All Forum Posts by: Charlie Booth

@Theresa Harris

Nope, can't live off the rental income.. yet.

One mortgage, lots of equity. As indicated the rental was purchased for cash, no mortgage. 

Might not need a bank to purchase new properties, but we will need a loan to leverage equity after each additional home has been rented. This (along with savings) will support us and add to our purchasing power and you don't necessarily need a job for that loan. $300k will last. We have the experience to remodel the homes at cost and quickly if we are working together.

Others did not ask how much we would earn from the rentals. We need to be able to cover expenses and leverage equity while maintaining a positive cash flow. The rental revenue will grow over time. Our money is made from the increased equity on each property and growing a rental portfolio and income over time. The quicker we can get there the better. 

@Alecia Loveless 

Thank you for your time and thoughts! Congrats on the 8 unit property. Here are some additional details, I'd love to know what you would do!

Only one mortgage with lots of equity. We paid cash for the rental. No large monthly expenses, but health care would need to be added and of course our income would be cut.

I believe we can take out ~75% on the rental and cash flow over $500. Clearly $500 is not enough to cover income, but I believe we have more than enough saved up to get there.

Let's say we spend $60k on personal expenses and the rental remodel over 6 months. Dropping our reserves to $240k (if we are working as a full-time team it will take less than 6 months and will cost less). We make our money from fixing up homes and being able to do so without hiring help. Our focus is on $300k range so we can increase equity quickly and fairly drastically. Last home sold for $1m over purchase price. I have seen thousands of properties during my time as a broker and have the experience of a contractor/woodworker. We are comfortable finding homes off-market and for the most part can do our own inspections. 

If we cash out around $300 using DSCR that puts us back at $540k (I am being cautious with the numbers) and we are ready to find the next property for cash and repeat. Once our assets have grown we can cash out around $500k out of our own home to add to our purchasing power.

300k saved up to cover a $80k/yr job. Our expenses are covered, including the added cost of insurance, and remodel costs. The homes will take 6 months or much less (and we are past seasoning), I am being careful with the numbers already. The plan is then to BRRR-Repeat.

Okay, please hear me out.

If you:

paid cash for a fixer-upper/soon-to-be rental (property one),

~$300k saved up,

a primary residence (property two) with only $230k left on the mortgage (low interest),

and had all the knowledge and skills to remodel each home so that:

property one ARF = ~$400k (4 bed, 2 bath)

and property two ARF = ~$600k (5 bed, 3 bath)

(each home will take 3-6 months to remodel and about ~$100k total)

would you quit your demanding $80k/year career and move to invest/remodel full-time using the BRRRR method?

Additional Details:

Homes in the area cost ~$300 on average and most need remodeling, rentals are in high demand. I am being careful with the #s  - either property could appraise for more.

New to investing, but not to remodeling. Made money with serious sweat equity on past homes. Worked in residential real estate for 5 years, and residential/mixed-use rental and building management for another 5 years.

We are a happily married couple that has done many remodels together and enjoys it. We are both very skilled (framing, drywall, cabinetry, trim work, plumbing, tile, electrical, fencing +). One is unemployed/always working on a home. Quitting the day job and paying for our own insurance scares one of us. 

Any advice/thoughts are much appreciated!