All Forum Posts by: Rob Randle

thank you, I appreciate the advice. time to jump in

@Joe Villeneuve

are you factoring in refinancing costs into your "rehab costs"?

are you factoring in holding costs? (ex: taxes paid during rehab)?

I just found a private money source that will offer me a nice sized loan at a good rate.  I have only used conventional financing previously and am trying to gain a better understanding of buying cash.

1. Do I use a RE Agent when purchasing cash? I believe I should if it is a REO, what if it a contact that I made through marketing? If not, how are contracts made?

2. What else changes when purchasing with cash? I plan on still getting a home inspection but are there any additional steps that I have to handle myself?

The pictures below are of a property that I am looking at.  It as at a nice price and likely not selling due to these "improvements".

Is this an easy fix?

Would a custom trim contractor be able to knock this out?

Your goal is achievable, it comes down to how hard you want to work to get there.

20 years until your 50

Purchase and finance 1 house a year (your income should allow this considering your salary, cash flow your will be making, and equity that you will be gaining from rentals).

$300 cash flow per home x 20 homes = $60,000 / year total cash flow.  

Hypothetically, lets say your purchased 20 homes worth 100k and used 20% financing on all of them.  Your equity gain on each home will be $222 per month.  So your net worth will be increasing per month by 222.  222 x 12 x 20 = $53,280 (in equity)

Your total net worth increase once 50 = $113,280

One your primary home is paid off, use that equity to use as down-payments on your dream homes.  Buy them as rentals and rent them out for the times that your not there.

I actually just purchased J Scotts books to learn the process of flipping and rehabbing so I can tie that into the BRRRR approach.

 I will have to become more familiar with local hard money lenders for sure.

I just purchased my first 6 months ago so I don't have anything to pull out currently.  When is a good time to start pulling equity out? 5 years?

My first and only rental consists of a property in a great area that didn't take hardly any work to get rented.  It gives a decent return of 10% cash on cash.  I am currently looking at another similar deal but I just backed out of it even though it met my previous "standards" and I got approved for the loan.  I'm sure my realtor isn't thrilled.

The reason I backed out is that it leaves me low on cash.  35k would be the down-payment, closing costs, and minor repairs.  At a 10% cash on cash return it would take me 10 years to get that money back, which I'm sure is obvious to most.  I can't see my next step because all my money will be tied up in equity and that is not a good thing.

I have been reading a lot about BRRRR and being able to "recycle cash" and force appreciation. Even though my instincts want to buy I think it may be detrimental to my growth compared to learning to fix up a property to rent.

I feel as though it takes more skill to fix up a property to rent but is worth it in the long hall.  It also allows for quicker growth.  What are your thoughts on taking this approach?

Congratulations!

How did you pitch the bank to give you a line of credit to fix the property?  Did they base it on the deal or your good credit (or both)?  Since it is your first major renovation there must not be much history for them to rely on.

I am looking at a property that is going to need some updating throughout.  Everything is functional but the bathrooms, kitchen, doors, closets are outdated.  I will be holding onto this property to rent.

What repairs / updates are necessary to increase the ARV?

For example, does replacing the doors or putting new carpet on increase the ARV?

I want to make sure that I am using my dollars effectively and that are going to have a positive impact on the homes ARV. I am looking to create value and not spend money on things that don't have a positive impact.