All Forum Posts by: Scott Johnson

Hi bigger pockets, I have 10 plus years of experience as a licensed plumber and have close relations to various trades which helps me greatly as I invest! I am a buy and hold inventor. My market is in the greater Boston area and I own 2 triplex property, 1 of which I am trying to BRRR.

I purchased the property for 815k in Jan, used a HELOC on my other triplex (interest rate is prime plus 2% as most banks dont give HELOC on investment properties) to fund the down payment and renovation costs.

Total renovation cost is 85k, down payment of 205k, amount due on HELOC 290k. Interest rates have been spiking so I used some reserves bringing my principal balance down to 180k. I have all units lease totaling $7500 per month.

My current mortgage on the property is 600k with 5.5% on a 5/1 ARM (planned on BRRR so why pay more in interest and closing cost) which amounts to $4800 with P&I, tax, and insurance. Average monthly cost for HELOC is roughly $1500 based on a 10.25% rate bringing my monthly costs to $6300 per month and leaving me with $1200 which I then factor in utilities, vacancies, etc.

Due to the seasoning period changing to 12 months I decided to try a DSCR loan (loan amount 825k, 7.8%, 30 year fixed, estimated mortgage with tax and insurance $7,100). My appraisal came back at 1.1 mil which with 75% LTV and the money I cash out would pay off my variable rate HELOC. I would leave 100k in the deal but my pros would be tax write offs, appreciation, raising rent, peace of mind knowing my payment is mostly fixed for 30 years, got this newly renovated awesome asset for 100k and some sweat equity, and most importantly I can repeat and reinvest again. My possible cons are I would only break even (long term I will get cash flow) and it could be possible I refinance if everyone's wishes come through and rates fall.

I am leaning towards the refinance into 30 year fixed because of the volatility in rates. There is some hesitation as the majority of my loan on this property is fixed for 4.5 years at 5.5% and allows me to cash flow nicely and seeing that only 180k is variable the rate would have to raise significantly for me to balance out the 800$ I lose by fixing my loan but my driving factor is I am a buy and hold investor in this for the long game which means if I have to break even for a few years while I still get appreciation, tax benefits, and raising rents than I am willing to make that sacrifice. Alot of investors I know are pushing me towards cash flow and leaving the current deal as is until interest rates get better but this of course cuts me off from the repeat in BRRR. My question is honestly a sanity check if what I am doing makes sense? Any advice on this would be much appreciated!

Hello All, 

Im new to the BRRRR model and I've been reading the book. I have a question about a property that backs up to a lake. Is the BRRRR model suggesting that the best way to implement the strategy is to use your own cash to buy the property ($120K) then use your own cash to rehab ($125K) or use a private or hard money lender to buy the property ($120K @12%) & rehab ($125K @12%) then go for the refinance? In short, what I'm asking is which is better? Is using your own cash going to net you better results or will using borrowed funds net you better results? (ARV $335)

Hi all, I'm reading Real Estate By the Numbers and I get PVM, FV, interest vs discount rate. Where Im struggling is Dicounted Cash Flow using the Discount Rate. How are they building an interest rate into cashflows to make the numbers work? Only way I can see to do that is use the annual rent increase (say 3%) as the DR. Any guidance would be greatly appreciated.

I see this question pop up a lot on BP: "how do I evict a tenant in [city, state]?" I've had to evict a few tenants from properties I've owned in different states, but I always rely on property managers to contact the law firms and work with an attorney to handle the eviction. 

Of course, this is usually unnecessarily expensive. The attorney charge hundreds of dollars, if not well over a thousand dollars, to essentially follow a step-by-step guide for how to do an eviction. Send a notice, fill out specific paperwork, don't collect rent in the meantime, don't shut off utilities to retaliated against the tenant, etc.

I want to better understand:

1. How hard is it for a landlord to read and learn how to perform an eviction in their specific city/county/state?
2. How much does eviction law vary by city/county/state?
3. I assume most landlords' biggest fear when evicting a tenant is either losing the ruling (because they didn't follow the process correctly) or being sued themselves (because of adverse actions they took while trying to evict the tenant). But is it that hard to learn it yourself?

