All Forum Posts by: Ronald Fontenot Jr

Quote from @Drew Sygit:

@Ronald Fontenot Jr if you read stuff by hardcore investors, they all state that you may have to write 100 offers, at amounts that make your numbers work, to get one acceptedl

How many offers have you made so far?

Absolutely. I've been in the game for a little over three weeks just yet trying to read, learn and get advice from everywhere I can. So far, I've made two offers, one declined, one not sure yet. I've ran the numbers on at least a hundred to see if they're worth even messing with. But I'll caveat that with the fact that I'm on vacation now and not making any moves while away. Back in the saddle next week and I'm cranking back up. Just need to get some family time out of the way. Thanks for the reply and the advice!

Quote from @Karl McGarvey:

I think it is important to remember that even if you are cash flowing only $100 a year, if you pulled all of your cash out, meaning you have zero cash in the deal… the ROI no matter what the cashflow, is infinite.

The Angleton area has me excited over the next 10 years. As does Santa Fe, Alvin, Algoa. As Houston expands these areas are going to develop and appreciate

100% agree. South of Houston makes the most sense. Just have to watch those flood zones. Santa Fe to Alvin is already experiencing high values. I still like those areas though. Thanks for the reply!

Quote from @Linda Labbe:

It depends where you are looking we invest in Ohio and Michigan and are still finding properties that Brrrr out  its just a matter of shopping and fining the right deals and yes creative financing helps a lot

.. it can make things so so much easier   more then willing to chat with anyone who wants more info

I wish I had the cajones at this stage to venture out of state. I look in other places and run the numbers just to entertain the thought, but I just need some experience under my belt first...I think. I could be wrong. But rather be safe right now. Thanks for the reply...I appreciate it!

Quote from @Kevin Parnella:

Great post @Ronald Fontenot Jr

 Thanks. Absorbing info!

Quote from @Kristin Fleming:

Quote from @Ronald Fontenot Jr:

Quote from @Kristin Fleming:

I'd like to take a look at your analysis. Generally if you pull one lever, you change the outcome, then you pull another lever, you change the outcome further. It's difficult for me to understand how you're getting negative cashflow if your all-in is 55% of ARV? Feel free to contact me if I may be helpful to you.

Thanks for the reply! I'll give you an example. The address to this particular home is 620 Manor Dr, Angleton, TX. It's listed on Zillow for 140k. I figured to offer 130k. I have found several comps that would tend to support a 210-220k ARV. I figure the rehab to be 15k. I am a GC and can get things done at quite a discount and I also have a ton of material in my warehouse that I can use. Here is a link to the report that I've generated for it. I've done it many different ways and this is the best outcome I've found. Any way I did it whereby I could pull out my entire out of pocket investment makes it substantially worse.

https://www.biggerpockets.com/calculators/shared/2680294/3acb9919-99bf-4a52-95e1-abaebf6776ee

I'd value your opinion. Thanks!

I think your cost assumptions are pretty accurate. Your insurance and taxes seem a little high to me, but I am not familiar with the typical costs in that market. I agree with those that have commented that it is unwise to go in at a negative cash flow. Are you quite certain about the rents? $1700 sees a bit low to me on a $210,000 property, but again, I don't know that market. I have seen other investors say that with this rate environment they are looking for 65% of ARV for their purchase plus rehab to make a successful BRRRR.

Yes insurance and taxes are horrible here in the Houston area. So much of the area is flood or wind zone and FEMA is ruthless with their rates. Rents are all over the place too, depending on where the property is. Hard pressed to find anything other than a teardown for 65% arv. There are some, but they get snatched quickly by the bigger players who wholesale them. Then there's not enough meat left on the bone to make a deal work, at least by BP parameters, and I'm a GC who can get work done for cost!. In this environment I'm dead set on not making a rash decision into a bad deal. It's tough here for the little guy. But I'll not let that deter me. Gonna keep pounding the pavement until I find one that works. Thanks for the reply!

Quote from @Chad Kastel:

Absolutely not on ever going cashflow negative. That means you're making an appreciation strategic play. That takes foresight and expertise. If you aren't finding cash-flowing deals you either need to spend more time learning underwriting/creative financing. Or you need to expand your search parameters. I know that may take your edge away b/c the further you go from your team the harder it is. If you only want to stay in your area in may just not be the time to buy. You may just need to wait for the market to catch up to the interest rates.

