All Forum Posts by: Seth Tipton

Yes one of the things I've picked up on surfing through the forums is to avoid narrowing in so much on the numbers and forgetting the real life aspect of real estate. Nobody is going to pay 400k for a house when most of their neighbors only paid 250k.

 Yikes that's much worse and really underscores the necessity forba reliable contractor. It would be a 9% return basically like if you put 50k into a 401k. 

I hope that is rare but it looks like an easy mistake to make.

BTW, how often do you see that happening on your investments?

Oh ok, so even if you get slayed on the appraisal that would be a 32% ROI on a 15k investment (in the form of 15k debt)

So it would be the same as if you took 15k to a stock investor and asked them to put it into something that returns 32%. So even a disaster BRRRR could work out as a good investment.

Another question I have is if you pay cash initially, no initial mortgage, is the refi process different? In that case it isn't actually a "refi" because it was never financed by the bank in the first place. I just started the BRRRR book so I am sure I will come to that.

Hello BP forum. I've never BRRRR'd yet and I'm in a learning phase. Everyone here has been great about sharing knowledge and stories. I'm getting acquainted with the risks of any investment and am wondering about the refinancing risk of BRRRR.

The whole idea is to get a good refinance to pull your money out of the first property and move to the next. If the ARV appraisal comes back low it can halt your progress (or can it?)

My question to experienced BRRRRers is how often has that happened? What did you do? What are the upsides and strategies to deal with it. Looking for stories, insight, calculations etc.

I watched the BRRRR podcast with David Greene and he showed how you can get hammered on the appraisal but still have a good ROI but I am not sure I understood his math as it was pretty fast. What's the "for Dummies" version of dealing with that risk?

I'm curious about how likely you all think that is based on past experience.

Others have suggested AirBnB a MFH or just MFH in general. House hacks. BRRRR. I'm looking into everything. We have friends in Atlanta near some good schools and are considering that too. All options are on the table save for one that we know we can't make work. But we are definitely open to ideas on that too.

We get massive cash flow from an investment perspective but not from a living perspective. The house we are in we split with my parents in law who are leaving in January (too expensive with the CA state tax which they have been paying with a credit card). All told, the rent and utilities will be a jump to $2700. That is with a big discount on rent we get from the family member who is selling the house in a couple years anyway. The rents around here can be around $3200 right off the bat not including utilities.

Groceries are about 700 and on and on. Medical. Gas. Etc etc. There's no way we can stay in this area with anything close to a good school. We have to move.

Renting the house from a distance makes me nervous since all eggs are in one basket and repair costs on managing CA house can be really high. I realize that cash flow isn't going to sustain in Austin. But I am trying to figure out a way to use the value of the house to snowball by starting to purchase with cash. I am researching numbers and trying to crunch them in a way we can make it work. Someone suggested a house hack which sounds interesting, but I do understand that it's not like money is growing on trees pretty much anywhere.

We thought about holding on to it and doing that. 3k though doesn't go far if we have to rent a place in Austin. So if a new big house problem came up in CA we'd have to pay CA prices to fix it with very little money. I'd be looking for a job but meantime savings would be depleting which is money I could use to invest if I can. I'm trying to minimize savings burn by getting some cashflow. If we buy a house in Austin or elsewhere and use the rest for rental properties we could possibly build enough cashflow to stabilize. The possibility of having to sell the CA house sucks for sure. 

At this point, I'm trying to crunch numbers to see how many rental properties I would need to get by along with a residence home. With the property tax in Austin, that really cuts into it. I arrived at about $3,300 in living expenses after the property tax is figured, for 4 total properties. That doesn't even account for Federal income tax. So it's tight for sure. I'm looking for a way to sustain while we look for jobs. The threat of being kicked out of our homes removed would be a big plus. Renting in the Bay Area feels like a tightrope. Even if we ate Ramen we could still have a roof.

Ali, this is all true. The problem is that I lost job and my kid is in a good school and has grown. The area here is a bit unfriendly too and it's very expensive. Also we have been splitting rent with my parents in law and they are leaving for the same reason. My wife doesn't have a job that can sustain us in the meantime. Even if I got another job we would have to move and the only affordable place has a horrible school. If we don't act soon it will be a savings burn, poof. We just spent 15k to replace the roof. So I feel that eggs are in that one basket with potentially scary costs that we wouldn't be able to replenish.

So, it's more than just investment factors that are causing us to consider it. It's about family, schools, living expenses, culture and a desire to spread out our investments.