maybe not all for the better.
Each additional deal will require another Private Money Loan, another project plan, and additional equity capital. If you are making good money today with the current approach, you may find that in a few years, you'll have slightly less paper wealth, but no "boss" in the form of investors if you just let the current projects finish and roll the proceeds into the next deal. Maybe you go a little slower at first, but you then compound growth with your money.
That said, if you need the capital, with this business model and price point, you probably won't have trouble finding it in this community. You are clearly on to something!
Scott, thank you for taking the time to read/respond to my post. Just put Set for Life back up at the top of my audible to listen to again next. With where I’m at now, I feel I’ll pull many valuable new ideas out it this time.
Great stuff here. I love the ambition and sounds like you will do great.
We do 20 Flips/BRRRRs per year and these are the tools we currently use to manage the volume:
Underwriting - DealCheck
Project Management - ClickUp
Bookkeeping - QuickBooks Online Plus Subscription
Team Communication - Slack
File Storage - Google Drive
OPM - Other People's Money. We fund with a combination of Hard Money and Private Money. Hard Money will fund 90% of the purchase price and 100% of the rehab on a draw schedule. Our Private investors will fund the remaining 10% of the purchase price, the first portion of the rehab (to be drawn later from the HML), and the holding costs. Of course, with private lenders, you will need to give up equity or a return on the debt.
Hope this helps!
An even better form of the strategy we want to employ. Thanks for the tools. I’ll check them out!
We just started to Fix & Flip using our own capital a few months back and currently have two projects that are both about 3-4 weeks out from completion. I decided to commit full time to learning this business as I knew starting out, even after studying real estate for the past 4 years, it was going to be a tremendous learning curve. I'm fortunate to have found a great GC to work beside me that will be our Project Manager to pull permits, and Subs/Handyman to complete all of the required work.
We have some additional capital on hand that exceeded what we needed to complete our first two projects and recently came across a deal that we didn't want to pass up that our crew is able to take on. We just put it under contract yesterday. That'll be flip #3.
Our plan is to sell the 2 houses which we expect to make nice returns on, invest all of our profits back into the purchase of 3-5 more properties, and scale as quickly as we can. We've made some mistakes along the way to say the least, which was expected, but they have led to many lessons learned.
My question is... What forms of borrowing/lending would be best to access the capital we need when we find a deal we're interested in purchasing? Starting out, once a funding source is lined up, I'd ideally like to put under contract a deal a week for the first couple of months while ensuring the team we have in place is able to handle the work we take on while making adjustments as needed.
Our target properties are able to be purchased for 40k-60k, need 15k-70k in repairs, and have an ARV of 125k-225k+ depending on the extent of the rehab involved. We plan for our holding time moving forward to typically be 10-12 weeks up to 4-6 months depending on the SOW.
Hey Alex, Thank you for your detailed response. After much research in the past 24 hours, we're really started putting the pieces together. Our plan is to use HMLs for acquisitions and DSCR Loans to Refi on properties we decide to hold. Our reason behind wanting to scale is to acquire more hold properties in a shorter time In the high growth/appreciation area we're investing in. We realize with growth comes the need of finding/bringing on more people to assist with all the tasks/extra work involved.
Our goal this year is to find/complete a combination of 50+ BRRRRs/Flips, cashing out $20k+ more on the properties that we hold, and $30k+ more on the ones we decide to sell. I believe we will make many mistakes and learn much along the way.
We look forward to becoming contributing members of BP as we learn and help others as others have been helping us.
Learning as we grow, look forward to seeing you around the Forums ;)
We just started to Fix & Flip using our own capital a few months back and currently have two projects that are both about 3-4 weeks out from completion. I decided to commit full time to learning this business as I knew starting out, even after studying real estate for the past 4 years, it was going to be a tremendous learning curve. I'm fortunate to have found a great GC to work beside me that will be our Project Manager to pull permits, and Subs/Handyman to complete all of the required work.
We have some additional capital on hand that exceeded what we needed to complete our first two projects and recently came across a deal that we didn't want to pass up that our crew is able to take on. We just put it under contract yesterday. That'll be flip #3.
Our plan is to sell the 2 houses which we expect to make nice returns on, invest all of our profits back into the purchase of 3-5 more properties, and scale as quickly as we can. We've made some mistakes along the way to say the least, which was expected, but they have led to many lessons learned.
My question is... What forms of borrowing/lending would be best to access the capital we need when we find a deal we're interested in purchasing? Starting out, once a funding source is lined up, I'd ideally like to put under contract a deal a week for the first couple of months while ensuring the team we have in place is able to handle the work we take on while making adjustments as needed.
Our target properties are able to be purchased for 40k-60k, need 15k-70k in repairs, and have an ARV of 125k-225k+ depending on the extent of the rehab involved. We plan for our holding time moving forward to typically be 10-12 weeks up to 4-6 months depending on the SOW.
Hey Alex, Thank you for your detailed response. After much research in the past 24 hours, we're really started putting the pieces together. Our plan is to use HMLs for acquisitions and DSCR Loans to Refi on properties we decide to hold. Our reason behind wanting to scale is to acquire more hold properties in a shorter time In the high growth/appreciation area we're investing in. We realize with growth comes the need of finding/bringing on more people to assist with all the tasks/extra work involved.