Is there anyone here who feels comfortable evicting tenants themselves without ever going through an attorney?

Hi All, I'm about to self-manage a property and I would like a straightforward online tenant screening software. Any recos would be greatly appreciated. :)

I'm setting up a legal org for my real estate project. Which type of legal structure should I set up? 

Big Details: 
Property (and me) are located in San Deigo, CA
Property is worth $900k (I own it personally right now)
Equity is $200k
I'm about to get a $2.2M loan to refi the main property and do construction to build 6 ADUs in the back.
Hopefully, all costs (including the cost of capital) are going to $2.5M.
After Repair Value is $3.2M-$3.5M
Net Profit should be $700k-$1M
I'm looking to hold it for 2-3 years. I could hold it longer if there is a special opportunity like limited taxes too.

Does it make sense to set up an S-Corp? Or are there other options I should consider? 
Thank you! 

Hello, just trying to get advice on how to go about this turnover.

I purchased an out-of-state property last Aug, and tenant just moved out this May. I have not been to the property yet, but have been told by the PM that they did not leave it in a good condition. I replaced the fridge this past Sep, and I'm being told it's so bad, it needs to be replaced again. I've listed the estimate the PM gave me, but I'm now thinking of flying out there to see the house and condition before signing off on any work. It seems some of these things are small fixes. Any feedback or advice is appreciated. Thank you in advance!

From PM:

"Your last tenant left the property in really dirty/needs work condition!. Note that your tenant ended their lease with a balance of $2,492.35 before their account was closed out!

Your tenant had a security deposit of $900.00 which was applied to your account to help with the turnover repair costs,

Below are the majority of the items that will need to be addressed to make the house ready for marketing and your next tenant.

Scope of Work Needed,

Interior:

- Repair all walls and ceilings as needed $350.00
- Full paint out (Ceilings,walls, doors and trim) $1,750.00
- Install smoke alarms and Co2s for all required areas $225.00
- Replace 10 blinds $450.00
- Replace all interior door knobs(6) $210.00
- Replace kitchen ceiling light $85.00
- Prep and paint kitchen cabinets(Inside and Out) $750.00
- Install vinyl flooring under kitchen sink base $85.00
- Install new stove and fridge(White) $1,575.00
- Firestop kitchen and bathroom $125.00
- Reglaze tub $385.00
- Silicone fixtures and install tub stopper $100.00
- Final Cleaning $275.00
Basement:
- Remove/replace all outlets, switches, gfci's and covers $250.00

- Prep and paint all walls throughout $850.00

Exterior:

- Remove all trash throughout $200.00

- Power Wash house $250.00

- Repair gutter at right side of house $100.00

- Clean fence line $450.00

- Prep and paint back porch $275.00

- Repair front/back storm doors $100.00

- Install trim around front door and paint $200.00

- Install new downspout extensions for all downspouts $150.00

- Install new drain for sump pump to front yard $225.00

- Install new dryer vent $100.00

- Seal foundation at left and right side $400.00

Total Make Ready Estimate: $9,915.00

Tenant's Security Deposit:: $900.00

Owner out of pocket costs: $9015.00

Please note that these costs are projections and added expenses could increase once work begins if additional concerns are discovered. I'll keep you posted if the budget increases more than 10%.

*At this time only the rekey has been ordered to secure the property. I do require your authorization and funding of $9015 prior to being able to start these turnover repairs which will take 10-14 days."

I am just starting to work on a deal for a 5-plex where the owner is offering financing at 6% APR. I am more familiar with APR with respect to credit cards and not so much with personal loans, so I wanted to reach out to the community and see if anyone would have any advice on pitfalls, risks to avoid, or strategies to consider with financing a deal like this. Any advice is appreciated!

I have a duplex garage that has existing plumbing, HVAC and electrical system in place.  I am looking to convert the garage into a habitable unit.  Are there any recommendations on which local architect firm that I can hire?  Thanks.