All Forum Posts by: Ben Firstenberg

All you've described here is a bare bones overview of a typical BRRRR deal. Could've been written by ChatGPT

@Michael Dumler is right, there's a lot more that goes into a successful BRRRR deal.

Qualifying for the loan will depend on your credit and income. FHA won't like that you have your own business (even though it's a great achievement). You may need to consider asking your parents or others to cosign on your loan to help with the credit/income aspect.

For now, I'd focus on building up your savings and keeping your expenses as low as you can. House hacking is as much about learning to live with less as it is buying the house and renting the rooms/units.  

While you're doing that, spend time looking at the homes available in your area. Try to get a good sense of what good deals look like and what kind of deal would be best for you. That is, do you want to renovate, or buy turnkey? Do you want a house with 5 bedrooms, or is a 3-4 unit better? Get an idea of price to rent ratios and try to learn the market as much as you can. That way, when you have the money and the credit to buy, you'll be ready. 

Hope that helps. I know it's "boring" advice, but real estate is often boring

If you're looking for a full time, hustle hard type of job, I'd definitely recommend becoming an investor's agent. You will see so many deals,, build extensive connections and get hardcore experience at building a business. Once you've done all of that, real estate investing will almost seem easy. 

The same is true of working for a GC (or becoming one), although your experience will obviously be more related to the physical aspects of the house. 

Property management is a solid option for sure. Good PMs are always in demand. That career is more about building solid systems than anything else. I personally wouldn't recommend it, as it's a high volume, low margin type job, but for some people it's perfect. 

Most of all, I'd recommend NOT pursuing a salaried job. You have plenty of cushion it sounds like, so now's the time to go for it. Whatever you do, build a business. That will be the most valuable to you. 

Hope that helps and best of luck

It varies client to client. Some people want "just sign here, this is an awesome deal" other people want to be much more involved. 

In my experience, a good agent can read the client and see what they're REALLY looking for. 

When investors are looking for an agent, they want someone who understands how buying rental properties works, ideally owns rentals themselves and has the connections to make things happen. You don't need to know 100 contractors and lenders, but 2-3 of each that you know and trust goes a long way. They don't even have to be the "best" necessarily, they just have to be good, reliable and honest. 

Hope that helps!

Interesting dilemma. If I were in your shoes, I'd be thinking "Do I still have faith in this investment?"

When you bought the house, presumably you liked the location and the long term potential. Has that changed? 

The repairs you described do seem extensive, but for a property that you have faith in for the next 10-20 years, it doesn't seem unreasonable. 

If you don't have faith anymore, or think the investment has reached its highest potential, regardless of the repairs or anything else, I would sell. 

Very sad to hear this. 

I hate to say it, but for people in these circumstances, buying a house may not be a smart choice. If stuff starts breaking, they could really be in trouble. Not to mention the cost of homeownership is very high right now. I'd love for them to buy something too, because it sounds like they could really use some stability. Just not sure if it's a smart play at this time. 

I'd recommend to keep looking and looking for apartments. Under fair housing laws, you can't discriminate by # of children, so anyone who's doing that is acting immorally and possibly illegally. 

I'm not sure how close you are with this family, but possibly you or someone else with good credit could cosign for the loan? If they have good income and the money for a down payment, all they really need is a cosigner. 

I'd also check out the section 8 programs where you live. Not sure if they'd even qualify, but it could help with finding bigger homes to rent?

The principles, values and morals he discusses are very good ones. 

His hard line stance on debt is admirable as well. I think it's necessary for him to have a "no exceptions" policy because if he allows debt for real estate, the flood gates will open and people will be borrowing money for all kinds of "investments" and saying that he said it was okay. 

Truth is, you may not ever get RIDICULOUS wealth if you follow his plan, but you'll almost certainly be alright. You'll retire with a paid for house, kids college paid for and a nice nest egg. All admirable things. 

It would also be hard for Dave to say "you can use debt for mortgages on rental properties" because then he'd have to explain all of the rules and pitfalls involved. It's a lot simpler this way. 

That said, if you're willing to put the time in to understand how to use debt for rental properties, I don't see anything wrong with it. 

From my perspective, it comes down to the fundamentals. 

Creative financing -- you're looking for sellers in very specific circumstances where they'll consider sub to or owner financing or whatever else. The vast majority of sellers just want to take their money and be done. It's a very high volume, low results approach. 

BRRRR -- you're buying a distressed property and adding value to it YOURSELF. You have a lot more control over the investment, you're in the driver's seat. With creative financing, you're not really adding value, you're just capitalizing on specific situations.

Interesting point. In an ideal world, you're absolutely right. But this is highly specialized knowledge and not something you want to skimp on. For the first 3, 5, 10 deals I think best to leave it to professionals. Learn how they do it and what they look for. After that, maybe try on your own. It's certainly a great goal to aspire to!

Hello all, 

For all the great content on here, I sometimes feel there could be more information about what happens between making an offer and closing. So here's a quick overview:

After the offer is accepted, due diligence begins. Due diligence is when you conduct your inspection and invite any contractors to the property to quote repairs/renovations. The buyer pays for the inspection and it typically costs $400 or so. If the inspector discovers major issues, you may want to ask a contractor to quote those repairs. Due diligence lasts for as long as stipulated in your offer. In the state of Georgia, a buyer can back out of the sale for any reason without penalty as long as it's during due diligence. 

If you discover problems during due diligence, you may renegotiate with the seller and ask for a price reduction to compensate you for the issues. Most homes have at least a handful of minor issues, so don't expect to get reductions for every little thing. Focus on the big things: roof, HVAC and foundation. Most homes (especially investment properties) are sold "as is", so it's typically a win to get any reduction at all. 

After due diligence comes the financing and appraisal contingencies. The lender will be underwriting your loan, checking your credit and ordering a property appraisal. Your agent will be coordinating with the lender to make sure everything is going smoothly. There isn't much for the buyer to do during this period, but you may be asked to provide information to the lender. Make sure to get them this information as quickly as you can. Brandon Turner has a rule that information requested by the lender is top priority. 

Lastly, throughout all of this, the closing attorneys will be preparing the deed and verifying the property's title. Their job is to make sure ownership is properly conveyed from the previous owner to you, the buyer. They will also prepare the legal documents that set up your mortgage. Again, make sure to provide them whatever information they request. 

One thing I learned the hard way: make sure to make it very clear to your agent, the lender and the attorneys that you will be purchasing the property in an LLC, if you choose to do so. They will likely assume you are putting it in your name unless you specify.

Hope this helps someone out there. Happy to go into greater detail