All Forum Posts by: Whitney Breedlove

I'm jealous of you! My husband and I bought our first house a couple of years ago before I knew anything about REI and if I had to do it again, I'd go back and house hack a multi-family instead. I'm also a newbie, but it seems you're on the right track with either option. Of course it's going to depend on the deals you find, but if I were doing it, I would simply run the numbers on each deal, and whichever produces the highest amount of cash flow I'd go with. It looks like you're in the game for the long term cash flow so I'd go with the multi-family, but it will all just depend on your numbers!

Interesting. Thanks for the input guys! As soon as I feel like I have a good grip on things, I run the numbers on a deal like the one above and get discouraged when i see the cash flow. I am happy though that I’m at least on the right track in thinking that a deal like the above isn’t that great despite hitting the 1% and 70% rule. Wasn’t sure if I was missing something. 

Hey guys! I'm a little confused as to how a rental property acquired by the BRRRR method ends up cashflowing after all expenses are taken out. Of course this depends on the numbers so let me give you a common example with numbers that I encounter in my market quite often.

Purchase price: $90k

Repairs: $8k

ARV: $140k

Rents: $1400/mo

This deal meets the 70% rule and also exceeds the 1% rule so it looks like a great deal! BUT once you go and refinance with the $140k ARV at a 70% LTV ratio at 5.5% interest over 30 years your cashflow is only around $100/mo after conservative expense estimates (I assumed $3k in taxes/year, this is typical for my market, $1k insurance a year, and 5% cap ex, 5% repairs, 10% property management, 5% vacancy, and only $50 yard services.)

As I said, this is just a common example, but the cashflow is even WORSE as the ARV gets higher, unless you can charge a ton for rent, but typically it's hard to get over $2k in rent in my market without getting into luxury housing.

I'm confused! How do yall make the numbers work on these BRRRR properties?

Hey Jason! I have lived in both Pearland and Friendswood and IMO, they are both great places to invest and I'm also looking to purchase properties in these areas.

Friendswood has great schools and attracts high quality tenants. There are no major universities or health care centers however many people choose to live in Friendswood and commute downtown. Friendswood was affected by Harvey so you may be able to find first time flooded homes at a really great value. 

Pearland is similar in that there are not any major universities, although there are a couple of hospitals and Pearland is only a 20 minute drive to the medical center in Houston. As a result, a lot of people in the medical profession live in Pearland. Pearland is arguably the closest suburb to the city as well. They are expanding the major freeway that connects Pearland to downtown so traffic is bad right now, but I believe they are expected to finish in late 2019 so the area is only going to explode more than it already is. Also, I don't think any of the houses in Pearland flooded despite its proximity to neighborhoods that did (like Friendswood) so I think that speaks volumes about the civil engineering in the area.

Hope that helps! 

Thanks guys. That's what I was hoping. I did some google-ing too and it appears that yall are correct and don't need an inspection to refinance. The house had a lot of issues though (my inspector just looked at it) so I'm going to pass but this is good to know for the future.

Hey guys! I'm getting close to pulling the trigger on a 1960's buy and hold home. I'm going to be using hard money to purchase the home and will refinance once it's fixed up and rented out. When I go through the refinancing process, will the bank require a passing inspection? The home will be in great condition for a tenant, however I'm worried that once an inspector gets in there, it would be expensive to make all the updates required to pass the inspection. 

Thanks David! This is a wholesale deal so there is no option period per se. I have to put down $2500 to reserve it while waiting for my funding and I believe I can back out at this point, but that’s more than I’d like to lose if it has an obvious issue. 

PS- what do you think about the Baytown/TX City markets? They seem like great markets for buy and hold strategies due to the nearby plants.

Hey BP! I have a house I'm thinking about purchasing in Baytown, Texas. It's a great deal and will go quickly. I need a contractor/inspector to go out today to check it out and make sure there aren't any big ticket issues such as foundation issues before I pull the trigger. If you're available, let me know! I am looking for a person to function in this role in an ongoing basis as well. :) 

Welcome Nancy! I'm a new(ish) attorney living in Pearland as well! I'm also looking to get started investing and have already found BP to be a great resource :)

I know Friendswood and Pearland are really good. I can't vouch for the others. Clear Creek ISD is also a top school district.