All Forum Posts by: Cole Raiford

@Caleb Heimsoth I’m not advocating for or against brrrr, but how is a brrrr deal and a traditional 25% down financing deal any different from a debt standpoint?

BRRRR

ARV of $100K, refi for 75% LTV and you have a $75K mortgage.

Standard purchase:

ARV of $100K, 25% down and you have a $75K mortgage.

You have the same debt and the same equity in both of these examples. The only real difference is how much money you have spent out of pocket to acquire the equity.

@Corey Martin welcome, and thank you for your service!

@Xzaviar Deary spend some time researching and educating yourself on the brrrr process and RE investing in general. BP recently put out a whole book on brrrr investing that would be helpful for you. Once you fully understand the basics of each step in the process, and have access to funds (yours or someone else’s) you can begin to look for properties. If you don’t have significant equity above the loan amount on the home you just purchased it won’t be a candidate for a brrrr. You need to find a house that is at about 70% of retail after all rehab is done in order to do a full brrrr. Finding a house that meets these numbers and has high enough rent to cash flow after the refinance and all expenses can be a challenge, especially in some markets, but it is doable.

@Season Price you can’t do much with $500. In order to make any meaningful progress in RE it takes money. It either has to be your money or someone else’s money. With $500 you better have someone else’s money.

@Yvette Valencia neighborhood aside, the cost of this place to rent for $1200 is really high unless there is a big appreciation play. Based on your concerns about the neighborhood I assume there isn't. You can buy houses for $70K that rent for $1200 in C+ areas in the southeast. Check your numbers again and make sure you are actually going to cash flow after PITI + repairs/vacancy/property management. I don't see it happening.

@Guifre Mora you calculate ROI with net cash flow, not gross cash flow. At $775 rent and $70K this house isn't going to net much of anything and the return will be in the low single digits. Wouldn't touch this house personally.

@David Olson If you aren’t concerned with appreciation then you can find cash flow 1-4 unit rentals in pretty much any city in the southeast. You’ can find ~ 1.5% rule houses in these areas in B- to C class areas. The same is probably true in the Midwest. Personally I didn’t stress too much over the market. They are all roughly the same for cash flow. If you just pick a market and focus your efforts on connecting with the right people that will allow you to find and rehab deals, off market deals preferably, you will be fine.

@Adam L. I would say no. Run full numbers and this won’t cash flow I’m pretty sure.

@Alejandro Arciniega my wife and I bought a house in the Bay Area that cost 4x more than our house we had just sold in the south. It took all of our savings to put 20% down, which was scary. We managed through it and got back above water on the savings by managing our finances closely.

Fast forward 8 years... we got raises and our income has gone up considerably which allows the mortgage payment to be met much easier than it was originally. And the best part is that the house has appreciated ~ $350K. Hands down best decision we’ve made was to buy the house.

I say buy it if you are confident in the arv, if the area is quality, and if you are confident in your rehab estimate.

@Sara M. Looks great. Good work!!