All Forum Posts by: Rich Dunmore

Thanks Rachel, I put a couple of them on my To-Read list.

I'm glad I asked before I presented this to anybody.  I figured I would bring the deal and do some of the work which would justify my equity position but it looks like either they wouldn't need me in the deal or I would have to rework the structure to make it worth their while.  I appreciate the insight.

Regarding the title issue and the 'seasoning' on the refinance.  If I stayed off the title completely during the rehab stage then I'm guessing it wouldn't be a refinance, just a typical conventional loan. 

It looks like I have to rethink this scenario being a BRRR strategy and just look at it at a way to get a rehabbed rental house and gaining some experience along the way. As long as the numbers worked out, it may not be a bad idea.

Again thanks for the input, it gives me something to think about.

I'm in the education stage of Real Estate Investing and still trying to put my strategy together. I'm pretty set that I want to buy and hold in order to get a sustainable cash flow but I'm also intrigued with the BRRRR strategy.

The concern I have with the BRRRR strategy is I've never rehabbed a house before and don't know what I don't know. So my thought was to partner with an experienced flipper until I can get a couple under my belt.

This is the scenario I've run through my head.  These numbers are theoretical just to see if this would create a win-win.

SFH Purchase: $60k Rehab Costs: $20k After-Rehab Value of House: $110k

Flipper would purchase the house (non-convential loan or cash) and I would kick in $10k for down payment.  He has $50k in and I have $10k in at this point.  

Flipper pays for rehab so that puts him at $70k

After rehab the house appraises for $110k so with his $70k and my $10k that we have into the house there is $30k of forced appreciation that we would split 50/50.  I would obtain a conventional loan  and pull $88k out of the house, giving the flipper $85k and he walks away.

Again, making assumptions that I can rent the house for $1300. Taking property tax, insurance, vacancy, CapEx and maintenance, and other expenses into account let's assume I achieve a cash flow of around $200. This would give me a Cash on Cash Return of about 9.5% and a total first year return of 104%.

I know its not an ideal BRRRR because I can't my $10k down payment out but I do get $22k of equity for a $10k investment and a property that looks like it cashflows decently. The other positive and more importantly at this stage of my career, I have someone with experience as a partner for the rehab portion of the project.

Looking at it from the flipper's point of view, he gets some help with the initial investment, a $15k profit and quick exit strategy.  Is that enough for him to get excited by a deal like this?