All Forum Posts by: Sammy Patel

I have a relative who is buying SFH's all cash at below market, $10k-15k. Putting in another $10k in renovation cost. He then rents out to sec 8. He is doing this in Missouri. He wants me to partner with some other relatives. We would put in ourselves 25% of the cash, but only get 12.5% of the rental profit. Once fixed and rented he is not going to refi. He will leave the cash in the house. He wants to do multiple projects. He would do all the work with renovation, finding the house and renting. But he puts in zero cash and gets 50% of rental income. As stated I put in 25% of the cash but only get 12.5% of the profit. Should I do this?

Thanks Jeff/Carson. I see the logic in your statements and agree, on to the next one.

Carson, 3.75% for conv on investment properties sounds great! Care to pass on the company? For when I do find one.

Does your calculation include principal and interest or just the interest for debt service?

I ask because when I ran just the interest I was getting a positive 10% COC ROI.

Thanks Jeff! Its hard not to settle since itching to get started. But I will follow the advice.

We are looking at a 3 bedroom 2 bath condo, short sale in northern Virginia. The current price is $220,000. Needs around $7000 worth of cleanup. Rent is approx. $1750, HOA is $307, annual Taxes is $2794. Looking to purchase, hold and sell in 3-5 years, BRRRR strategy. Resale right now in top condition is around $255,000. Vacancy rate is approx. 1 month per year if tenants leave. Looking at 30 yr fixed around 5% for conventional loan with 20-25% down.

Please let me know if any additional info is needed.

Thanks for the tip.

Thanks. My wife and are trying to get our first property and I keep passing on properties because the COC ROI is 1% or 2%, where we might be -$20/month in cashflow but may have $10K-$15K in equity. My wife thinks with my requirements we will never find anything. When I include the debt service gain the property shoots up to 10% return. My wife is getting on me for being too stuck to the COC ROI. She thinks we will never find anything in the 10% range when I do not include the debt service pay down. I am not including the appreciation because that is not an exact science. However the debt pay down by someone else is a gain. Just not sure if it should be used to determine ROI to make a decision to get the property.

"Hey Patrick. Sorry if I wasn't clear. I use my own cash to buy and rehab. I then get private money asap secured by the property. Once it's rehabbed and rented then I will refi to conventional or portfolio lender. I"

Why don't you skip the private money and go straight to conventional refi? I am trying to learn BRRRR as well and am curious why.

I guess what I am trying to ask is when analyzing a property to see if it is a good deal to invest in will I miss out on opportunities because my ROI is too low since it is including the principal paid by the tenant which I will get when I sell?

Sorry, was a small.....2% COC ROI but if I subtract the principal I am paying to myself I would get a much higher ROI of 10%, what is the correct method to get an accurate ROI?