All Forum Posts by: Aaron Cullen

@Medi Sarwary

Hard Money: 10% annum with 2pts

Reliable Contractor: YES, that would be one of the key team members you'll want to find. I source mine from my network so I know they have a proven track record.

@Medi Sarwary If you haven't already I would suggest reading some books that go more in depth about loans and utilizing the BRRRR method. BP has a few of them. It's a very powerful method but you need to understand it and have your ducks in a row before you purchase the property. It's actually pretty simple, but you just need to know what you are doing at each stage. Have the plan laid out.

The whole point is to get your money back out and still positively cash flow after ALL expenses. Not every deal will work, in fact most deals probably won't work. If the deal works better for you to leave some cash in to give you more cashflow you can certainly do that. What ever works for you, everyones wants and needs are different. Some people are afraid of too much leverage and others want as much leverage as possible to maximize ROI. Figure out your comfort zone and go with that at the beginning until you get comfortable investing.

@Medi Sarwary I can share with you my experiance doing the BRRRR method (Actually I do a slight variation, the BARRRR method (A=Advertise, you do this for tax write of purposes if needed to write off more of the rehab cost right away. Everyone is different).

@Brandon Hall wrote a book with that method in it. 

I usually buy properties that are distressed to the point that they will not qualify for conventional mortgages. So I get a fix and flip loan from a hard money lender that covers the purchase price plus usually around 1/2 of the renovation cost. Then I put my own money in to cover the rest. I will then fix up the property, rent it out, and do a cash out refinance 6mo after purchase. This pays back the hard money and the money I put into it. This is the main reason to do the refi. TO GET YOUR MONEY BACK so you can DO IT AGAIN. That's the last R, REPEAT. 

The power of the BRRRR method is enabling you to recycle your cash over and over, adding more cash flowing assets each time. If it won't cash flow, I wouldn't do it.

@Mike V. that's awesome. Great work AND a great location! I would love to do a BARRRR there. Sounds like you able to get the higher appraisal (and get all your money out) partly because of appreciation and not strictly due to the rehab you did to the unit. Is that correct? 

Would love to hear a little elaboration on that and what your original projection was for cash flow? I'm assuming you did a refi (2yrs later) because of the mass appreciation which we know can't be counted on. 

I only ask because I would like to buy one there at some point ;-)

@Robert Gati

That is one of the tricky parts to control. I use a 2 prong approach. If you are making MLS offers you don't have to have the contractor go by to make an offer. Depending on your market, you might not get the offer accepted or countered if you are offering a lot lower than list. I just take an educated guess on Reno and make the offer (this gets easier as you get more experience). If they counter or accept THEN have a contractor go out and get a bid. You can also ask your agent or PM what they think could be a Reno estimate if they have been to the property. This only works if they have experience with investors doing rehabs but at least it gives you a ball park figure until you get better at estimating your self.

If it is an off market deal then I have a contractor go out immediately. 

Some contractors will also charge you for a bid, you might offer to pay a fee for them to go out and give you a bid to compensate them for their time. That might make all parties feel better about the transaction. 

I usually get 2-3 bids per project to compare.

@Christina Kim Hello, first I would double check all of your numbers to make sure they are accurate. For example, what your rent would be after renovation. Have you verified this with a couple PMs? and also taken a look on Zillow/Craigslist to do rental comps.

Also where exactly is this property? Fountain Square or something like it? 

what level of rehab do you plan on doing? Is it just cosmetic? or down to the studs?

I buy and hold utilizing the BARRRR strategy in and I do SF flips in Indy. I might be able to give you some more feedback with more details to go off of. 

Best of luck!

@Ethan Perkins That BRRRR Calc can be confusing...

Hello @David

@David Schnaak

@David Schnaak Welcome to BP. I'm also an out of state investor investing in the Indy area. Hit me up if I can be of any help. My wife's family lives there as well so we are always out there. Best of luck! 

@David Hammill

I concur with Bill F., You need to budget way way more for CapEx and Repairs and Vacancy probably as well.

Is it freshly rehabbed? if so I go with 8% CapEx, 8% Repairs, and 10% Vacancy for a 4 plex. If it is not rehabbed recently you need to budget more for CapEx and Repairs.

What's the address?