All Forum Posts by: Samat Davletshin

@Marcus Auerbach thanks for the reply! I agree. However, I wonder if the median priced home in a $100k city area would attract higher quality tenants than a $150k home in $200k area? 🤔

Happy Saturday, people of Bigger Pockets!

I, ideally, want to buy my first property in the low price range to minimize the cost of likely mistakes. Feel free to let me know why this is a bad idea!:)

So I am looking to spend around $30k and do a BRRRR deal. I know that is not easy, but why not try and see if it is possible?

Disclaimer: I am still in the research phase on which state/market to choose. I understand that it will be crucial to find a great team in that area, but given that I will be doing the team search for any area, I could focus on the markets that are favourable for my investing goals.

Let me know if my math is incorrect, but I think I have the following options to achieve the 70% rule:

1. Buy with a conventional loan:

a) Buy a $50k house with $10k down and spend $20k for rehab to aim for $100k ARV

b) Buy a $75k house with $15k down and spend $15k for rehab to aim for $129k ARV

c) Buy a $100k house with $20k down and spend $10k for rehab to aim for $157k ARV

2. Buy with all cash

a) Buy a $10k house with all cash, spend $20k for rehab to aim for $43k ARV

b) Buy a $15k house with all cash, spend $15k for rehab to aim for $43k ARV

c) Buy a $20k house with all cash, spend $10k for rehab to aim for $43k ARV

Seems like all these options should work on paper for a perfect BRRRR (if we don't count closing costs, inspections, etc.) However, I assume some of these options are less realistic than others?

I am currently leaning towards the conventional loan option because the $50k-$100k range seems to provide more options. Also, my understanding that the $10k-$20k houses would require a much larger rehab that will exceed $20k. Finally, given that I will be my first purchase, it seems like the loan approval for the property would reduce the number of ways where I can screw up.

However, I recently came across some stories where people buy ~$15k houses and do impressive renovations (roof, floors, kitchen, bath) for ~$15k due to the fact that those properties are in less populated areas and have cheap rehab costs. Also, given that I will be refinancing my loan as soon as possible anyway, seems like, ultimately, the all-cash purchase is the right way to do BRRRRs - to reduce costs, increase the pool of available properties, and refinance without having to wait for 6 months.

I know I am talking a lot of non-sense above and that is why I would appreciate your advice to better understand what I am missing!

If you think that some of these deals are possible in some markets, I would appreciate hearing about which states/cities I should look further at! I previously asked about good markets with ARV of $100k and was recommended Toledo, OH - so this is the area I am currently looking at.

Thank you,

Samat

Hi @Taylor Delp and @Michael P. ! Wow, seems like Toledo, OH is an exciting place to take a look at! I would love to chat more and see how realistic BRRRR is there now and would greatly appreciate recommendations for great team members! I Will message you directly!

@Ben Scott Hi Ben nice to meet you! How is the flipping and BRRRR market doing in OKC city? Do you see people getting 70% rule deals? Do you think it is possible to find it for under $100k and a pre-approved conventional loan? Also any tips on how the contractor situation is in OKC this summer?

Thanks!

@Jim K. thank you so much for the honest feedback - I love it! 

I agree with your feedback - I will try to focus on finding a good team first (might create another BP post for that) and then select the area. By the way, any people that would recommend from your experience?:) I can send you a direct message for that - would appreciate any suggestions.

It makes sense that now there are no good contractors. However, perhaps it is not so bad in some other markets? Seems like Pittsburgh is not so newbie-friendly especially now. So will research other places like Toledo - let's see how the contractor situation is there!

I agree - the market seems to be crazy now and without a cash offer it might be unrealistic for me to find something matching the 70% rule. I understand that and am ok with paying 75% or even 80% - if that will be the best I can get. Given that I am not in rush to invest right now and have few months to wait for a good deal, I just want to make sure that I will get the best offer I can realistically get. 

Again, thank you so much for detailed and honest feedback that literally saves me thousands of dollars and years of time!

Sam

@John Sprague good point! I agree it seems like finding a good contractor nowadays is very hard! However, I am hoping that if I will get recommendations for good and reputable property managers/contractors, it should be possible to get an honest and realistic budget estimate from them to base decisions upon. Please let me know if I am missing something!

@Jim K. thanks for the tip! I agree there is probably a lot that I don't know. Any particular points that I should pay attention to?

My current plan is:

1) Find a good market that will work for me matching the criteria I described above

2) Using the power of BP and the internet ask for recommendations in that city for great reputable investor-friendly agent and property managers

3) Ask the agent for a good lender. Ask the property manager for a good contractor recommendation.

I am likely missing multiple things here and would appreciate valuable advice that will save me tens of thousands of dollars!

Hello BiggerPockets!

I am excited about starting my REI journey this year! I live in San Francisco and looking to invest out of state using BRRRR strategy. Brandon says he doesn't like the question "What is the best market?" because "the best market is where you have your team". The problem (or the opportunity) is that I don't have a team yet so I am free to choose the state/city/area.

I know it will be challenging to implement fully on the first deal but this is what I am aiming for:

- Get a full refinance and take all the spent money out of the deal. So that would require the 70% rule in my understanding.

- Have a mix of appreciation and positive cash flow. So I am thinking a B- neighbourhood would be good.

- Invest $20k-$30k with a conventional loan. So I would imagine it would be a $50k-$75k house ($10k-$15k down) and average renovation (good foundation, walls, roof, electrical, plumbing, and $10k-$15k for the rest). So the renovated house would have the appraised ARV of $90k-$130k.

I am not sure what would be a good market for it (if any) but I am considering at Memphis, TN; Birmingham, AL; Oklahoma City, OK; Rochester, NY; Pittsburgh, PA; Cleaveland, OH;

Would appreciate any tips on what could be potentially matching markets for my criteria! Also please let me know if any of my plans/calculations are missing something.

Thanks!

Sam

Hello, people of BiggerPockets community!

My name is Sam and I am new to the world of real estate investing but I am already fascinated by the financial opportunities it promises!

I am a software engineer living and working in San Francisco and am interested in investing out of state. 

However, it seems like the whole process is VERY complicated, requiring months of research and learning, making REI inaccessible to many people who want to invest money but are not ready to commit a lot of time.

So I feel like there must be a way to make the whole process simpler and more efficient.

If you have purchased investment properties, I would love to have a zoom chat with you to learn more about what are your pain points, what is easy and what is most complicated in the REI process.

In exchange, in addition to a big thank you, I will be happy to provide you first and free access to whatever great tool I will be building that will be aimed at helping you in REI!

To be clear, I am not selling anything and am just excited about working on and building a great tool!

Sincerely,

Sam