FIRST BRRR Complete! Details + Pictures!

276 Replies

Hey James,

Very motivational story. Especially since it hits so close to home. My wife and I flipped a home in late 2017 and decided that REI was the right path for us. Unfortunately, analysis paralysis is real, and we've primarily been looking in the Inland Empire instead of out of state. We have plenty of capital ready for starting our journey but just need that nudge, or the right partners, to move forward. I'd love to chat more about your story or start a conversation about future investments if you're looking for additional local partners or investors.

Let me know your thoughts. Once again, stories like yours help the little guys stay motivated and encourage us to take action. Thank you for that. 

@James Gates

Thank you for sharing your journey- truly a dream to have it workout like that... really thats my actual life goal! I am still a college freshman but I’m starting early and working on getting some answers so I can jump into real estate ASAP!

With that said, I have a few questions for you...

How did you find the right partner?

How did you evaluate that house as a good one to rent?

How did you find tenants?

And lastly, what was the most difficult part of long distance renting?

I really appreciate your time. Congrats on your properties!

Thank you,

Nate

I am just starting out, recently retired and am looking for monthly income to supplement my pension. The retirement wasn't planned,job injury. 

Your story is inspirational.  I live in the Atlanta-Metro area and like most buyers do not want to be a slumlord.  My other desire is to see the not so great neighborhoods become revitalized.  

@James Gates congratulations! Thanks for sharing it is inspiring to read such stories.

Originally posted by @Nate Rogers :

@James Gates

Thank you for sharing your journey- truly a dream to have it workout like that... really thats my actual life goal! I am still a college freshman but I’m starting early and working on getting some answers so I can jump into real estate ASAP!

With that said, I have a few questions for you...

How did you find the right partner?

How did you evaluate that house as a good one to rent?

How did you find tenants?

And lastly, what was the most difficult part of long distance renting?

I really appreciate your time. Congrats on your properties!

Thank you,

Nate

 Hey Nate, thanks for the questions.

1) One of my partners I have known for ten years, and we are in the process of learning the real estate investing space together. Another partner I found locally at Biggerpockets, I reached out to  him, offered to buy him coffee, and we spoke real estate and went in on a deal together.

2) I knew from visiting the city that this property was in a good neighborhood. I confirmed my thoughts by asking around my team and contacts I had me through my visit and Biggerpockets, and they confirmed that this was an up and coming part of town.

3) Finding good tenants comes down to vetting and hiring a good property manager. One of the main functions of the PM is to find a stable and qualified tenant for your property. They need to match certain qualifications like credit score and proof  of income.

4) The most difficult part of long distance investing (GREAT question) that I have found is taking the initial leap and building up your team and contact list. Once your systems are in place, every deal is pretty much going to go through the same steps. And each deal gets easier. I hear guests of the BP podcast say all the time "no one ever stops at one deal."

James, a very inspiring story. I'm your neighbor (I live in Arrowhead) and have invested in real estate since the mid/late 90's. My place is a five-unit in Downtown Riverside which keeps me busy. Would love to talk with you regarding BRRRR investing, or anything real estate related. Will look you up locally, as I can't leave cell/e-mail.

Best,

Steve Sloane.

Originally posted by @Stephen Sloane :

James, a very inspiring story. I'm your neighbor (I live in Arrowhead) and have invested in real estate since the mid/late 90's. My place is a five-unit in Downtown Riverside which keeps me busy. Would love to talk with you regarding BRRRR investing, or anything real estate related. Will look you up locally, as I can't leave cell/e-mail.

Best,

Steve Sloane.

 Hey Steve,

That is awesome! I lived in downtown Riverside for many years, let get together and talk shop.

@James Gates Can i ask why you decided to wait the 6 months to refinance vs going to a hard money lender for a rental loan? I am starting my first BRRRR next week and do not want to wait 6 months to get my money back to buy another property, a rental loan seems like an OK way to get the money faster than 6 months, granted you pay for fees, etc.

What are your thoughts?

