Brandon and David: Ask Us Anything Podcast!

186 Replies

@Brandon Turner @David Greene

1) For BRRR deals, what are your favorite, widely available materials and suppliers? (Also, they should sponsor this podcast episode, haha.)

2)      I've read Brandon's, David's, and J's (excellent) books, so I know good rehab estimating principles, and would be interested in some personal anecdotes and detailed examples, to help put things in context. I will be leaning heavily on a GC for the detailed rehab estimates, based on a scope of work that we'll collaborate on. What I'LL be doing are the quick-and-dirty estimates before I ever send him the deal, though... Sometimes just from photos. Clearly practice makes perfect, but if I can learn from your experience, it could save me some grief!

3) I like the book "Make It Right" by Mike Holmes and think anyone aspiring to do reno projects would benefit from reading it. But… The book is targeted toward normal homeowners, so some of his recommendations would not pay for themselves. What do you think of the following? When would they be worth it for a BRRR investor – if ever?

a.       Kitchen/bath cabinets. When installing new ones in a gut reno, run the finished floor all the way underneath them, so if there is a leak, if flows out and can be seen and fixed, vs. soaking into the subfloor and rotting it.

My comment: Most production homebuilders don’t do this, because if anything goes wrong with the flooring during the later stages of construction (tile crack, blemish/scuffing, whatever), it’s much more expensive and time consuming to fix it after the cabinets are installed on top. In a rental, I can imagine the same issue if a tenant breaks a tile. Plus, if there’s a leak, it’s still not guaranteed you’d find it with the finished floor in, especially if there is a slight backward slope to the floor.

b.       Kitchen/bath exhaust fans.Don’t buy a $50 exhaust fan for the bath or kitchen. Splurge on a $500 model with a stronger exhaust and vent it all the way to the outside of the house, to avoid future repairs caused by excess moisture and mold.

Worth it? Would you only do it if you’re redoing the bath, or would you do it even on a “paint and carpet” rehab, to protect your investment from sloppy tenants? I guess this is a 2 part question in terms of (1) the expensive fan, and (2) venting it to outside the house, if it's not already. Maybe only on a gut rehab?

c.       Finished basements. He lays out in great detail all the ways people screw them up, resulting in leaks and mold. To be safe with anything except a fairly new house, you’d really need to excavate around the house, parge the outside of the foundation with an asphalt/tar product, install a dimpled plastic membrane over that, and then on the inside, fastidiously install rigid foam on the floor and walls, spray foam/tape all seams, etc… Then frame, then drywall.

Seems ungodly expensive. I like his solution, if it’s done by a normal homeowner as a labor of love and money is no object. I cannot imagine it ever being cost effective for an investor, even if you’re adding an extra bedroom or unit! Have you ever finished a basement for a rental? Did it work out in terms of cost, payoff, and nuisance factor? What about long term? Any leaks or mold issues?

d.       Moisture barrier systems for tiled showers. He recommends the Shluter Ditra/Kerdi systems plus their pan assembly kits, to minimize leaks and mold. They seem cool. Not sure what they cost. Any thoughts on these systems or others that you like to use?

A lot of these questions overlap with J's book, so I'll post this on his thread, too. If I'm lucky, maybe we can get a little healthy debate going. ;-)

Thank you @Lukasz Boczniewicz for this.  I just need to find out what a promissory note is and who/how I would secure it.

How to Scale after 5 Rental Income Properties?

I just started listening to BP Podcast a few months ago after completing the Rental Income Podcast with Dan Lane. I am enjoying it and listen while I am running or traveling. I am in the process of buying my 4th home. I have Multi Family and Single Family homes and I work full time where the pay is way too high to walk away. I say this because I now live in AZ where I have properties (Turn Key) and also in OH where my projects are intense - In OH, I am long distance BRRR'ing and long distance land lording which keeps it fun!

In regards to funding, I am using my HELOC account for the down payment. I have been saving up for 20% down payment and then buying another property. I plan on doing this one more time next year, but then after I acquire 5 properties it will be hard to acquire more due to my debt/income ratio even with an 814 credit score and no debt other than my rental income properties.

I have a serious capacity for stress and risk. I stay extremely aggressive in work, investments and in life! With the stock market being extremely volatile, just like many of the members in the BP Community, is the reason why I love real estate so much! With that being said, I wanted to reach out with my question:

After I acquire 5 properties (where my goal long term goal is to acquire 10), do you recommend paying off the 5 for a year or two until the market correction unfolds or look for other types of funding? In order for me to scale outside of just being a sole individual real estate investor, I would need some guidance on partnerships and outside funding as I have been using traditional financing.

Please send me your recommendations as I am reading lots of books and articles and networking to add more weapons to my tool belt over the next 5 years!

Thanks,

Jared

@Brandon Turner

What is your best advise to proceed investing in very expensive market like Sydney where prices are now going down. I'm from the Philippines and migrated to Australia and would like to start investing here. Please give some tips to proceed. Thanks very much!

@Brandon Turner I went to a seminar that was talking about a 453 instead of a 1031exchange and they said it defers taxes for 30 years. I don’t know anyone who has tried this new tax strategy before and it seems risky but the tax guy said it is a better option so you aren’t forced to buy something you don’t end up wanting to own. Can you go through the pros and cons of the 453 tax deferral strategy?

@Steven C Kelly  Yes. Thank you. I prefer to listen while I'm driving. Podcast Addict is working great and I like it better than Google Play! 

@Jared Smith

You can do a refi out with a commercial loan on all five properties as a bundle and start over, or you can move to commercial loans for your next properties individually. Or you can get hard money loans or even private funding. You can also do owner financing. I suggest you go to your local REIA group and you'll meet lots of people there who can help.

When looking for an accountant what are certain questions to ask to make sure you're getting someone who is good with real estate taxes?

After self-managing for +6 yrs. I have officially hired my dad who loves it (believe it or not)! In the Cleveland Market, I am having other investors/friends/colleagues reach out on property management. Outside of the standard 10% monthly rate and 1 month's rent for landing a showing, what are some good ways to structure a property mgt contract? such as hourly rates or flat rates for management, projects as well for overseeing contractors?

Also, do you recommend accepting CMHA - Section 8 Housing?

Please and thanks!

Jared

Hello Brandon!

What are the biggest differences, economically and culturally, investing in Hawaii versus investing in the Pacific Northwest and what was the biggest adjustment you had to make? 

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