All Forum Posts by: Taylor Murphy

@Patrick Schwappach I read David Greene's as well and did some other homework on the BRRRR strategy before jumping in but unfortunately books don't cover everything so I just jumped into this deal and did it because I was getting analysis paralysis. I knew it wouldn't be a perfect cash out where I could pull all of my money out and I was ok with that for this one so I could get a feel for the strategy. The rehab was very light on this project l, it was mainly paint and some minor cons metic upgrades. The biggest thing was raising and fixing the sagging floors since it is a raised home, some of the hoist had settled but overall it went pretty well. I did learn some things about how to better manage and delegate task among my contractors though. For instance, next time the painters get all the painting, flooring guy gets the flooring, etc. I used my handyman to complete the job and I won't do that again, reason being it took more time than it should have and the people that paint daily are going to be faster and do a better job. So job delegation was a learning point on this one. I'm a newbie with this but if you have any other questions just ask man

@Dave Foster Thanks for the response! I calculated the cash flow incorrectly the first time I posted the deal, that's why I had to go back and change the cash flow which is why it probably seemed off but i did make another post with the corrected cash flow. I am still searching to find some cheaper financing for the refinance as well because that will play a big part in my monthly cash flow. I was able to rent one of the units for $900/month which was $50 more than I ran numbers at so that is a good things. Just have to find some cheaper financing now!

@Will C. I responded to cory about the commercial financing above. The closing cost are no different with commercial, those are the standard closing cost at my title company. Part of the reason they were a bit higher though is because I am in a flood zone so my flood insurance is much higher. The property appraised at 140K on the initial appraisal and comps in the area on like properties support the ARV of 165K. With the upgrades I did I also increased the rent on the property by $285/month.

@Corey Young I use the commercial loans because of the strict lending requirements a conventional loans have. Conventionally I would have to have cash reserves for all of my properties, consistency in my bank accounts, and 25% down to purchase a 2-4 unit property. Commercial offers 20% down with no cash reserves and I can pull the money out of thin air a day before the closing to close on the property. It works better for me because on the restrictions. I just have to find a bit better deals to cash flow on a shorter am schedule with a little higher interest.

@Jason Turgeon I totally agree. At 370/month there’s not a lot of meat on the bone so I’m kind of back and forth on if I’ll hold it for the long term or not. I guess we’ll see how it goes and can always 1031 in the future if the property becomes more of a headache. 

I do all my managment in house because I’m trying to develop my own in house managment and do that full time and quit my full time job once the cash flow is there to comfortably do so. 

But yes, I have to find something better than the current loan I’m looking at, we’re still shopping but I will definitely check out BP to see if anyone has some better options for me. Thank you for your input! I’m still just a novice investor and this is kind of the   Test subject for the strategy. 

***Also there is a correction to the total cash flow, it is not 550/month. With lawn maintenance taken out it is 370/month.***

Is managing a property and dealing with it worth 370/month?? Yes, I captured the equity in the property so I have a good amount of equity in it and my COCROI is high due to not a lot of skin in the game but is such a small dollar amount of cash flow worth the headache?

@Jason Turgeon You are correct, not truly a rehab project, this was more of a quick cosmetic upgrade. I can certainly share the information for the lender once I choose the loan I am going to refi with and close on the refi. One of the refinance loans I am looking at is with a portfolio lender, Gulf Coast Bank and Trust which is here in Louisiana. This is a residential property, it's just a duplex but I use the commercial loans to buy my properties due to the stiff lending requirements government backed loans have such as my bank accounts have X amount of dollars, having cash reserves for my current properties, and I can also get into the deals with 20%. 

Total rents are going to be 1700, 850/unit.( Although I am trying to rent them at 900/unit) but I am using the lower rent rate just in case I don't get the 900.

The mortgage should be about 877.31/month for Principle and interest 

Taxes and Insurance are 393/ month

I self manage so no property management. My only expense besides maintenance is going to be law care which is 60/month. 

Cash flow should be roughly 370/month which if I'm all in on the property at 10K should give me a COCROI of 44%

That's not factoring in any maintenance either so that just the gross return 

@Robert McAllister for the initial purchase I have a commercial loan, 25% down on a 20 year am at 5.99% interest. I have 2 loan options on the refi that I am looking at. The first one is refi into a 80% LTV, so 20% down commercial loan on a 20 year am schedule at 5.99% interest. The second option is a 30 year commercial loan at 80% LTV on a 30 year am schedule and 6.99% interest. I am leaning towards the 30 year am loan with the higher interest due to increased monthly cash flow. The interest is high on that so we are still shopping to find one with lower interest. I do not plan to carry the mortgage for the full term so the interest is not a turn off for me, personally. (Unless you have another opinion, I would love to hear what you have to say). Refinancing at the higher appraisal will decrease the actual dollar amount I'm cash flowing but I will have a higher percent return and I will be able to get most for my money back for the next investment. This would cash flow much better if I leave the current mortgage in place but now I have a good chunk of cash tied up in a property so I would really like to cash out.

@Andrew Postell Thanks for your feedback! The lender that will be handling the refinance has lent me on all my current properties and he has gained my trust when it comes to him saying he can get it done.I will be using the same loan product he's using for his refinances because he is an active investor and doing BRRRR's also

Hey everyone, I am going through my first BRRRR right now and am looking to get some feedback. This is my first ever renovation project, all my others have been turn key 4 plex's so far but am looking to learn this new strategy to help grow my business. So here's a breakdown of the deal.

Property is a duplex

Purchase Price- 120K

Rehab- $9,300(Rehab has finished as of today

Closing cost and insurances- $9,140

ARV= 165K

Total rent= 1700

I used a commercial loan to purchase the property at 25% down (Bank forced me to do 25 because of the area. Its not great but its not bad either)

I had to bring 35,500 to the table (25% down payment plus closing)

I spent $9,300 on rehab and a additional $1K on inspections and flood elevation survey to get the flood insurance down

I have no holding cost because there is currently a tenant in the front which is floating my mortgage and insurances

Total out of pocket for the entire project is roughly $46,000.

I will be refinacning into a 30 year commercial loan with 20% down, so if the ARV comes back at 165K like its expected to I will get a check for 132K. I will use that 132k to pay off the existing loan which has a balance of 90K, then will be left with 42K to replenish the 46K it cost me to do the project. Now there is still the cost of the refi not factored in to any of this so I'm looking at being out of pocket about 10K.

I did not expect this to be a perfect BRRR from the get go, I was expecting it to cost me about 5-10K when it's all said and done so I'm on the higher end but I'm still on track with my original projection.

So currently I am looking like it will cost me about 10K to have 20% down in a 165K property that will cashflow roughly 550/month.

Looking for some constructive criticism or any thoughts and ideas ya'll may have because this is my first BRRRR and this will be the blueprint for BRRRR's in my market moving forward. I will now have a better idea of renvoations, refinancing a property, and overall knowledge of what it will cost me to pull off a zero money down BRRRR in the future.

Thanks in advance!