All Forum Posts by: Rigoberto Medina

Hi George and welcome

@Mac F., thank you very much for the information. I will just continue on my path then and stay away from paycheck parking. I had not thought of it that way, but you are absolutely right, it would make it much easier to spend. Thank you again.

Minor update. 1st step of my plan has been taken. $1162 has been applied to my first debt to pay off, there is a remaining balance of $250 which will be paid off on my next paycheck as well as $1038 that will be paid to my next debt. It feels good to be taking this first tangible step. Reading, planning, building the budget, and the great advice I have gotten here have all lead to this step and I will keep moving forward and posting as I go. Starting debt amount $38150, paid $1162, $36988 left to go. The great part is that as I pay off my debts, I will be able to snowball those payments into paying off the rest. 

As an aside, has anybody heard of, used, a concept called paycheck parking? I have been doing a lot of reading and research and the concept seems to make sense, just seeing if anybody has had any success with it.

@Kamille T., welcome to Bigger pockets! Those are fantastic goals and let me commend you for taking action and working toward your goals. I too have just started my journey into real estate investing, I'm in Corpus Christi, Tx. These forums are a treasure trove of information and best of all, individuals that are doing just want you want to do. I have been listening to podcasts, reading, attended a video conference last night, and trying to network with people to learn more, kinda hard as I am normally a keep to myself guy so I am forcing myself out of my comfort zone. From what I have learned so far here are the answers to your questions:

1.) It's a toss-up. You definitely don't have to have your real estate license to invest in real estate, especially when you start digging and find out there are sooooo many different ways to invest. Some of the benefits are:

a) Access to the MLS. This can be huge! My state is a non-disclosure state, meaning that sales prices of homes don't have to be disclosed and most often not. One of the core things that you will need to be doing as an investor is running comps (comparable home sales in your immediate area) to determine the ARV (after repair value) of the deal you are looking at. As a real estate agent, you can have full access to the MLS

b) Access to homes that are listed on the MLS. Again, another big advantage is that you would not have to have a realtor escort you to a property you want to look at. you would simply contact the listing agent, get permission, and you can let yourself in. Can be a huge time saver

  c) Commission. As you may already know, realtor fees can add up. 6%+ does not seem like much but when its 6% of a 250000 home...that's 15K that you are paying out (realtor fees vary, I'm just using an average), and at least part of that could be going to you if you are a realtor

  d) legitimacy. This is somewhat of an intangible and some will argue the point, but some people just feel more comfortable dealing with a licensed realtor. They know that all the proper paperwork that is required by law will be filled out, etc. (that is not to mean that investors dont do that, they do, but perception can mean the difference between a yes or a no.)

and there are many more pros.  Now some of the Cons

  a) Takes time and investment to get your license. This will vary by state but in Texas its a 150hr course which you are paying for.   

  b.) Continued cost to hold on to your license. From what I have read, there are continuing education requirements, brokerage fees, etc. involved with keeping your license

  c.) perception. It's a wonderful double-edged sword. while some people will want to work exclusively with a licensed realtor, others will shy away from you because you are a realtor. 

There are possible legal ramifications as well so I urge you to really research the topic before you decide yes or no. 

In regards to the best books. I have read and really enjoyed "How to invest in real estate". I posted a review of it on the forums. it is a good book to help you get started. I am also currently listening to "Your money or your life" on audiobook and reading the "book on rental property investing" at night, my wife thinks I have lost it because I read it to my kids as their night time book last night, just a couple of chapters....they seemed to enjoy it, lol. 

Overall, keep making progress, keep educating yourself. Leverage the tons of experience and knowledge that you will find in these forums. Be honest with yourself and realize that much like most things in life (I am a lifelong martial artist and powerlifter) things can be much much harder than others make it out to be, but that is a good thing. The best things in life take hard work and dedication, and if you have them, you will succeed. Might have some failures on the way, but you learn from them, fail better, and keep pushing forward till you make it. Best of luck Kamille, and I hope to see a post of your deals in the future.

Hello @Pierce Gwinn. From your post, I am going to assume that you are working on a flip, or least asking about a flip. If you get private funding there will be a loan term (6 months or 12 months for hard money, possibly longer for private lending, but you want to pay it back as quickly as possible to minimize holding costs). Ideally, assuming you did all your numbers right and you set money aside for taxes, etc., the best practice, at least in my opinion, would be to roll the profits back into your business and into another deal. 

For full disclosure, I'm new to real estate investing myself and am learning, currently have 0 deals under my belt. the advice is simply from what I have read, but I am confident that the more experienced investors on the forums will tell you something similar. You would keep working this formula until you have enough capital under your belt to fully fund your own deals, though loans may still be the best idea then as you would be leveraging other people's funds and not tying up all your capital, that would allow you to work on multiple deals as opposed to tying everything up on 1 property.

Best of luck and let everyone know how your deal goes.  

Update just in case anybody reads this as it might be helpful. I was a part of an incredible videoconference last night and I got answers to some of the questions above. 

1.) You most definitely can use hard money to fund your BRRR. Moreover, the investor that hosted the video conference stated that many of his deals are funded initially with hard money, plus he helped me with the numbers that I was utilizing in the calculator. To begin with, hard money loans are interest-only loans, and I did not have it set up right in my calculator. The interest rate that I was utilizing was a little low, from what he told me, in my area I can expect to pay about 10-15% interest based on several factors (How much or little experience I have, credit score, the deal itself, etc.) and I will definitely be paying points, how much will vary by HM lender (usually between 1 to 3 points). Lastly, on this topic, he told me that on the refinance side of it, especially starting off, to not expect the full LTV (loan to value) ration on the refinance, that usually what a loan officer will tell you is, "up to". For example, if you are told, "we can refinance you for up to 75% LTV" to realistically expect approximately 5% less until you have experience and establish a relationship with your lenders.