Our goal this year is to find/complete a combination of 50+ BRRRRs/Flips, cashing out $20k+ more on the properties that we hold, and $30k+ more on the ones we decide to sell. I believe we will make many mistakes and learn much along the way.
We look forward to becoming contributing members of BP as we learn and help others as others have been helping us.
I would go hard money lending, if you can't go all cash. If you need some recommendations on contacts let me know, I have a few that my investors work with pretty regularly.
I work primarily in the 757 area code for Virginia. If you want to expand in this market, we currently have 6 properties available with amazing potential. Some are pretty close to turn key, some are flips.
Sounds like you're rocking and rolling, let me know if I can be a value add to your journey. Congrats!
Thanks Virnisha! We're doing medium to major renovations right now so are sticking with local in high growth areas. Definitely would be open to contacts that offer HMLs and DSCR.
We are currently in the process of preparing to close on our 3rd Investment Property. Originally we planned to Fix/Flip/Sell houses in our farm area using all of our own cash. We are now looking into HMLs for Acquisition, Paying Cash for Repairs, and DSCR Loans for Refinance to scale quickly and start building a portfolio of long term income generating properties in 2024. Just have a couple of questions...
When getting a HML, is it possible to just make the interest payments while we complete repairs/rent out?
Can loan points/fees be rolled into the loan to reduce down payment on HML?
If you have the cash, is it better to not finance repairs using a HML? Since you won't have to wait on draws, inspections, etc..
For a DSCR Loan, Is the ARV they will lend on calculated similarly to a Conventional Loan? Using Comps, doing an Appraisal, etc?
If we're able to close/rehab/rent in a period of 2 months, Is there a minimum seasoning period before we can Cash Out using a DSCR?
I'm assuming DSCR loans can be issued to LLCs and other Entities... Is there a limit of loans you may hold at any given time?
We will be done remodeling our 1st and 2nd Investment properties, we originally planned to sell, in about 4 weeks. We are now considering turning them into rentals and doing cash out DSCR. We will likely need to get 3x DSCR loans in a short time frame.
Looking for some advice to help us determine the best way to move forward... Thanks!
We are currently in the process of preparing to close on our 3rd Investment Property. Originally we planned to Fix/Flip/Sell houses in our farm area using all of our own cash. Doing so would trigger the need to pay Taxes on gains, additional closing/agent costs to sell our properties, and provide no residual income or capture of any benefits related to holding a property in a high growth area. We now have a new strategy which we are asking for input on before we move forward at a fast pace to scale quickly in 2024.
We plan to use a HML for the Acquisition, Pay cash for Points/closing/repairs(no HML draw costs/waiting periods). After repairs are complete, get a renter in ASAP using a property management company/Cash flow positive, obtain DSCR Loan for $100,000 - 105,000, repay original HML, Net additional cash of $23,800 on each property and repeat the process.
With the capital we currently have, I believe we can put 1 similar property under contract each week, close in 2 weeks, Refi 8 weeks after closing/rehab/renting and repeat the process. In year 1, I calculate being able to acquire at minimum 42 properties, after the initial 2 month period to close on first Refi, using only our original cash, if consistent. If investing all of our net additional cash, an additional +6-8 in Q2, +14-16 properties in Q3, and +20-25 in Q4. If sourcing private capital to use for cash at time of purchase, in addition to our own, I feel like this could magnify those number even further.
While scaling, I know we'll need to bring on additional parties to assist with property acquisition, Project Management, and property management.
What are your thoughts??
3rd Investment Property - ARV $130,000 - Purchase Price $60,251 - Repairs $17,500 - Rehab Time frame 4-5 Weeks
Acquisition
20% of HML $12,050 + Points/Fees $1,500 + Repairs $17,500 + Closing Costs $950 + 3mo I Payments on HML $1,000
Refinance
$105,000 DSCR Loan - $48,200 Aqu HML Loan - $33,000 Initial Cash Invested = $23,800 Net Cash Out
For years, I spent my mornings listening to audio books at the gym and often throughout the day learning as much as I could trying to find my way in to REI. Late 2023, I figured it out. The following week, I resigned from my job of 3 years in Sales, took the money I saved up, leveraged my good credit/high income and borrowed as much money as I could get my hands on, then dove in to the world of Investing and haven't looked back since. I started a company that focused on Remodeling SFRs originally with the intention of selling each one when complete. Just recently, with the input from some seasoned professions on BP, the new plan is to incorporate the BRRRR strategy utilizing Hard Money Loans for the acquisitions, my own capital/retained earnings for the rehabs, and DSCR Loans for the Refinance in order to scale as manageably as possible. I continue my education every day and am interested in learning about more creative ways to invest in this new world of opportunity I've discovered. See y'all around on the forums!
@Anthony Pellettieri
I would go hard money as well and get a good relationship with a lender. If you covered the rehab cost and they financed the acquisition that could be more advantageous.
Also if you keep one as a rental and own that you could use that as collateral as well
Side note just remember you will pay taxes on your gains so if you make $50k make sure to leave some money set aside for taxes
Excellent strategy!
If we can get good enough deals on each acquisition, the bank should cover most/all of each purchase, correct?
If I kept one as a rental and owned it outright, what would I need to use it as collateral for? A gap in the LTV and the purchase price?