All Forum Posts by: Avery Rustad

If you go to the Network tab, you'll see a Contractors section. You just fill out what you are in need of and it will provide a list of reputable contractors. 

Many experienced investors, including Brandon Turner himself, say that the goal isn't to try to get the best cash-flow right off the bat. It's to get in the game and learn the lessons from that first property to apply to your future properties. While finding a substantially cash-flowing property would be ideal, the estimated cash-flow from this deal looks good. Make sure you run the numbers on how much that ADU would cost to build and how it fits into your grand scheme with that property. I am always down to help you out with any rehab or managing you may need as I am in the Minneapolis area for the most part. (in Chicago right now, but will be back on the 15th of August). I would love to do some free labor in exchange for knowledge and experience! Let's connect :)

Well it depends on your goals. $204/mo in cash flow equates to $2,448 per year. Personally I would be fine with those numbers. You also have the ability to to an ADU for AirBnB. That additional unit would generate even more cashflow.

Something to think about is, is that a reasonable price for the market? Or is there room to BRRRR the property? If there is room to renovate and force appreciation, I would say it looks like a great deal.

After all, you could always househack it for two years, then sell the property while not being taxed on any gains up to $250,000 to build toward a bigger deal with the added appreciation and cash reserves you've made from renting it. 

First off, yes you own that appreciation. The bank solely loaned you money, they did not lend you the home. 

To answer your second question, yes you can. You will have to refinance your current mortgage, but the FHA must approve of it first, even though you are moving to a non-FHA-insured lender.

The property manager question is very situational. If you are prepared to manage your tenants and advertise vacancies, you can easily get by without having a property manager. Property managers are great later on when you have multiple properties as they can take some of the grind out of the sport, freeing up your time and head space for other matters. I would recommend reading The Book on Rental Property Investing by Brandon Turner to further increase your knowledge. 

I am in a similar situation right now. I have built up some savings, but not enough to have cash reserves for renovations to accomplish the BRRRR deals I would like to follow. As a result, I am educating myself as much as I can to answer other peoples' questions and build up my reputation. I would recommend leveraging your knowledge and hustle to entice someone to partner with you on a deal. The terms are subject to the situation, but you may be able to work out a situation where you allow an investor to go 50/50 with you and their role is solely providing the funds while you do all of the work. This is what I am working toward right now and recommend you do the same. I would love to connect and give you my two cents on how to get where you would like to go :)

This answer can be answered from the book "Tax-Free Wealth" by Tom Wheelwright. He says that the top ten discussion pieces you should bring up are:

1) What is your view of the tax law?

2) Who gets the most advantages of the tax law?

3) What made you want to become a tax advisor?

4) What would you like to know about me?

5) Tell me about your team of advisors.

6) Describe your personal business experience.

7) Tell me about your personal investment strategy.

8) Where did you earn your Masters of Tax degree?

9) Give me three examples of how to reduce the risk of an IRS audit.

10) Tell me your thoughts about asset protection.

He goes on to state "the top 10 things your prospective tax advisor should discuss with you:

1) Tell me about your dreams and goals

2) Describe your current and projected family situation.

3) Describe your relationship with your spouse and your children.

4) Describe your current and projected investments.

5) Describe your current and projected business situation.

6) Explain your philosophy of tax reduction.

7) What would you like to learn about the tax laws?

8) How do you learn best? Auditory, visual, tactile, or kinesthetic?

9) In a perfect world, how would you like to work with your CPA?

10) Who are the other members of your team?"

Hope this answer helps! I recommend the book too :)

"Using A Lease Purchase

One way to utilize seller-financing options if there is a due-on-sale clause in place for the original mortgage is to conduct a lease purchase, which is sometimes known as a rent-to-own agreement. Under these agreements, the potential buyer agrees to lease a home at above-market rent. The purchase price of the home may or may not be set before the actual sale, and the surplus amount that the potential buyer pays each month is credited as a down payment against her future purchase of the property. After a set amount of time, the potential buyer obtains financing on her own and uses that to complete the purchase of the home. Since the change in ownership doesn't actually occur during the lease time, these agreements do not violate due-on-sale clauses.

There are many things to think about when considering owner financing, particularly if the home is already mortgaged, to make sure that both buyer and seller are protected and acting legally."

This is taken from https://budgeting.thenest.com/can-house-mortgage-sold-owner-financing-21118.html#:~:text=Using%20A%20Lease%20Purchase,home%20at%20above%2Dmarket%20rent. and should provide with you with one idea of how to get around the mortgage issue. 

Another idea would be to take the increased cashflow from those two properties and save for another down payment. Keep the mortgages running while just building your own monopoly of cashflowing properties. Putting equity into the homes is great and all because you'll receive more of a return if the mortgage is paid off, but something to consider is that if you're putting your cashflow into paying off your mortgages, you're inhibiting your ability to rapidly grow your portfolio. My advice, having read a multitude of books on REI(although not having invested myself) would be to use the cashflow to make more down payments. You're net worth will grow much quicker especially if you BRRRR the properties, because hopefully you will create tens of thousands in value after renovating and will only have put X amount of money into the deal and you can then refinance that deal to pull out equity and put it into other properties.

I seemed to ramble a bit there, but hope you find some value in my words. Would love to connect as well to stay updated on your adventure :)

Hey Everett, happy to hear about your start in real estate investing. While I am not in the Knoxville, TN area, I will say that property values are more likely to appreciate in areas with better schools. Also, the tenant pool will likely be more qualified and you will have less issues. That being said, the purchase price will reflect this. You will also want to follow new construction, residential and commercial. Big companies spend millions in research before deciding to open a store in a location, so if you see a big company opening up, chances are that area is developing. Trulia.com is a great website where you can see school ratings, crime ratings, as well as new construction. I would recommend scoping through that. Also, real estate agents in the area are going to know the most. Make sure to do your due diligence when finding the right one, but once you find one they should have the information you're inquiring about. 

https://www.budgetdumpster.com/blog/creating-a-basement-apartment/

I have attached a link to a website that should assist you in your search, or at least provoke more insightful questions to follow. Hope your situation works out :)