Originally posted by @Nate Fanara :

@James Gates Can i ask why you decided to wait the 6 months to refinance vs going to a hard money lender for a rental loan? I am starting my first BRRRR next week and do not want to wait 6 months to get my money back to buy another property, a rental loan seems like an OK way to get the money faster than 6 months, granted you pay for fees, etc.

What are your thoughts?

I had not considered using a hard money lender for my first deal, I did not have any credibility nor any contacts. My understanding is the interest rate is much higher (with points and fees), and the term much shorter. Our timeline for this property is likely around 10 years, and the low-interest 30-year fixed was very appealing to me. I also found the 6 month interim period extremely useful in stabilizing the property and getting everything running smoothly. So those 4 months where we had a tenant paying full rent but no mortgage expense were nice in setting up the reserve coffers for future expenses. 

@James Gates thanks for taking the time to answer my questions! I have yet to watch the videos-but definitely will now. I've been consumed by the endless podcast episodes during my commutes. Keep us all posted on your next projects. 

hi James, just curious, we have been asking around and almost all banks are only doing HELOC on primary residence. Who did you go to for your HELOC on your rental property? Thank you!!

This post has been removed.

Originally posted by @Jing Long :

hi James, just curious, we have been asking around and almost all banks are only doing HELOC on primary residence. Who did you go to for your HELOC on your rental property? Thank you!!

 Hey Jing, thank you for the question,

We only have a "HELOC" on our primary residence, on our rental property we have a conventional loan which we got when we "refinanced" the property after holding it for 6 months. As far as I know, HELOCs are not really available for investment properties anymore (and if they are they won't lend you very much, I have seen someone mention that they got 60% LTV, but at that amount I would rather refinance or exchange the property to strip equity).

How did you manage the renovation process from out of state?

Wow, this is very inspiring! 

Originally posted by @James Gates :
Originally posted by @Nate Fanara:

@James Gates Can i ask why you decided to wait the 6 months to refinance vs going to a hard money lender for a rental loan? I am starting my first BRRRR next week and do not want to wait 6 months to get my money back to buy another property, a rental loan seems like an OK way to get the money faster than 6 months, granted you pay for fees, etc.

What are your thoughts?

I had not considered using a hard money lender for my first deal, I did not have any credibility nor any contacts. My understanding is the interest rate is much higher (with points and fees), and the term much shorter. Our timeline for this property is likely around 10 years, and the low-interest 30-year fixed was very appealing to me. I also found the 6 month interim period extremely useful in stabilizing the property and getting everything running smoothly. So those 4 months where we had a tenant paying full rent but no mortgage expense were nice in setting up the reserve coffers for future expenses. 

 Gotcha, thanks for explaining this to me. 

@James Gates This post is out of state investing GOLD!  I'm sure your lender & David Green appreciate all of the referrals.  I'll be PM'ing you for the lender referral.  ;)  Thanks for sharing your experience as I'm sure all of your thoughtful responses took quite a bit of time.

After quite a bit of research I too landed on Huntsville to begun my OOS investing journey for all the same reasons you stated. BRRRR is VERY appealing to me; however, I had some cash saved and decided to go for a buy & hold in order to test the waters and build the team. I closed on a 4-plex in January. NOT the 4-plexes near Ascent Trail but in a nicer area of S. Huntsville. As you mentioned, MFR is difficult to come by in Huntsville. On Monday I'll be closing on a duplex in NW Huntsville that should cash flow nicely. Now that I have 2 properties and am more comfortable with the area & my team I'm definitely interested in BRRRR'ing.

Have you had any difficulty obtaining financing as your mortgage count increases?  

Thanks @James Gates for sharing. I also live in Cali and been debating how to make use of the HELOC on our primary home. Have done quite a bit of research on Huntsville and starting to arrive at the same conclusion you have, that Huntsville is a good location for opportunity. Would very much like to ask for any referrals you would recommend so i can see if i can have them as part of my team, wholesale, contractor and property management.

Thanks!!

Marcus

@James

@James Gates following up on the seasoning time for the refi that someone asked you about. Some lenders do require the 6mo seasoning period. I use a hard money lender on the front (rates are fine and added to my projections) and then my end lender locks me into the conventional 30yr fixed. My end lender looks at the HUD in advance and confirms if I need to season for 6mo or not. So far no seasoning period and he does the refi really quick. Total time is about 4-6 weeks for rehab and then approx 3 weeks to close on the refi. And my PM is placing a tenant quickly.

