All Forum Posts by: CJ M.

@Will G.

Well, you can just ask @Grant Cardone

He's on BP

@Ashley Petersen

Hi Ashley, this is very tough to answer, but I'll chime in as I've done what you're trying to do (with less than $60K and in less than 2 years). As @Joe Villeneuve (who has great feedback on BP) said, there are many different ways to accomplish your goal. You really need to put critical thought into which path you want to take...then work to master that path.

Honestly, I feel like I'm still a novice (and suck at REI some days lol), but here is what worked for me:

1. MENTORS AND INDUSTRY COLLEAGUES: This was the most important part for me. I was blessed to find a great support system, and actually acquired a number of deals from these generous people. Without having folks like that, I probably would have failed. Seek out those who have already done what you're trying to do and study them, copy their systems, and most importantly add value to them! There is no such thing as “self-made.” You cannot succeed alone, and you need a team or support system.

2. LEVERAGE. I had a job, and 800+ credit (and some cash saved up to purchase properties on the front-end). This made financing much easier!

3. PORTFOLIO LOANS: I did not use any conventional lending as it slowed down the process for me. I used portfolio loans and private money.

4. RELATIONSHIPS WITH LENDERS: You have to make calls, meet with lenders, and earn their trust. They don't have to loan you money if they don't like you.

5. BRRRR: This was my starting point and allowed me to recoup over 100% of my initial investment on one of my first rental properties...which I then recycled that capital on other properties. And repeated the process.

6. WILLINGNESS TO TAKE RISKS: I made offers on deals that I knew were good, but I was scared. I borrowed money from family and on my credit card. I spent nearly 100% of my capital on multiple occasions to fund the next deal. Was that smart, maybe not, but it worked for me due to having relationships with lenders and being able to quickly recoup/refi my investments. I’ll also add, people will take you more seriously when you’re out in the world “doing things” and not “talking about things.”

7. FRUGALITY: 100% of every cent I generated from my business went back into my business

8. LUCK: This might sound silly, but there is a component of luck that often happens. For example, living in a part of the country that has cash flowing properties, meeting people most would not have had the opportunity to connect with, finding deals, etc.

9. OBSESSION: I'll end with this one. I think a person's mental willpower, tenacity, and determination is something that's not discussed enough, but is the unsung hero in most professions. Honestly, I'm crazy! I obsess about REI and financial independence every single day. It's always on my mind. I've made the mental decision that I will succeed, and no one will stop me. Study often and frequently. Listen to podcasts, read books, network, join your local REIA, ask a sh******d of questions, and move forward! Always ask yourself "how bad do I really want this?"

I just want to conclude by saying that what I did may not work for everyone, in fact some may disapprove of some of the things I did. Only you can decide what path is right. Wishing you the very best of luck and success!

I've heard the horror stories on here about squatters and how people have needed to go throughthe eviction process, even though there was never a lease in place.

Might be a dumb question, but at what point does a squatter or thief, or someone who shouldn't be at the property, have legal rights to the property? I'm sure different states have different laws, but say for example someone breaks in to a vacant property. If the cops come, can they simply say "I live here?" Or if you walk in to a vacant property to rehab it and a squatter is there? Can you call the cops? Or do you need to post a notice?

@Andri Grullon

Interesting. I recently when into Huntington Bank where my HELOC is from, and flat out asked them if the line could ever be recinded due to coronavirus, market values, etc. They said no, it's guaranteed for use for the life of the line (which is 10 years). I'll need to go through the fine print of my agreement one day to confirm, but my question to you is, are you sure they could eliminate your HELOC out of the blue?

@Hud Malik

Run the numbers on a deal. All it does is shift money from your pocket to out of your pocket. Yes, you get more monthly cashflow (because of higher equity), but how many years will it take to recoup that out-of-pocket money before you truly start turning a profit? (I.e. you have a lower cash-on-cash return refinancing first). Also, what is the opportunity cost by not having that cash now?

I'm not saying it would never make sense to do finance first, you just need to understand what the tradeoff is. Here's an example from an actual BRRRR I did (except for rounding a couple numbers to make everything easier for this exercise):

REFI LAST:

Purchase w/cash: $25,000

Rehab: $30,000

ARV: $100,000

Loan (@ 65% LTV) = $65,000

Closing Costs: $5000

PITI: $550

Rent: $995

Equity: 35%

Out of pocket: $0 (actually made $5K)

REFI FIRST:

Finance $25,000 (w/20% down): $5,000

Closing Costs: $5,000*

Rehab: $30,000

ARV: $100,000

PITI: $240

Rent: $995

Equity: 80%

Out of pocket: $40,000

*This is probably going to be lower due to a lower financed amount...but still, hopefully you get my point :)

@Ricardo P.

I'm sorry to hear about what folks in California have to go through. All I can say is at the end of the day, just make sure you've done everything you can (in your control), to mitigate losses. For example, did you apply for the EIDL grant? Did you apply for the government SBA loan? Have you reached out to all your lenders on possible loan deferment? Have you had the best and appropriate discussions with your tenants? Are there other ways you can generate some capital in the short term to help offset losses? Are you networking with locals to try and learn if there are other opportunities to mitigate losses? Again just a few things to consider, but I'm sure there are others out there.

@Henry D Griffith

I'm no expert, but the electrical would not scare me. Just outsource it, I would not think the cost would be that extensive.

@Frederick McCree

First off, thanks for your service.

I will say that if rehabbing the property adds any significant value (i.e. equity), I would do that before refinancing so you can maximize the amount of money you pull out because of a higher appraisal.

While rates are low, the issue is getting a lender to actually approve someone to move forward with those low rates lol. Being a veteran, and going conventional, you may have some other loan opportunities available, but I'm not knowledgeable enough to speak into that as all my loans are portfolio loans.

@David McKelfresh

The loans vary, and lender locations vary. That said, I don't look for any one specific set of terms when refinancing. I look at that "individual deal," and take whatever terms make that particular deal work (i.e. cashflow).

@David McKelfresh

I don't know about the best, but they certainly worked in my situation. I have nearly a couple dozen portfolio loans, many on BRRRR properties.