All Forum Posts by: George Ozoude

Ok thanks. That really helps because it leads to some other gray areas I had about the process. 

So it sounds like I need to figure this initial involvement of the contractor as cost of analyzing deals. ...because if the contractor comes back with an estimate of repairs that is too high to make the deal attractive then I'd be out that fee for his service. At that point do you just take that loss and look for another deal. Or do you bring in other contractors to give you more estimates??

Thanks for the welcome all.

@Jordan Decuir @Jorge De Jesus Just seeing this and working so it may be tough. Send me the details anyway! You never know. Ether way I would be happy to stay aware of any local meetups. I've been to several in many locations throughout Houston over the last year. I am starting to settle into one in my neighborhood that I just found. 

@Brian Ploszay thanks again for the advice...I think I found the answer and it is much like you said....Buy right (aka buy as deep as you can), try to ensure it cash flows and cash out refi the thing whether it is an up or down market and whether it is large or small MFH. 

I was happy to come across this post as I am trying to decide whether to start out BRRRRing small (2-4) or medium (~15-30) MFH. Had the thought/concern that a small MFH would behave like a SFH in terms of valuation in the midst of a developing downturn, and irregardless of the cash flow because the value would depend on surrounding sale comps. It sounds like a downturn can, to some extent, affect the refinance part of the deal; but accounting for that potential situation when you initially analyze and pursue the deal sounds like the idea everyone is advocating, correct? So buy low enough that a down turn still allows for you to successfully cash out refi? Thanks in advance.

Cool. Appreciate it. My goal is BRRRR my way to a very large portfolio of large MFH apartments so I just want to better understand any implications of market changes. Being able to get my capital out of a deal to move to the next opportunity efficiently will be important for my strategy I believe. Starting relatively small for the experience is important, I agree. And believe me, I'd rather start smaller than bigger. But knowing that the strategy would work for both small as well as large MFHs if the market begins to down turn would help knowing which options I have as I start up. Right now, I just don't know the answer to that.

Just for my understanding, I see you're saying not to focus on the effects of a downturn... so is that because it is not an issue with this BRRRR strategy for either large or small MFH? or because it is just not as significant as the other factors the play into the deal?

Essentially, I just want to be able to cash out refinance when the time comes despite an developing down turn and no matter the size of the MFH. Thanks for helping to clarify. 

https://www.biggerpockets.com/forums/311/topics/395258-brrrr-in-declining-market here is a link that may potentially be helpful for some to further add to this discussion

I'd like to know if there is now a way to edit past posts. Thanks!

@Brian Ploszay  I see. I hadn't thought of it being counter cyclical, but that makes sense. 

...and I guess more specifically if I am in the middle of a BRRRR strategy on either a large or small MFH and the market turns downward, would it have negative effects on the small MFH since the ARV is still based on local comps? ie, would I not be able to cash out at a desirable profit margin, or at all even, if it were a small MFH in a down SF market?

While for the large MFH, would the BRRRR strategy still perform well since the value of the property is based on the cash flow, which as you mentioned should improve in a SF down market?

And yes I agree the SF market has been hot for some time here in Houston, so I am trying to plan for both continued growth or a downturn. 

@Brian Ploszay

Trying to enter into the real estate MFH game. ALthough I am interested in 15+ units, I come across more potential 4plex, 3plex, 2plex deals. Hesitant to go for those as I learn the benefits of large vs small MFH. I am curious to know if a small MF apartment is subject to the effects of a market downturn like a SFH would be?

@Jordan Decuir Can both hard money lenders and banks use this recourse loan?