All Forum Posts by: Aaron Millis

I agree with everything @Tim Herman said.

I've notice a lot of people get caught up in the " I need to build my business" or " I need to build my team" mentality before they have even done their first deal. The thought of having a well run business with an awesome logo and a bunch of team members is enticing for sure.. but in my opinion its not something you should really be worried about right now. 

I'm still relatively new to REI. I've purchased 2 properties so far and have yet to make an LLC, or form a team. But I have made some money and I've learned a TON. Much more than I could have learned from just reading RE books/listening to podcasts. You've got a full time job so that's a great start. I'd say figure out what kind of investment you want, get pre approved, and take action!

Hey Clay,

Congrats on your first property! A popular theory I've heard around here that makes sense to me is to fix up your unit before renting. That way you can take care of any deferred maintenance, possibly command higher rent+ a more desirable tenant, and budget less for repairs/cap ex because (in theory) you just fixed everything.

However at the end of the day I think the most important factor is going to be your financial situation. Fixing a home up is first great and all, but does it beat getting a tenant in immediately and getting that rental income to help cover your mortgage? Only you could answer that.

I'd say if you can easily make your mortgage payment by yourself and have the capital to fancy up the place go for it. Otherwise get a tenant in there asap and take care of the luxurious stuff later.

Hey Neel,

My best advice would be to just spend the extra money to get a structural engineer to inspect it and give you his/her 2 cents on the condition. I bought my 2nd property earlier this year that I'm currently working on. It had a several signs of foundation issues to include cracked driveway, cracks in the walls, and somewhat uneven floors etc. I didn't know how bad it really was so I just paid the local structural engineer to inspect it and he concluded that it was all cosmetic and that the house didn't even need foundation repair. I have not finished the project yet but I think that his letter will help ease the minds of my future buyers. 

Also it's worth mentioning that foundation shifting is very common in my area (Montgomery), so people are probably more used to it and it won't be as big of a deal as it would in other areas. I'm not sure if that's the case or not in Huntsville.

I don't necessarily regret buying this house with it's foundation issues, but my biggest mistake was buying it for too much which I'm realizing now as the numbers add up. That doesn't really have anything to do with the foundation but more of me just being new to this like you. If it's got issues I would use that to make sure you negotiate a price that works for you.. don't feel like you HAVE to buy it just because you can!

Well done man! Sounds like you learned a lot along the way + you made a nice profit. Keep killing it

That's awesome man. Keep crushing it

Hey Charles,

I know nobody likes hearing this answer but.. it depends! I personally don't plan on renting in the near future. I lived in my first investment property as a "house hack". Now I'm currently doing a "live-in-flip" and when I sell (or rent) this house I will move into my next investment property- preferably multi family.

I personally am doing this because it's pretty easy for me. By that I mean I'm young and single with no kids. I don't mind living in a construction zone or living with my tenants if it gets me where I'm going. Not to mention that its easier for me to get a loan when I move into a house IE: lower down payment/better interest rate/long term fixed rate financing. 

Also being able to get loans is muy importante to me- and debt to income ratio is a big part of that. If I were to rent a house now that would just hurt my DTI and keep me from where I want to be. Same thing if I were to finance a car or something like that.

As I get older and progress with my investing I'm sure I could end up renting. But for now it's cheap used cars and house hacks.

Hi BP,

So here's my situation: I have a rental property that cash flows well and now has a nice chunk of equity (thanks to appreciation). I'd like to do the BRRR strategy and do a cash out refinance so I can use the money for more real estate investing endeavors.

The property is worth 170K - I owe 103K- and I put about 25K into it... between a down payment, closing costs, and rehab.

