All Forum Posts by: Brenden Mitchum

@Drew Steusloff

@Account Closed is absolutely correct. If you really want to find home run deals, the MLS is not the place to look at this point in the cycle. But don't worry about not being able to finance those deals. Instead, ask yourself how you can. Peter mentioned just two of many creative strategies. Then when you find someone who is open to selling you can provide them with multiple options.

However, don't discount on-market deals entirely. House hacking is still a viable strategy there. Small MF, while slowing down, is still pretty hot and difficult to house hack successfully. However, there are a number of SFHs that have potential, namely the ones with mother-in-law suites and other additions. That being said, now is not the best time to look for roommates to share common spaces with so that is something else to think about. I am also seeing some potential BRRRR deals on-market. The problem with these is that third "R." Lenders are really tightening up refinancing right now, plus know one really has a good idea of where the market is going to be in 6-12 months when you're looking to get that refi. With so much uncertainty around refinancing, I'd recommend tightening up your criteria for BRRRRs and accounting for this uncertainty. Also, start a line of communication with your lender(s) now, if you have not already, regarding refinancing.

I know we already got a little chat going, but I'd be happy to discuss these topics too with you if you'd like.  

Hey @Sardar Mustafa Khan!

I'll briefly touch on each of your questions here in hopes of providing some insight.

1. The reason your buyers are now looking for extreme discounts is to offset the potential dip in values coming. The mortgage market is pretty out of whack right now and last time that happened we saw values plummet. Any flippers and BRRRR people out there are looking for larger discounts to hedge against this. Both of these models completely rely on that ARV, whether to sell or refinance. So if prices drop by 20% mid-flip then they will have needed to bought at a 20% discount from their typical target to still get their target returns. That being said, short term it's really hard to tell what's going to happen with prices (they are still going up in my area).

2. Cash buyers preferences have changed for the same reason I listed above. Most "cash" buyers are still borrowing money, whether it's private or hard and they definitely don't want to get caught in a contraction with a 12 month high-interest loan on their hands.

3. Obviously with future values so uncertain, the safest strategy at the moment is to focus on cash flow. Now, more than ever, appreciation is a guessing game. Many investors are aware of this so it's not surprising to see a shift in focus to cash flow. Who cares if values go down as long as you're cash flowing. You can sit on a property that is underwater as long as it cash flows.

4. As a new investor, I am hyperaware of these facts and am significantly tightening up my criteria in these times. Cash flow requirements for me have gone up to take into account potential rent decreases and vacancy increases (short term) and I am no longer looking for anything that needs significant rehab or a refi. I do believe now is a great time to get debt, while it is cheap, so I am still looking but with a more skeptical eye.

Hope that helped a bit! If you have any other questions or just want to chat, feel free to message me anytime!

Hey @Francisco Arias!

First, I would ask if you have spoken with your gf about this? Is she onboard with the house hack strategy? If so, it all comes down to the numbers.

What is your cash flow after factoring in rent if you buy an investment property down south? Now what is your cash flow if you house hack up north? You will also want to look at your ROI in both situations. They may be similar due to the price differences between north and south Jersey (I am not sure), but a huge benefit to house hacking is that low-down mortgage you can get. After you get these numbers, the decision should be fairly easy granted you are both comfortable house hacking. If you are unsure how to get these numbers or just want someone to double check them, feel free to shoot me a message anytime. I'd be happy to help!

Hi @Mohi Naamani, welcome to the BP community!

Yes, finding a mentor is a great way to get started. However, it is not as easy as simply asking some seasoned investors and hoping one says yes. The best way to find a mentor is organically, through networking. Yes, this can be tough right now with social distancing, but you can start building these relationships with local investors right here on BP. Reach out and see if anyone in your area is currently working on a flip. Find out how you can add value to that person. Maybe they just need someone to go take pictures of a property because they do not want to leave their house. Now is not the best time to get involved in flips as a newbie, but it is a fantastic time to learn everything you can. So my advice would be to focus on networking and educating yourself so that you are prepared to capitalize on the opportunities to come. It is also a great time to start making some goals and building a plan for your investment career. 

Hope this helps a bit! Please, feel free to reach out to me anytime if you have questions or just want to chat! 

@Adah N.

Now is a fantastic time to be educating yourself and building that network so you are definitely on the right track!

Great advice @James Wise! She will definitely want to set some goals and determine what strategy or strategies will get her there. Maybe she wants to invest herself so working with investors may not be a bad idea. Or maybe she just wants to maximize her income, in which case she'd want to focus on listings. 

@Tony Stone I look forward to speaking with her!

Hey @Jake Beauchamp!

This is likely a typo or perhaps the ratio is based out of 10? so 3 to 6 would be 3/10 to 6/10 which would be 30% to 60%. Although 60% is too high. But no, lenders would not require you to have a DTI of 3-6% as far as I am aware. That would not even allow you to have some credit card debt. Can you drop in a photo of the passage?

Hey @Tony Stone!

It sounds to me like what this group wants is a well connected agent. So that's what she needs to become. So her first steps should be to build that team they are looking for; find some rock star lenders and contractors. The last thing she should do is call a bunch of agents to figure out what she should say to the investors to come across as being more experienced than she is. Any investor will quickly figure out she's not being honest and that will end that relationship real quick. 

That being said, she will also want to do some research on what makes a good flip because these properties often don't even make it to the market. She'll want to get familiar with REOs and HUDs because these often need some work. Adding to that, she should get really knowledgeable on the pre-foreclosures and short sales process as these strategies will be very important in the months to come. Really as long as she finds a way to continuously add value to these investors she will be just fine. And if they decide to go with someone else then at least she has put herself on the right track for future investor clients.

If she does join BP, have her message me and I'd be happy to answer any questions she might have.

Hey @Jess Thompson!

Absolutely love your story here and am a bit jealous but hope to take some pages out of your playbook! Would love to do a van conversion one day and spend some time driving around North America. I'm also big into climbing so love the idea of climbing all over the world.  

Is your plan to build a portfolio of cash flow rentals to support that traveling climber lifestyle? Would love to connect and chat more about your experiences! I think we have quite a lot in common.

Hey @Adah N.!

Now may not be the best time to get started in the flipping business. Even the author of that book you're reading, J. Scott, said it himself on a recent BP podcast episode. I believe his words were something along the lines of, "Do not getting into a flip right now unless you are an expert" (he even claimed he did not know enough to do so). Obviously, a lot of investors will preach that you can get into real estate at any point in the cycle. However, you just need to be careful about which strategy you use since certain ones will work better at different points in the cycle.

That being said, I don't mean to discourage you are add to the many obstacles you'll face to get into the game. I just hope to be a voice of reason, or devil's advocate, whichever you like. You can absolutely still make a flip work right now since real estate markets move quite slowly. You could very well get into a flip and get out in 6 months before prices begin to drop. With all the money the fed plans to pump into our economy, prices could definitely stay where they are at or even go up once people return to work. Prices could also plummet in a few months when many are still not back at work and we have more fully realized the full effect this event has had on our nation's GDP. The problem here is just that you really don't know, nobody does. That doesn't mean be fearful but you will just want to factor this uncertainty into your math and be extra conservative. If prices drop by 20% while you're in the middle of rehab, will you still make money? Do you have more than one exit strategy?

Hopes this helps a bit and I am not coming across as overly preachy. Feel free to message me anytime if you have other questions or just want to chat!