I usually pay out about 10-12% total ARV in the end, leaving around 25% equity and after all closing costs and paying back hard money. I like it because I can buy more-- but I actually didn't do any of the work. I work with a group that puts it all together for me and I just choose the property they have ready.

I haven't done this in Huntsville yet---- only Birmingham and Montgomery. The team that I do these with will go into Huntsville if the numbers work. Anyhow, best of luck!! Keep posting. 

Hello James,

Congrats on your success! As a fellow BP enthusiast from SoCal, I am contemplating investment in areas where market prices allow for more favorable cap rates. I am interested in how you resolved the property management issue. How are you handling it? How did you find the property management company and --if you care to share-- how expensive does it run?

Thanks a lot and good luck with all your future endeavors!

Cal

Originally posted by @Craig Drummond :

@James Gates This post is out of state investing GOLD!  I'm sure your lender & David Green appreciate all of the referrals.  I'll be PM'ing you for the lender referral.  ;)  Thanks for sharing your experience as I'm sure all of your thoughtful responses took quite a bit of time.

After quite a bit of research I too landed on Huntsville to begun my OOS investing journey for all the same reasons you stated. BRRRR is VERY appealing to me; however, I had some cash saved and decided to go for a buy & hold in order to test the waters and build the team. I closed on a 4-plex in January. NOT the 4-plexes near Ascent Trail but in a nicer area of S. Huntsville. As you mentioned, MFR is difficult to come by in Huntsville. On Monday I'll be closing on a duplex in NW Huntsville that should cash flow nicely. Now that I have 2 properties and am more comfortable with the area & my team I'm definitely interested in BRRRR'ing.

Have you had any difficulty obtaining financing as your mortgage count increases?  

 Congratulations on your closing! We have a duplex in downtown, I wonder if ours are close?

I haven't run into trouble obtaining financing yet, although that is a hurdle we are going to have to figure out in the near future...

Originally posted by @Marcus B Hsu :

Thanks @James Gates for sharing. I also live in Cali and been debating how to make use of the HELOC on our primary home. Have done quite a bit of research on Huntsville and starting to arrive at the same conclusion you have, that Huntsville is a good location for opportunity. Would very much like to ask for any referrals you would recommend so i can see if i can have them as part of my team, wholesale, contractor and property management.

Thanks!!

Marcus

 Hey Marcus, send me a PM and I hope I can help!

Originally posted by @Melissa Nash :

@James

@James Gates following up on the seasoning time for the refi that someone asked you about. Some lenders do require the 6mo seasoning period. I use a hard money lender on the front (rates are fine and added to my projections) and then my end lender locks me into the conventional 30yr fixed. My end lender looks at the HUD in advance and confirms if I need to season for 6mo or not. So far no seasoning period and he does the refi really quick. Total time is about 4-6 weeks for rehab and then approx 3 weeks to close on the refi. And my PM is placing a tenant quickly.

I usually pay out about 10-12% total ARV in the end, leaving around 25% equity and after all closing costs and paying back hard money. I like it because I can buy more-- but I actually didn't do any of the work. I work with a group that puts it all together for me and I just choose the property they have ready.

I haven't done this in Huntsville yet---- only Birmingham and Montgomery. The team that I do these with will go into Huntsville if the numbers work. Anyhow, best of luck!! Keep posting. 

Sounds like you have incredible systems in place! Did you have those systems in place from the beginning? Or are they something you put in place as your investor knowledge grew?

Originally posted by @Calin Costea :

Hello James,

Congrats on your success! As a fellow BP enthusiast from SoCal, I am contemplating investment in areas where market prices allow for more favorable cap rates. I am interested in how you resolved the property management issue. How are you handling it? How did you find the property management company and --if you care to share-- how expensive does it run?

Thanks a lot and good luck with all your future endeavors!

Cal

 We found property management companies through referrals from other BP investors in the area. For Huntsville, I have noticed its pretty standard 10% of rent collected goes to the PM company.

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