All Forum Posts by: Rabih El-Khoury

Hi, i'm on the same boat: learning the Baltimore market and figuring out the best neighborhoods for BRRRR. I've been looking at properties and crunching numbers for the past 8 months but haven't found that sweet spot neighborhood yet. If you just look at JUST the numbers you'll find row homes in downtown are good. Then again, there's the question of tenant sustainability, if you're looking at holding the property. Lots of voucher/section 8 tenants in those areas, which give a false cash-flow security. The last 7 to 8 properties I looked at areas like Middle River, Ashburton, Rognel Heights, Union Square, Rosedale didn't seem to cash flow---rents are less than 1% of ARV. I agree with @Yannik Cudjoe-Virgil there are many areas that allow for a successful BRRRR; it's a matter of finding them, right! A good broker is a must (i haven't been so fortunate so far). I'm now looking at Baltimore County and have moved up from looking at $100k (purchase + rehab) to the $150k range.  

@James Gates well done! your determination paid off. I am in the same boat so it was a pleasure reading about your success.

Good on you, this is a solid story! Quick one: as you said you're doing it yourself, how are you managing the out-of-state rehab work? Seems like a daunting thing. 

@Andrew Postell i agree, they're not easy finds. The reason for my investigating the private lending route is scale. I'm going after an 80-door target in 5 years. I can fund 20 of them. I have access to a renewable pool of ~$500k in private equity and I'm trying to figure out a model for using it to buy my missing 60. Of course, the 80 doors is a means to an end, the end being a certain cash flow target i have. Someone suggested ditching going after so many SFH and MF and focus on say an apartment bld/complex. Thoughts?

@Curt Davis thanks, I figured so. Can you think of a model to use private funds and turnkey? (this is the spot I'm in now and I'm trying to crack a solution).

The only way BRRR with private money works is if the cash-out re-financing amount is equal to or greater than the money put it by the investor + their expected interest.

Here's the catch: roughly speaking, if the investor is expecting 10% ROI, you're looking at an after-repair-value that's 40%-50% of the purchase price of the distressed property (+closing fees if you're using the investor for that too). What are the odds of finding those kind of properties?!?!?

Do you agree or am I missing something?

Hi @Dom J. wondering whether you had any luck finding an online tool? Thanks. 

Thank you gentlemen for your feedback. The network of private equity investors I have access to would expect nothing less than 7% interest. You're seeing requirements less than that, which is an advantage by all means. Ultimately though, whether 5% or 12%, what I was trying to determine from my question/post is whether a forced appreciation of sorts is required to render the private equity funding model a workable one. Now if you're borrowing at 5% it means the appreciation has to be less acute than if borrowing at 12%.The point is, one cannot borrow money without using part of it to rehab a property. Once the rehab is done, you either flip and return the money to the investors or wait the seasoning period out and cash-out-refi the property paying back the investors.  

Hi! 

I've come to a crossroad figuring out my investment game plan and would like your advice.

My goal is to hit $12k in after-tax income by 2026.

I can pump ~$60k every year, that's excluding re-investing any cashflow revenues and income for selling properties or re-financing. 

I also have access to private equity to the tune of $100k per year. 

Whatever strategy needs to work for an out-of-state investor. 

If you have can spare 4 1/2 minutes, here's a video that gives a bit more detail about my situation. 

https://vimeo.com/249726725

Update: I just locked in a new funding option: special bank loan of up to $100k at 2.70% annual interest, payable up to 4 years with monthly installments. 

Many thanks! 

Unlike a bank, a private investor (not a hard money lender) is looking to get their principle+interest within a very short period of time, 1-5 years. Whether they're getting interest only at first or a one-shot balloon payment at the end of the deal term, it doesn't matter: what matters here is that it is a short period of time.

With private investors looking at anywhere between 7%-12% ROI, there is no way a property investment can afford that kind of investor return unless it (1) a BRRR play or (2) a flip. In other words, you're typical buy and hold won't accumulate enough cash flow.

True or False?