All Forum Posts by: Scott Kimberly

This might be a stupid question, and its definitely more theoretical, but I am curious about it.

Does the value of a 5+ unit property technically change every time rents change?

Let's say I buy a 6 unit apartment building that has 1 rented unit at purchase. If I spend 5 months filling the other units at a rate of 1 unit per month, does the value of my theoretical 6 unit change 5 times (once for each added renter)?

I realize that the value of the property probably only meaningfully changes in a tangible way when its appraised.

I have been doing some light digging and wondering about this question:

Is it possible to "know" (or have a reasonably good idea) of exactly what you could get at the end of a BRRRR for a 5-6 unit property?

I know that on 1-4, you can study comps and ARVs and have a fairly good idea, but you're still more vulnerable to market conditions (i think).

5 or 6 units could be priced similarly, but if you increase NOI, you should be able to increase the appraised value, thus having better chances of a successful BRRRR. Successful BRRRR being one you can pull all your money back out of.

The issue, to me, isn't that people don't want to invest in new builds, its that they have to be a certain size to be viable and no one wants them. The price of materials always goes up, the price of houses always go up, but wages have stagnated for 40 years. That combined with younger generations not wanting to buy massive houses creates a real housing problem.

Real Estate has been able to run wild for decades because there was enough room to between home value and wages. Now, in a lot of areas (but not all), the wages cannot sustain the prices. I will say that arbitrarily raising wages is not the solution, but wages do need to accelerate faster than inflation for a number of years to make up for lost time. Once wages catch up to where they should be, then they should just pace inflation.

I want to be prepared for potential deals that I might acquire via seller financing.

Let's say I am discussing a deal with a seller and I ask them if seller financing is an option and they say "yes, its an option".

What would be the best way to proceed? What should i already have ready before going into this conversation? Should I have a contract ready before talking with them? If I get a contract after the fact, is there anything I can do to stop the seller from changing discusses terms? Do you need a down payment? How much of a down payment? etc etc.

I am interested in learning about the ins and outs of seller financing, so I am looking for a discussion on this topic, rather than just a Q&A. I don't want the transaction to work for both parties. I don't want to give too much up just to make the deal work, nor do i want to be too greedy.

I usually defend millennials as a millennial myself. I went to a stupid college that was hilariously expensive but walked away with comparatively little debt. Solidly against college now, unless you actually need it for your dream career. My wife and I own our own home and have a new baby. Tons of expenses and excuses, but not from where I sit.

Since graduating 8 years ago, I have worked for 5 different companies. I went from $10 an hour to $38 an hour in that time. However my current commute is well over an hour one way. Because thats where my higher paying job is. Its what needs to be done.

Most of my friends get by well enough, but have no sense of their finances. There are people like this in every generation. Most of America is shockingly average and would rather complain and spend then save for even a little while and live better on the other side.

It might be callous, but let them. Millennials want to rent forever? Fine. That means that we will have tenants forever. You can lead a horse to water but you can't make the drink. In the age of the internet in your pocket at all times, how can you not look up a way to improve your own situation? 

I like the idea of a data-backed tool to determine what markets are best to invest in. It would be doubly cool if said tool could filter by the desired real estate strategy. Find good markets for fix n flip and good markets for buy and hold etc.

@Chris Mason i figured it was a dumb question. Your reply makes sense.

I wanted to make sure there wasn't some bizarre technicality when refinancing a hard money loan with a conventional mortgage as I have never heard anyone explain it in detail

This might be an incredibly newbie question, but I feel like it gets glanced over a lot.

How does the Refinance portion work from the perspective of the bank? Let's say I have a house with a completed rehab that is valued at 100k. I used hard money to get this deal, so I have a loan balance of (for the sake of simplicity) 75k. 

Does the bank view this as a First Lien against the property? If so, would the transaction I want to carry out with the bank be a genuine refinance from their perspective? I get that we want to replace the hard money loan with a larger mortgage, which would allow us to take cash back out and pay off the hard money loan (ideally).

I apologize if I am oversimplifying a lot, I really want to be able to go to a bank and have an intelligent conversation with them about what I am trying to do.

I am trying to search out good deals in the New Britain area and wanted to discuss some good conservative numbers to use for the BP calculator.

Even if you don't use the calculator on BP, you will need to know the numbers. 

What utilities do you have to pay as a land lord and what are they typically a month. Growth and expense percents. Property management percents. Things like that.

I am using numbers that I got from one of the webinars and I keep finding "good deals" so my first thought is that I'm wrong and missing something. Probably on the renovations side because I have little experience and that's hard for me to estimate.

You know what to do or you wouldn't have asked. The numbers will stop working REAL fast if anything goes wrong. Remember it's not you, its the tenant. Any dog that gets out or barks at all hours of the day and night is going to very rapidly be your headache one way or another.