All Forum Posts by: Ronald Allen Barney

Cash on cash return is what you should look at. If you pay all cash your ROI drops to below a 401k, and in case you didn't know, that's bad. If the cash flow is near-zero on a mortgage assuming you have the right figure for rent, that's also bad.

Cash is the key ammo in your firefight against the 9 to 5 so you've got to get cash back on investments.  Cash on cash return.

The new refi would reset LTV to 80%, so it's a potential loan amount of $160k gross and after the original principle payoff you'd get $45k. If that's the only cash for your BRRRR you would likely need hard money to supplement the down payment, the closing costs, and the rehab. There's math for you to do there when you evaluate a deal. It will probably have to be distressed in some way with a "sneaky cheap" way to rehab, speculating a bit but $45k is pretty light going into most BRRRR deals.

It occurred to me too, in Google Maps with Street View you can get a virtual neighborhood tour that way.

Different people have different thresholds of "good" so it's generally good to get multiple viewpoints.  Also you can leverage crime mapping tools, and even have the agent drive an area with a Go Pro to give you an idea what the area is like.  The agent will probably assign that to a runner from the office but yeah.

MLS properties that a typical agent would pull up in a list usually don't hit 1% because they avoid the rehab-required houses by instinct (most are used to dealing with owner-occupier buyers that get more excited about a shiny new turn-key house).

In the lower price ranges on the MLS you'll see distressed properties passed over by most buyer agents, where there is more potential for 1%, and more importantly, cash on cash return on investment. But you have to vet each one first to make sure the rehab would really be in budget and that the rental potential is there.

When attacking a "1% list" like what I pull I see it as peeling layers of an onion. 1% is the easiest quick and dirty barometer for potential cash flow, and there are other quick and dirty ways to estimate all the numbers based on correlations to nearby rental listings from the same MLS. The next layer to look at once rent is established would be rehab required and the cash scenario. Does the rehab push you into hard money where the payments eat up the cash flow? There's math for that. Then to dial it in some more, taking another onion layer off, is a hardcore evaluation of expenses, make sure there are no tax gotchas, insurance gotchas, etc. That brings the number step by step from the initial first cut to a more precise evaluation of the deal. But without a 1% "rule" you'd see so many listings you wouldn't know where to begin.

If he's started Chapter 11 he's no longer called the owner, he's the Debtor-in-Possession.  You can start with him but he'll have to make his case to the creditors on the deal.

 That's a double whammy in my decision to have tried my hand as an agent here in Florida.  I'm brand new here and almost everyone I know is back in Minnesota.  Working on them for referral business but even that is slow-going.  The tiny size of my database drives my market center crazy, lol, but it is what it is.

If you start being an agent 30k in debt a few months later you'll be 50k in debt.  Being an agent is a business, and to get it off the ground requires investment.  I brought not enough as capital and suffering the consequences.

Also a word of advice:  if you're not bringing at least about $25k to the business in startup capital, don't quit that day job.  Closings require leads, and leads require marketing, and marketing requires investment.  It's significantly less cheap than I thought going in.

A sale in chapter 11 doesn't necessarily have to always cover all costs as market conditions can be a factor, but the debtor-in-possession is a fiduciary to the creditors in all cases and will be directed by the U.S. Trustee in all cases to do what is in the interest of the creditors.  Creditors would have to be convinced that a sale at a certain price is more advantageous by virtue usually of time to cash over a dragged out sale when there is negative cash flow.  In that case the DIP would have to establish that the property can't command a higher amount in a reasonable time period.