All Forum Posts by: Scott Wiliamson

@Shawn McClelland Thanks for posting the final sale price. It always find it useful to know what the final numbers end up being to get a better feel of the market. 

@Joshua Fulenwider Thank you for your reply! I see what you mean about paying it back without doing the refi. The only problem I have with that is paying back 40k(ish) without racking up alot in interest. Right now we could put about 1500 a month total if we keep bugeting the way we are now. At that rate it would take over 2 yrs just in principle. I completely understand your suggestion and it is very much appreciated. I guess what I'm trying to do is get a rental and build equity in both. Maybe by continuing to build equity in primary would be better considering i might not be about to take out equity in the rental (most banks wont allow you to take out equity of rental by my understanding). By this method I will be able to cash out refi on primary to by the 3 estate. Do you agree?

Hello BP members,

So I have been gaining my education on real estate investing through BP (thank you all I can't express how awesome of a community this is) ], reading books and other searches on the internet. I have been analyzing deals in my local neighborhood and feel I am ready to make some offers when I find the next good deal.

WHEN I find the next deal is the key word. I don't want to rush it, so I like the flexibility of a HELOC over that of a cash out refi. I have a traditional loan on my house and have been renting it out for the past 5 yrs. It is doing great as a rental but we moved back into town and will be moving back in when tenants move out in 2 months. My plan is to get a HELOC and start making offers. When 1 of my offers goes through, I will use the HELOC for the down payment and get a traditional loan for the remainder. At that point I will do a cash out refinance (on my primary house) to pay back the HELOC. Is this a good decision? Do y'all (that's right I'm from Texas) see any issues with my plan? Little more details below:

Primary residence (in 2months) is market valued at 160k and my loan principle is at 65k. I talked to current lender about cash out before and I want to keep loan down so when I rent it out again I will still cash flow. This means the max I will use for the HELOC is 50k. That way when I do the cash out refi it will fully pay off HELOC and not increase monthly payments. If there is any details I left out I apologize I'm still learning. Is this a solid plan?

I fully agree with @Ariel Salvaro and @Gordon S. and I'm sure with the countless other followers. I am currently building my education in the RE world and it's people like you that have a dramatic effect on ppl like myself just starting out. Please don't be embarrassed or anything of the sort to be learning as you go (your more prepared than I would have been). You had the courage to start; to act while others just analyze. I have picked up great nuggets of information from your posts. Thank you!!!! Please keep posting as I look forward to reading the inevitable good outcome.

"The Book on Estimating Rehab Costs" is great and I definitely recommend it. The problem with a question like this is exactly what he does say in the book about cost can change dramatically by location. That said I did pick up a "Rule of Thumb" on the BP forums. I don't know if it has a name but I am calling it the "1/3rd rule". Disclaimer that this won't work in all markets. A contractor will charge 1/3 for materials, 1/3 for labor & 1/3 for profit. So if you were to find out what material would cost you could then have a ball-park cost for the entire job. Ex. Material for bathroom redo = $1500 for materials * Multiply by 3 and you would arrive at $4500 for the total job. Hope this helps!

Thanks for the replies! Being conservative is definitely what I am doing. Sorry for being a bit confusing in my question. An example is probably the best way to explain more thoroughly which I will remember with future posts. If rent in neighborhood is going at 1100 (similar Sq. Ft and bedrooms) is it likely my rental will rent higher say 1400 if in better condition? Or will rent prices be dictated by rent prices around the neighborhood? When I am doing the BRRRR calc. cash on cash is negative. In my thinking there are a couple of ways to improve . If rent income is raised I will be in the positive and if loan amount goes down expenses go down I will be in the positive. If I can't change the loan amount then that leaves rent increase. If I go through with the deal and I can't get the house to rent at the higher rent I will be losing money.

Is there a rent ceiling for a neighborhood?

I'm looking for my first BRRRR property and I keep getting stuck on approximating future rent prospect. If the rent of houses in the area, with similar Sq. Footage, is low can mine sell for higher? What is a way to find out or maybe a rule of thumb for knowing what the rent of my house will go for or how high it will sell at?