What to do

Question

Brent Coombs · Answer

@Chris Sukala, that logic makes sense to me! Sub2 due diligence; go for it!

Chris Sukala · Answer

@Brent Coombs we have no problem rehabbing again. We usually do everything ourselves. This time we were going to hire it all out to see a couple things. 1 the speed in which project will get done and 2 their costs. Since we both work it takes us longer to get things rehabbed then hopefully contractors will. My logic,correct me if I am wrong, but if they can get done in a month or 2 verses us 6months. We can rent out faster and the money we pay out would be less then if it took us 6 months plus and no rent yet making loan payment.

Thanks for your knowledge and comments.

Chris Sukala · Answer

@Brent Coombs actually just found it in our area we are focused in after I posted my question.

Brent Coombs · Answer

@Chris Sukala, yes, I wondered where that $30k Offer suggestion was coming from. I'm surprised it didn't make the top four of your suggested options - in fact, didn't seem to be on your radar at all. Is that because you didn't want to go to all that rehab effort AGAIN, for a (mere) $44.5k improved value, if you had to spend that extra $25k to get there? I put it to you: it was worth it. That's the very essence of the BRRRR strategy that will allow you to rinse and repeat, over and over, with no further outlay of your OWN money!

I'm very glad you: "got it"! Cheers...

Chris Sukala · Answer

@Brent Coombs ok got it. Sorry this 30k property was another piece that we are looking at is not a turnkey its vacant. If we can get this vacant piece for 30 and probably have to put less then 25 in it. We can probably rent it for somewhere around 850-950

I doubt the turnkey will go that low 30k it is however like 2blocks away from our rental that we just was appraised. It need work but they probably will not go that low.

Brent Coombs · Answer

@Chris Sukala, are you obliged to pay back the $20k in full, STRAIGHT AWAY? If not, why not pay it back on the drip feed (seeing as its earning more than it's costing)? That's what the "BRRRR strategy" is about (you know about THAT)!

Of course, if you can get this turnkey, that's advertised for $60k, for $30k, then yes, get that one!. But the way you described it, getting it for $50k when it's listed at $60k, means that it will appraise at $50k, due to that being your ARV purchase price. Whereas, in your FIRST deal, spending $30k, plus $25k on rehabbing, gave it an appraisal of $74,500. THAT'S what you want: (free/forced) EQUITY!

So now, once you've cashed-out your eligible $52k, BRRRR?...

Chris Sukala · Answer

@Patrick Liska sorry auto Corrected your last name

Chris Sukala · Answer

I'll be honest with you, do not know if I quite understand @Brent Coombsand @Patrick Lisa So what you are saying is take 25% (7500) and put down on a 30k house and 25k into the house 32500 leaving 20k available to pay off remodel from previous home. Right? sorry if I seem naive I just want to understand completely. Is this what your guys are referring too.?

What do you mean about if cash flowing I would not have to pay back 20k completely?

After loan of the 52k, which we included mortgage, taxes, insurance, plus the water it looks like about a 20% cash flow about 150.00

We did find a house hopefully ,still available, that if I can get for 30k when done will be able to get around appox. 28% and if I can get taxes reduced would be hopefully upwards of 35%.

Patrick Liska · Answer

I have to agree with @Brent Coombs on this, take his option. I think the way you are looking at it is that it is ready, no work needed and is 5,000 less than what you spent on the 2nd one. You will be tying up your cash, better to do option 5 and invest that 20,000 into a deposit for another place, as long as you cash flow on the 3rd property, why not take the money and keep going.

Brent Coombs · Answer

@Chris Sukala, Option 5: once you receive $52k cash, buy a DIFFERENT home for 30k, (put ~$25k into it) with 25% down and finance the the rest.

This turnkey you are proposing looks to be about a $15k WORSE deal than your first one. You can see why, right?

If it's cash flowing and you are not REQUIRED to pay back the remodelling cost in full, and it's fairly standard interest rate, you would still have $20k in your pocket! If ONLY you could think of something you could do with that...