All Forum Posts by: Andrew Postell

@Tim George this is the BRRRR Method forum. Not sure how many comments you would get here. I would try the "Land and New Construction" forum for better results but I also think that speaking with other investors in your market would work best. Connect with some of those Nashville and Tennessee Facebook investor groups and ask this question there since it's so market specific.

@Johann Villalvir I'm guessing you are a wholesaler? Most wholesalers provide the asking price, ARV, and sometimes the rehab amount....most of the time pictures too. Frankly, the wholesaler's ARV and rehab don't really matter to most experienced investors - because our numbers will trump whatever their numbers are. But if you are marketing a property, what you have up there is reasonable.

@Stevie Nosekabel is your company based in Ohio or based here in Texas?   I'm assuming with "commercial" you have a company and are looking for a line of credit based on the income that your company is producing?  Is that what you mean?

Jessica, Visit your local REI groups. There are many groups that meet across the country. Obviously things are a bit different right now but many are meeting virtually. Some post here on the Bigger Pockets Marketplace. Many post on meetup.com. Networking is always a great practice and you never know who you might meet there and what good information they have to share.  I mean, I know that's what you are trying to do here but if we need a plumber, or electrician, or title company, or lender - ask other investors in your market through these real estate investor groups.  Even facebook will have several groups for you to join.  Would certainly recommend visiting if one is close to you.

@Leroy K. Williams "strong" credit is a little open to interpretation but the recommendation here is to go speak with some lenders.  Having a mortgage on that home might change some of the answers so just be prepared with how much the property is being rented for, what the taxes and insurance amounts are when you reach out.  Now, how do you know which lenders are good?

Visit your local REI groups. There are many groups that meet across the country. Obviously things are a bit different right now but many are meeting virtually. Some post here on the Bigger Pockets Marketplace. Many post on meetup.com. Even facebook will have several "Michigan" or "Detroit" based real estate investor groups.  Join all of them and ask who the good lenders are.  Networking is always a great practice and you never know who you might meet there and what good information they have to share. Would certainly recommend visiting if one is close to you.

@Jason Gass qualifying for a mortgage on a rental property is almost brainless. Needing a W2 job is not a requirement. Nor is needing income at all! The whole point of a standard DSCR loan is to ignore your personal income and to use the income of the property to qualify.

Now, needing money...that's different. Needing money is ALWAYS an issue for us as investors. Even if you have a lot of money...that just means your limit is higher than others. Everyone has a limit on how much money they have. So, when we go to acquire dozens of properties we need solutions around that "needing money" thing. This is why "sub to" or the BRRRR Method or "loan assumptions" even exist - because those all solve for the "money" need. Even buying your own primary home is a strategy that many people use. House hacking too.

My recommendation is to usually focus on having a good home for your family.  School zones, being in a safe place, etc.  All of those personal needs you have - solve those first.  And then use whatever else after to invest.

Hope all of that makes sense.

@Stuart Udis yeah, 65%-70% LTV is too steep. If you are saying you are making this work then keep going with it but for most of us we don't have the capital outlay to make that work.

@Stuart Udis the reason why we don't do this technique is because lenders don't lend 75% of ARV on new build investment properties. The downpayment requirements are too steep to make this achievable. If the property is already existing, then lots of acquisition loans exist that will lend 75% of ARV and that makes the BRRRR Method achievable.

Hope that makes sense.

@Christopher Sweeney you can 100%, without a doubt, do this. If you speak with a bank that says they don't like to lend to LLC's then go find a different bank. There are tons of lenders who lend to companies on residential properties. That's the whole purpose of a standard DSCR loan. You can certainly find lending to execute on a property in this fashion.

Let me know if you have any other questions on this.  Certainly here to help.  Thanks!

@Tyler Vanic thanks for the post.  I'll answer your questions in reverse order if you don't mind.

Keep in mind that house hacking REDUCES my cost of home ownership. You will NOT cash flow on any property that you purchase. I'm not sure if anybody has said anything different to you but I need this to be your expectation. Remember, you are occupying one of the units...it would be impossible to cashflow in that scenario. Ok, maybe if you rented out each room and maybe did everything Short Term or something like that. But if it's long term renting, then you won't cashflow. But it will still allow you to afford a SIGNIFICANTLY higher price point than if you did not house hack.

So, if real estate appreciates 5% per year, then a $500,000 property will have $138,000 in additional value after 5 years. A $1million home will have $276,000 in value increase after 5 years (using that same 5% appreciation per year). The higher our value, the higher the equity gain is - even if the % of gain is equal between the properties...the dollar amount is higher on the higher valued home because the property is worth more. That's how house hacking helps us gain wealth. We certainly aren't gaining $276,000 with $200 of cashflow. So, don't sweat the "no cashflow" thing. Just focus on purchasing a good home that you feel comfortable with living in. Your commitment is to live in it for 12 months...and then you can do it again and again!

Now, what should you do?

This might be pretty difficult for someone else to decide or recommend. The thing I would encourage you to think about is that even if you do start with fix and flips...you still need a place to live.  So, the expense of having to live somewhere usually drives us to find a solution that allows us to gain wealth.  Many of us started with buying our primary homes.  It's the lowest downpayment, the lowest interest rate, the least out of pocket, etc.  It's usually a good place to start. But keep doing research and see what's right for you.

Thanks!