2.) He also corrected the closing cost estimate that I have above. From what he was telling me, in my area, the closing cost is usually closer to 2 to 2.5%. That can make a big difference when you realize you have to close twice utilizing the BRRR method.

3.) He confirmed my assumption that the estimates on Zillow, etc. are pretty much junk, that they will regularly be at a minimum 5% off, sometimes much more, and that what he has seen in the past is that new investors have based their numbers (purchase price, rehab budget, etc.) on these inaccurate numbers and what started off looking like a great deal, turned out to be a bad deal for them after the actual comps,  inspection, and assessments. 

In addition to that he explained, and the best part for me as I am a bit of a visual learner, he showed how most people's rehab estimates are way off. He broke it down into what most people estimate, what a handyman would estimate, what a "paper contractor" would estimate (I had never heard that term before), and what a full team contractor would estimate, and the difference was eye-opening. He also detailed the pros and cons of DIY, handyman work, and hiring a true contractor. While you might save some money doing it DIY, you will pay for it by the amount of time it might take you and possible missed steps. The videoconference was so full of information from someone that is actively out there making it happen right now. Just wanted to share, hopefully, this helps someone.

@Abel Castaneda, Hello and that is awesome that you are interested in real estate investing. The best part is that you are taking action to learn more and get going. I too just started my journey into real estate investing, my first step is getting my financial life in order, but I am also learning as much as I can about real estate. While taking a class is a great idea, keep in mind that there is a lot of information out there that you can leverage for little to no money. These forums are a gold mine of information, there are lots of books written by people who are not just explaining abstract theories, but are actually doing just what you want to do. I am by no means any kind of expert and have so very much to learn about this business but one of the things that I have learned already is that wholesalers, in general, don't have the best reputation. From what I have read, the reasons are as follows: 

1.) Inaccurate ARV (after repair value) - Work very hard to learn how to determine after repair value of the homes that you want to wholesale. From what I am learning, it is a lot more than just looking at other properties in the area that have sold and assigning an arbitrary value. It is dissecting your property, finding others that are like (same sq footage, same amenities, within the last 3 months maybe 6 if there is not sufficient data, etc. the basic idea here is that you want to represent the closest like for like that you can.

2.) Inaccurate rehab costs - From what I am reading most people are sold on wholesaling being a great way to start in real estate. This may be true but the lack of experience bleeds through when rehab costs are grossly incorrect because of lack of education on what it takes to rehab a home, apartment, etc. Spend time here and learn as much as you can on how to estimate rehab costs and it can pay off for you

3.) Integrity - I won't say much on this aside from likening it to the business I am currently in. I am an API authorized inspector by trade and my industry is a small and tight community of professionals. In my industry, if you don't know what you are talking about, are lazy, can't get the job done, or are sub-par in doing your job, not only will the rest of the industry know about you..quickly, but people can get hurt or killed and you could end up with legal action against you and having to live with the knowledge that your actions, or lack of, got someone hurt or killed.

I am not trying to dissuade you, I'm trying to do the opposite actually. Get into the fray, learn as much as you can. Become the best at what you do and set yourself apart from all the rest and success will come, plus it will help me out as well, I might be looking you up in the future for a good deal. Best of luck and if I can help in any way, please don't hesitate to reach out. 

Hello all, thank you for taking the time to read this. Here is my issue in a nutshell. I am new to real estate investing and am currently on my path to getting my finances in order so that I can position myself to be able to invest and to get rid of some bad money habits. As I go through this journey I have also decided to educate myself in real estate investment so that I can be best prepared for July 2020, this is the point when I will be debt-free and will be shifting all my energy to actively investing in real estate utilizing the BRRR method.

To that end, I have made it a goal to analyze 2 properties per day so I can become familiar with my area and become comfortable analyzing properties...and that is where my issue is. I live in Corpus Christi, Tx. As you may know, Texas is one of several states that is a non-disclosure state meaning that real estate sales prices do not have to be disclosed and most often are not. Yesterday was my 1st day of analyzing properties and the problems I am coming across are as follows:

1.) My current source of data is Zillow, Redfin, and realtor.com. In digging through the bigger pockets forum I have found that the delta between the actual sales price and what these 3rd party websites list or state can be very high. I will not be in a position to start putting in offers, etc. and I don't want to waste the time of a busy professional (realtor) by constantly asking for comps for what in essence is homework for preparation. Is there any value in continuing to analyze properties utilizing the values on these websites until such time as I am not wasting a realtor's time, just to get used to the process?

2.) From my research, the average closing cost of a single-family home in Texas is between 0.98% to 1.31% of the final home sales price. Does this seem like an accurate amount? I have been using 1.25% on my calculations

3.) In the BP BRRR calculator, the 1st section in regards to loan details is the purchase loan details, this is self-explanatory enough, but what I noticed was the section of it (required section) asking "Amortized over how many years". The question I have is, can you not use a hard money lender for a BRRR? The reason I ask this is that one of my goals was to reach out to a hard money lender and find out more about it (I don't know if I can mention the gentleman's name or business name and don't want to violate forum rules so I will just call him HM). From what HM told me, in addition to the points that his company charges (Each point is 1% of the loan amount), and the interest rates that you deal with when going hard money, the length of the loans are 6 months and 12 months, there is no multi-year loan. All that being said, do I just put 1 year in that cell? Is hard money not an option for a BRRR?

Any help and advice with this would be greatly appreciated, I really want to meet my goal of analyzing 2 properties a day.

Hello Vivan and welcome. Lots of great people here, I'm sure you will find a lot of powerful advice.

@Andrew Syrios, thank you very much, really glad to be here and learning so much.