All Forum Posts by: Sam Rust

LOL, I think FMV is going to be debated a bit in the coming months!

@Chris Lopez Thanks for the guidance and recommendation, I'll definitely look up Marc when we get to that point!

@Bill S. Good point, one of the downsides of a hot market! Thanks!

@Steve K. Thanks again Steve, do you have a property manager you would recommend?

Thanks for your input Steve!

I've definitely been considering BRRR as well, some of my favorite podcasts on BP are of folks using that method to their advantage. My biggest hangup is the (perceived) learning curve. I have an excellent contractor/realtor that could solve a lot of the usual problems with fix and flip, while with the BRRR strategy I would need to not only master the buy/renovate, but the landlording side of the deal as well.

Your ARV figure of 83% lines up with the few deals I've analyzed recently, I'm hoping to find a better deal, but don't want to be unrealistic either.

If I did move towards BRRR, would you work with a wholesaler that may require the use of hard money due to speed of closing, or would you go more conventional from the start?

I'm getting into fix and flip here in the greater Denver area and have connected with several hard money lenders and wholesalers. Currently I have two paths open to me, I would welcome input! Currently I have $35k in cash in the bank and am 3 years into a 15 yr, 3.625% on my primary residence with about $230k in equity.

Scenario #1

Refinance my primary into a 30 yr and pull out an additional $145k in cash to use for the venture. I'm working on getting quotes, but I have excellent credit and anticipate a rate near 4%. I have spoken with several groups, the best deal so far is 11% interest, 2 points, 15% down, 1 year term. I'd be looking at houses in the $350-450 range, buying near 70% ARV.

Scenario #2

Use a 100% rehab loan, and leave my current loan in place on the primary. Best deal I've found so far is 15%, 4 points, with 9 month balloons and interest only payments. I'd be looking at very similar acquisitions, but would be forced to only look at dealsI can buy at or below 70% ARV.

I lean towards scenario #1, both the lower cost and the fact I'm taking action by refinancing appeal to me. It also seems a bit less risky as my cash reserves would be significantly higher. On the other hand, I can get into the game quicker, and with no money down in scenario #2.

Any thoughts would be appreciated!

My current house has a 15 year mortgage (3 years in), the original plan was to pay it completely off. Over the last 6 months we have been talking more and more about diversifying in real estate, and the safest and most obvious way for us to jump in is to access our equity through a refi. We are in that process now, and are heading towards a 30 yr fixed loan because it will be a smaller payment, thus freeing up cash flow to fund deal(s). At the beginning it sounds like you want to scale at a good pace to improve your retirement prospects, just remember the more cash and free cash-flow you have, the more options are available!

You can always pay a 15 like a 30, the interest difference is not that different. In real estate, having a 30 yr fixed rate mortgage of 80% ARV hardly qualifies as highly-leveraged. Ultimately, you and your husband need to decide your "risk-tolerance" and then act accordingly.

Best of luck!

I'm meeting with a SFR wholesaler this afternoon that I met at a BP gathering yesterday. The wholesaler is fairly new to the business, but is employed with a well-established firm here in Denver. Any tips on good things to look for, questions to ask, pitfalls to avoid? Thanks in advance!

Thanks for the explanation Chris, seems like the length of time the property is held would play a big role in which route to take.

Interesting idea Lana, I'll definitely be looking into that option as well!

I was reading a blog post today on BP and the author mentioned a deal that had 10% down but no PMI. I'm looking at starting out my invensting with a single family home, but the type I'm most interested in are a bit out of my price range if I needed to put down 20% to avoid PMI. Other than the normal 20% down, are there any other ways to avoid PMI?

Thanks!

My biggest fear is making a large mistake that knocks me and my family back because I didn't know enough. My second biggest concern is paralysis by analysis! 

I'm hoping to allay both those concerns by joining the BP community and learning from others.