All Forum Posts by: Sean Tabor

For the sake of future landlord's that screen tenants, yes file the eviction. They need to have it filed in order to show up on credit reports and warn the next landlord about their tendencies. I'm sure you'd appreciate the same courtesy.

Just my take. 

@Joe S.

I invest in Genesee County, MI. I've been able to get city owned homes and update all the essentials; roof, plumbing, electrical and service the HVAC for 3 bed 1 bath houses that rent for $700-800. Not war zones. I've lived in these neighborhoods. You can send me a message if you'd like to talk.

@Derek Savage

The ONLY reason I got my degree, was because I am a veteran and had the Taxpayers pay for it. I finished my degree and many of my college classmates are making $50,000/yr and they have that much (or more) debt.

It’s not worth a degree anymore. I got my real estate license with a one week course (many states require longer) and I make more with that than a four year degree. Skilled trades start in the high teens per hour and by the time you would have finished college you’ll be making 30-60/hr.

My advice, go into a trade or get your real estate license. If a trade lean towards Heating/cooling or electrical and earn a wage without debt. “House hack” in your parents house for 3-4 years and bank that money. You’ll be better off in the long run.

Originally posted by @Dave Fagundes:

Enjoyed this podcast a ton. Lots of great info and insights. One question and one follow up observation:

First, my experience has been that most lenders are unwilling to finance for more than the purchase price until six months after purchase. This would slow down the BRRR approach because it would mean that if you bought a place and then finished rehab in a month, you'd still be stuck with initial financing for five months. I've talked to lenders who have offered delayed financing options less than six months after purchase, but this option is always based on the purchase amount of the property, which defeats the purpose of BRRR because it misses out on the equity that is added by improvements. Bottom line question: are any (residential) lenders willing to lend based on the appraised value of a property within six months of purchase?

Second, one feature of the BRRR strategy that never gets mentioned much is that it necessarily constrains cash flow. If you finance a place for $100k, then improve and rent it out, and later do a cash out refi at an appraised value of $150, then the cost of financing is going to be significantly greater. You're paying to rent 70/75% of 50% again as much money, but the rent is presumably the same. So the higher financing costs necessarily diminish the cash flow to an extent. This diminishment may well be worth it to get the extra cash out to use; and by reducing the cash in the deal the cash on cash increases significantly even with the reduced cash flow. But it's a point worth considering that I've never heard mentioned in discussions of the BRRR strategy.

Dave, 

I saw this question and my mind went back to Ep. 301 (though it took me half an hour to find it). Alex said that he's done a few days through Delayed financing through HUD, and it allows him to refinance out his construction costs as well. Something to look into!

Rock on Dude! looking forward to hearing you on the Podcast!

I'm going to be quick and to the point:

1) Real Estate agents know the business. They understand who pays for what, and how to get you a better contract. Each paragraph can screw you and/or cost you thousands of dollars. If I help a buyer (my client) purchase a "FSBO", or For Sale By Owner, I write their contract to 100% favour the buyer (And if people think that's shady, I must remind them it is my legal obligation).

2) They have a network. For instance, I work with a lot of investors but I'm also  active with my church and other social organizations. Therefore, I seem to always know a potential buyer/seller.

There's nothing wrong with skipping an agent IF you know the business. But the rule of thumb is, it takes 10,000 hours to perfect a skill/trade. So until you've got the equivalent of five full time years in the business, I'd take all the help you can get! Then, consider getting your license to save costs. List your own properties and collect commissions on your purchases.

@Jennifer Brown I asked myself a similar question about two years ago. I actually decided to cash out refi my free and clear properties. It comes down to your “why”. For me, I want to accrue wealth, so spreading my cash across multiple properties gets loan pay down and I increase my wealth courtesy of my tenants. And ive even been able to cash out more than Ive invested. However, there is more risk In my plan. if your “why” is for security and peace of mind, not having those loans is a much safer option. Find your “why” and you’ll find your answer!

So I did this last year, but I even took it one step further. In Short, my number is $250,000 per year. This number gives me a comfortable lifestyle, but most importantly it affords me the time to release myself from the mandated schedule of corporate America.

Last year, on a slow day at work I wrote down everything I wanted in life as if it had a monthly payment attached to it (Although I don't intend to have monthly payments, I used these payments for budgeting purposes). The modest but reliable car, one for my wife. An average home and a cabin up north (popular amongst Michiganders), comfortable eating allowances and private school tuition for my children. I then added in a couple of extra's, such as an annual two week vacation, and a percentage to continually reinvest and give to my church. 

Then I broke it down to units, as if each unit cash flowed $100 to my pocket. So I know I'm working towards 209 units to get me the life I dream. (But I'm not stopping there). 

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $89,500
Cash invested: $4,500

House Hacking 2.0 - The live in Flip.

What made you interested in investing in this type of deal?

As I was getting married, my wife and I decided we didn't want to live in the city. I don't like losing money, so I looked for a home we could add value to.

How did you find this deal and how did you negotiate it?

MLS - Looked for vacant homes of either estates/trusts/or trash heaps. Found this Estate home and purchased via VA with $0 down. Better yet, after concessions I got money back!

How did you finance this deal?

$0 down VA loan

How did you add value to the deal?

Tore out carpet and refinished hardwoods, Updated bathroom/kitchen. Painted interior/exterior

What was the outcome?

We've increased estimated value by $20k so far, with hopes the market continues to climb. We hope to sell in spring.

Lessons learned? Challenges?

We knew the market didn't favor Crawl spaces in our area, but we under estimated how value-capped we would be in a home with a crawl space. Around here, EVERYONE has a basement. I feel we could have double our equity had we found a home with a basement.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $10,000
Cash invested: $4,000
Sale price: $10,000

First House Hack: 6 BR 2.5 Bath (Semi-Duplex). Rented all spare rooms for $300/mo.

What made you interested in investing in this type of deal?

I wanted a bigger house. I got this idea in my head that I could rent spare rooms for more than my payment.

How did you find this deal and how did you negotiate it?

MLS during recession, out of state investor off-loading bad investment decisions.

How did you finance this deal?

Private Money

How did you add value to the deal?

Updated furnace and HWH, painted throughout.

What was the outcome?

Pseudo-Disaster. The house worked very well, I took the shabbiest bedroom and fixed the rest of the house up as I could. Big houses come with big bills. Put a new roof on the back half of the house which took care of all my leaks. Heat bill was outrageous and after my 2nd winter I decided to sell the house to prepare for my marriage.

Lessons learned? Challenges?

Understand why the seller is selling, and make sure you can handle the challenges they couldn't. Thank goodness I didn't "Technically" lose money on it, but I bit off a little more than I could chew at the time. Now that I have some more experience and access to capital, I'd like to revisit that property!