All Forum Posts by: Samuel Watts

Being newly self-employed has made it tough to find financing on my own, but my partner/investor/family member has been willing to be a co-borrower for my first few transactions which has helped me get around that aspect of the lending process so far. 

@James Wilcox I'm hoping to find a nicer MFH that I can buy with an FHA loan and house hack, while using my HELOC funds for either another single family to BRRRR or a duplex. With the HELOC funds I am hoping to just buy something without doing any more financing and have not seen many duplexes in that range lately that were worth buying.

I have been finding good deals on single families lately but the multifamiles have been tough! I am starting to look outside Lexington to the surrounding areas now as well

@James Wilcox If I were to sell it, I would buy a multifamily for greater cash flow but they are tough to find good deals on right now, as i'm sure you already know! I really got into it with the plans of doing the BRRR strategy and I believe I will stick with it at this point. One of the main reasons I was thinking of selling was that I have been needing to buy a truck (Hard to haul rehab tools and materials in a small car) and was hoping to use some of the selling funds to make that purchase. I may just use a small part of my HELOC for that though.

@Mindy Jensen I was able to get the 0% loan from a family member! Pretty awesome huh? Paying that back at $380 a month which is not too bad! Do you know how strict they are on the requirement of living in it myself for 2 years to avoid those capital gains? Say I were to put a renter in there and move out? 

@Aaron C. That was my original plan when I bought the house was to rent it out after I finished up the work, but I didn't expect to be able to sell it for 120k when I bought it either! 

@Dave Foster I'm thinking i'm just going to hang on to it for a while and use the HELOC funds to do the same thing over again. Hopefully doing it with a house with a garage this time (I have too many tools now!) I take it they are pretty strict about actually occupying the house for the 2 year period for the tax break?

@Andrew Syrios Thanks! I am confident in the appraisal at this point. My home is much more updated than any of the other homes of identical size and layout that have sold in the area. The main concern of mine at this point is that there seems to be a bit of housing bubble and if I wait around a couple years I might lose out on money when I sell it. 

Hey Everyone! 

I am finishing up my first BRRRR project right now and wanted to share some of my project with everyone.

I purchased my first property in January of this year from a wholesaler for 72,000 (private loan for 15 yrs 0% interest! ) . It is a 3 bed/1bath home in Lexington Kentucky and I was expecting it to need about 8k in repairs and was hoping for it to appraise at around 100k when complete. I also have lived in the home since the purchase and during the repairs (NEVER AGAIN!!) 

Good stuff about the house: The house had a new roof and newer windows installed not too long before my purchase and had a kitchen remodel that was started but never completed (new but unfinished cabinets, countertops, plumbing were complete). 

Bad ::: The house had an extremely heavy smoker living in it prior to me (previous owner died of lung cancer and I could see why) tar was dripping down the walls and trim throughout the house.  Dogs had destroyed the carpet and badly damaged the hardwood under the carpet to the point that I covered it with vinyl plank. Kitchen needed the entire sub-floor removed/leveled/replaced. Bathroom shower needed to be tiled. New electrical, installed central air/new furnace. Other than that it was just cosmetic (Paint, new flooring, trim)

I finally got everything finished up after a break of a couple months due to being too busy at work to focus on anything else. 

Since purchasing the house the real estate market has really taken off in my neighborhood with many houses like mine selling from 115-125k! My appraisal just came in at 120k which is about 20k higher than I was expecting when I first bought the home and right where I thought it would come in after seeing what the other recent comps were. I ended up putting a little over 10k into the repairs, so I have about 82-83k in the house total and looking at a profit of around $38k!

Ended up doing a HELOC instead of a refinance since I only have to pay interest on what I am borrowing and there were no closing costs. Not sure if this was the best idea but I liked the flexibility of the HELOC. Feedback?

Also, I am planning on continuing to live in the house until I find my next project and compete it, maybe I will move into that one or maybe i'll stay here? I now have a line of credit of $96k and am trying to decide my next step. Should I buy another single family and BRRRR it too? What would you do? I have also considered selling while the market is hot but am concerned with the tax hit and don't know if it's worth it right now).

I would love some feedback, sorry for the poorly written post! 

Thanks @Austin Fruechting, I was thinking that it would be a bit risky myself, I was just hoping to try and avoid the taxes with flipping and figure out a way to pay myself with the refinance funds but it doesn't seem to be a viable option. 

@Aaron Gordy, I believe it would be best for me to sell a couple flips per year and BRRRR the rest of them.

Hey Aaron! I haven't thought about the 203k loan a whole lot as I have been mainly looking at using my HELOC to purchase properties, that is something I will have to look into a little more. How would using the 203k loan leave me extra money left over?

Also, taxes are what have sort of put me off about flipping houses. I have been looking around for the best CPA to talk to and have narrowed it down to a couple that I am going to contact very soon!

I am contemplating whether I want to stick with the BRRRR strategy now or if I want to just start flipping while the market is hot and save money for rentals when it cools off a bit. I could make a lot more money flipping than I have been with my current job and would enjoy it quite a bit more. Also, I could live comfortably off the profits from 1 flip per year (While doing 5-10 a year and saving/investing the profits) and work as a Realtor part-time.

I got my real-estate license as I thought it would give me an advantage with finding properties for myself but it has mainly been a distraction to my main goal of flipping and buying rentals. 

Also, as far as getting loans, I don't think I will be limited by this too much as I have a non-active partner/co-borrower with a great income. 

 Thanks for your detailed response Steve! 

I definitely still have some to learn about mortgages! I was confused when I thought I understood the lender to agree to do both at 80%. Thanks for clarifying that for me and providing the related articles! 

 Haha alright. I guess I was mistaken there, I'll have to clarify that when I speak with them again!

I guess I should clarify my role in the rehabbing as well, I plan on doing some of the rehabbing myself but subbing out a lot of the work to others as well. I want to be spending most of my time looking for deals and possibly wholesaling/listing the deals that I won't/can't take for myself.