I can appreciate that advice. Thanks! I would rather stick around my locale since I'm I'm a newb to this. Having long-distance rentals right off the bat doesn't seem like a good idea. I'm still getting my people together and making plans. Trust me, I'm in no hurry to jump into anything I can find just to do it. It might just be a wait, search and see for  now. I know there are deals out there. Seems like flips are probably the way to go, at least for me, right now. We will see. Again, thanks for the advice. It's well taken.

Quote from @Kyle Mccaw:

@Ronald Fontenot Jr ya it's tough out there. With this property you have to think you're buying a long term asset, not so much a cashflow asset. If you hold it awhile it will come out great in the long run. It could also be a great play if you need to cost seg it to save on taxes.

To get the cashflow we have been focusing on the tertiary markets just outside the core metroplex. For the properties in the "city" we just have to wait long between deals.

Thanks Kyle. Yeah that's kind of what I'm thinking. It's going to be a long term hold. This is just an example of the type of deals I'm finding. Interest rates are killing them, or making them at least negative CF for a year, two or three. I didn't actually get this property, but I've identified a lot of them with the same outcome, some better than others. I'm definitely expanding my search beyond the city...actually not even interested in Houston proper at this time, but rather in the suburbs that are experiencing growth and potential. Gonna keep on looking! Thanks again!

Quote from @Kristin Fleming:

I'd like to take a look at your analysis. Generally if you pull one lever, you change the outcome, then you pull another lever, you change the outcome further. It's difficult for me to understand how you're getting negative cashflow if your all-in is 55% of ARV? Feel free to contact me if I may be helpful to you.

Thanks for the reply! I'll give you an example. The address to this particular home is 620 Manor Dr, Angleton, TX. It's listed on Zillow for 140k. I figured to offer 130k. I have found several comps that would tend to support a 210-220k ARV. I figure the rehab to be 15k. I am a GC and can get things done at quite a discount and I also have a ton of material in my warehouse that I can use. Here is a link to the report that I've generated for it. I've done it many different ways and this is the best outcome I've found. Any way I did it whereby I could pull out my entire out of pocket investment makes it substantially worse.

https://www.biggerpockets.com/calculators/shared/2680294/3acb9919-99bf-4a52-95e1-abaebf6776ee

I'd value your opinion. Thanks!

I'm having a hard time finding BRRRR properties that meet the suggested requirements. I've located several properties that are well below 70% ARV, some even as low as 55%, but I cannot get them to do all of the things. Even with light rehabs, it's been difficult. I'm a GC and have the ability to rehab properties well below what an average investor would expect to spend. Seems they all come up with negative cash flow for at least the first two years. In my mind, that's not a deal breaker, especially with my plan to hold the properties for the long term, 10 years at least. I know interest rates are not helping matters at all, so does this mean we should just adjust and expect to cash flow negative and wait for interest rates to normalize and then refinance? Or just wait the market out? Sometimes it feels like searching for a very small needle in a very large haystack.

Quote from @Greg Kasmer:

Ronald - What do you have in your expenses in your pro forma? Do you have all expected expenses including: principal, interest, taxes, utilities (not paid by tenant), sewer, insurance, maintenance/repairs, property management? Hopefully you do. I don't like to typically see negative cash flow in year 1 as you typically cash flow less than you think you will. However, I think you're plan to utilize proceeds to pay for the negative cash flow makes sense. As an alternative, you can also take out less of a loan and that would lower your overall loan payment as well. I would also put in an offer 15% less than asking to negotiate the price. For me, I would say if you can be "even" or slightly positive cash flow in Year 1 the deal makes sense - I just don't like planning to have negative cash flow from the start. Good Luck!

 Thanks for the reply. I've added in all expenses except utilities, those are to be paid by the tenant. I've figured 5% across the board for vacancy, cap ex, and repairs/maintenance. Not considering those items, it would actually cash flow, but I'd definitely want to keep those included. I'm still working on it. Have put in an offer for 140, but there are multiple offers on the table, some of which are cash offers, so I don't have much faith that I'll get it. But the information I'm gaining will be helpful in the future on others that may be the same situation. I'm not crazy about a negative cash flow, but if it's only for a year or so, then I think I could put the cash up to cover it until such time as it does flow since I plan to hold the property for the long term.