I'm still talking to a bunch of different banks/credit unions.. but the general feedback I keep getting is that I can only get 75%LTV. Long story short- thanks to the property being an investment property/a condo/and my below 700 credit score - I would only be able to get back about 16K cash... and on top of that my interest rate would be considerably worse. It's at 4.375% right now making my monthly payment about $730. If I do the refi I've been told it would go up to like 5.8% which would increase my monthly payment to nearly $1000 per month. As terrible as that sounds my rent for the property is $1700 a month. So the higher payment would hurt but it wouldn't kill the cash flow.

-On the other hand I have owned and lived in this property for 2 years so, if I'm correct, I know that means I could sell it and not have to pay taxes on the profit. I know I could sell this home pretty quickly with very minimal effort.

I don't actually want to sell this property because it's a great rental, and I never really seriously considered it until now. But it just seems like a waste to have so much equity in the home that's doing nothing for me!

I'd love to know what any of you other investor/landlords might do in my situation. Thanks!

@Clint G. I'm not sure what its like where you are located, but where I am there is a Structural Engineer that does inspections for most homes with foundation issues in the area. I had him come out and inspect a property that I ended up buying. His inspection basically stated that the foundation issues on the property were all cosmetic and that didn't impact the property. This is stuff like cracks in the walls and ceiling, and cracks in the driveway. Apparently the soil in my area is famous for moving around causing a lot of foundation issues for homes. You'd have to search hard to find a driveway without cracks and uneven parts in my neighborhood, but its still a nice neighborhood.

I looked up a few homes that were comparable to this house that had sold withing the last 6 months on the same street. All sold for a price that works for me, and all had uneven driveways etc..

So in my mind I have a home that I got for a great deal, with a foundation inspection letter from the guy who is the subject matter expert engineer, and I know that most homes in the area are in the same boat as me. 

Only time will tell if I'll actually be able to sell it, so I can't call it a success story yet, but I feel good about it for the reasons listed. So I would say make an offer, get an inspection, and learn the area.

Good luck!

@Jordan Kalk My 2 cents is about the same as everyone else here. I'd say you are already thinking too much if you're wondering about LLC's. Depending on your debt to income ratio/credit/etc you should be able to qualify for a mortgage from a bank in your name. I see a lot of people go get business cards, LLC's, and all that without actually pulling in any deals and it just seems like a waste of time and money.

If you only have enough for a down payment I'd say keep saving up so that you have some reserves in case something goes wrong. That or negotiate a more affordable deal! Either way good luck and welcome to BP.

Hi BP

I am contemplating purchasing a flip property that has extensive fire damage on the inside of the home. It is a brick 1 story home on a concrete slab. I've been in the property (With a GC) and 99% of everything in the house was destroyed by the fire. So the job would be a complete gut and basically a new home for the inside. However foundation-roof-and all of the beams running through the ceiling/attic appear to be fine and untouched by the fire. The GC has handled fire damage jobs before and guaranteed me he could do the inside of the house (and fill in a pool in the backyard) for 100K

The numbers

Purchase $10K Rehab $100K ARV $150K

I have the money for the purchase and some of the rehab. I've gotten the green light from one hard money lender to finance the rest- and I am waiting to hear from a local bank and some investor friends that would offer better rates. I am still waiting for an insurance quote to have all my numbers to completely analyze the deal.. but I have the general picture down its looking like after everything I would have around a 25K profit.

Pro's in my mind=

-It's a complete renovation so I feel like that would cut out the "unforeseen issues" factor.

- I am very confident in my ARV estimate because I just bought a home on the same street a few houses down

- I will be a real estate agent by the time I would go to sell this house so I could save money/build my network etc..

- The home would likely not be hard to rent, it's in a great neighborhood

Con's in my mind= 

-Its a huge project and I've never handled a straight up flip project let alone one this big. I'm not scared to take it on but I'm worried that might be more because of my personality and not because the deal is so perfect. 

- I know next to nothing about fire damage.. this is why I searched for a while to find a GC who knows a lot about it.. but still seeing the entire house look like burnt toast is daunting. 

If anyone has experience with a situation like this I'd appreciate the input/advice. Thanks!

Aaron