All Forum Posts by: Ryan Kinney

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $35,000
Cash invested: $30,000
Sale price: $87,000

This was essentially my summer job while I was in college. My first flip purchased with hard money and sold via off market sale.

What made you interested in investing in this type of deal?

Honestly I was thrown into it my father was a builder and had run some of his own investments and flips. He mentored me through this first one.

How did you find this deal and how did you negotiate it?

We found this via the MLS and our Realtor at the time.

How did you finance this deal?

Hard Money (8%) added to the total loan value.

How did you add value to the deal?

Remodeled kitchen, remodeled bathroom, moved some walls, new paint, new carpet etc...

What was the outcome?

We made about $10,000 and had a buyer before it was finished.

Lessons learned? Challenges?

We learned a ton: 1) Paint colors matter very little 2) There is always a lot that you can't see 3) We may have undervalued the home but also didn't payout for commissions

@Kevin Siedlecki Do you find that the headache of being a landlord outweighs the benefit of whatever cashflow you gain? (You may have such great cashflow it makes it worth it and or not manage your own properties).

Today I got in an argument with my father (who is also a real estate investor) and a friend of mine over the best method to use to generate long-term wealth. One method would be to flip 3-4 homes and use the profits to then roll right into buying a rental. You then own the home outright and it cashflows wonderfully, however, your money then becomes locked up. The second method would then be the BRRRR Strategy favored by many on BP. The issue here is finding a portfolio lender or private money lenders.

For Example:

Buy a home for $42,000 and spend $45,000 on repairs so total expense is $87,000 

The after repair value of the home is $130,000. The home would rent for $950/month.

Monthly expenditures including mortgage and capex are approximately, $650 cashflowing roughly $300.

At an LTV rate of 75% the new loan amount would be roughly $97,500 plus fees so roughly $102,000. Leaving you with $10,000 extra on top of the previous money invested to roll into a new deal.

The second method would do several more of these flips say 4 netting approximately $30,000 to then buy a rental at $120,000 that also rents at $950, Casflowing roughly $700 after expenses.

So I made the argument that in the first method you not only gain all the equity you would off the flip and still have a rental. They, in turn, argued that $300/month is not worth the headache of being a landlord.

I'm curious what other investors think?

Thank you!