All Forum Posts by: Daniel DaSilva
Daniel DaSilva has started 2 posts and replied 7 times.
Quote from @Clayton Silva:
Quote from @Daniel DaSilva:
Quote from @Clayton Silva:
Quote from @Daniel DaSilva:
Quote from @Clayton Silva:
Hey Daniel, you Portuguese or Brazilian? (I have a lot of relatives named Daniel Silva lol).
Not to copy and paste an answer from another forum, but it seems to be pretty applicable to what you are asking here. This is my personal take on BRRRR strategy in this market:
I don't do BRRRRs personally, but I work with a lot of investors who do as their lender. I will say, I have not seen a perfect BRRRR in a number of years for a few reasons. (Perfect BRRRR meaning they paid off their loan AND recouped ALL of the capital they put into the project via a cashout).
1) Cashout rules have changed to hedge for risk on almost every loan product. In 2021 and 2022, you could cash out a property pretty quickly and conventional loans were at 6 months if there was debt on the property. That changed when conventional loans required a mandatory 12 month seasoning of the prior lien and forced a lot of BRRRR investors to hold onto high-interest rate hard money longer (conventional loan changed in Apr of 2023). DSCR loans are often 6-month minimums as well with few exceptions as well so investors are not able to recycle capital as quickly as they would always like to.
2) Home values and rates have both climbed faster than rents. The other limiting factors I see are restrictions on cashout refinances on vacant properties and rents not being high enough to support the new debt so the cashout LTVs are often lower than what the investor was looking for.
3) Tax, insurance, labor, and construction costs have all risen as well which further compresses margin.
Summary: most "BRRRRs" I see these days are lucky to get enough equity, enough rent, and what not to pay off their hard money and maybe pull a small amount of the personal capital out of the deal. The investors usually have a lot of equity left to tap into, but the rate on the debt often prevents them from being able to tap into more equity. It definitely slows down the velocity of money and scaling but can still be a good strategy if cards are played well, and a longer time horizon is considered. Hope this helps!
Hey Clayton. I'm Portuguese, I may be bias but that's a great name to have haha. Thanks for your comment!
I've heard that BRRRR is "dead" in several podcasts and forums but as you said, if played well then it can still work. I agree with all your points which shrink the margin; the way I see it is even if a deal does break even, we're still adding another property to our portfolio with tenants building up our equity and potentially some cashflow to trickle into that pile. With that in mind, we have a long term play on it. Though if hard money is used, wouldn't that avoid the 6/12 month requirement? (Which thank you, I was not aware it got extended to 12 months for conventional!!)
However, I'm curious if you have any other strategies in mind that might play better in the current market. It's tough out here recently but there seems to be a shift happening, and it's starting in the south. Very curious to see if that spreads to the NE/MW or if these markets are more resilient.
Correct, it still works, it just means people are leaving more equity in the deals than before, and the 6-12 months is across the board for most cashouts from the date of the last lien. Meaning the new loan requires you to hold the old loan for 6-12 months. So that just means most cashout lenders have that requirement not the hard money lenders.
Honestly, for most investors right now. A lot of them that I work with at least are shifting to flips and development to build up cash should the market correct soon. Keep making money in real estate where they can, and prep for whatever comes up in the near future.
I do not believe there is a one size fits all strategy in any given market, and ultimately comes down to goals, strategy, ability to execute and other factors. Each market is being impacted differently right now.
Switching to flips is interesting, not something I've considered doing and figured it may not be advantageous in the current market due to cost. Though doing 1031's there could be useful perhaps. I noticed there are now many more sellers than buyers in the national market in a report that came out this weekend. They haven't had trouble selling at their asking?
You won't be able to 1031 a flip as it usually won't meet the 2 holding period requirement as far as I can tell. But tax advantages aside, the best investors in real estate use a combination of a few different strategies to build, scale, and navigate difficult markets like the one we are currently in. Most of my clients that have been doing this through multiple cycles, I watch what they do and a lot of them are just turning little base hits in flipping. Instead of going for that 100k profit home run, they are happy to have 1 or two flips going that kick out 30-40k in profit. And there is no trouble selling when you have product market fit and are realistic about prices and costs to consumers. People have a hard time selling because they have not come to grips with the fact that high rates mean fewer people can afford that house and the house probably isn't as nice as you think. Pricing correctly and being realistic about what the monthly payment is for the end buyer will help you navigate each market.
Very good points. I've seen many distraught properties going for crazy prices and so we offer 15-20% below asking. Most recent example was a 3-family property in an area I'd rank as Class C but close to Class D area, off-market asking for $475k. After looking at it everything was very outdated, windows all needed replacing (31 in total), and mold was on the third apartment. I myself didn't see it but a couple of my partners did. We offered $400k but got turned down for someone who offered more. ARV was expected to be ~$650 - 700k and we were thinking $150-200k in full reno. Rents go for ~$2600 - 3000. Hindsight, maybe we could offered a bit more but at greater risk. Being a house built in 1942 there could've been some hidden surprises.
But going back to what you said, possible we could've brought in $25-75k. In this market that's not bad. Maybe a lesson learned here.
Quote from @Mike Klarman:
Daniel, fellow New Jersian here. I live in South Jersey. I grew up in Philly. I'm familiar with Allentown as my brother attended Lehigh Univ and I have been up there several times.
Flipping is definitely a market to market thing. Markets are capped on ARV, no matter if you make the bathrooms out of solid gold or plastic. Sellers often times want top dollar for their house, and then since you are capped on ARV, you can only afford so much rehab and often times its not enough as there's always overages, always delays. So now at exit, you have nothing to make and even worse do not recoup it all back.
The two most important numbers in Flipping are the purchase and the rehab. The ARV is out of your control. That is highly dependent on market, interest rates, inventory levels, buyer subjectivity, quality of finishes.
Your first step in the deal is the purchase. How you purchase, where you purchase, for how much you purchase, this all matters. You need to get into the deal ahead of the game by being in a property at 75% or less it's as-is value. If a fixer up is selling for 100k on market, you need to find a way to get the same 3/1.5 house in same neighborhood for 75k - 80k. Then you need to do the job GCless or be in bed with the GC and let them eat with you at the exit. Subs need to be managed and labor needs to be paid for in wholesale prices. Material costs are what they are today, but you don't need a GC padding numbers for sure. So the rehab some new investor is getting done for 90k, you need to be able to get it done for 75k.
So now, investor one is into the house for 190k, and investor 2 is into the house for 150k. Let's say the ARV is 260k in this scenario.
Investor one has a Project cost of 73% of ARV, investor 2 has a Project Cost of 57.6% ARV. Investor 2 can list the house for 240k and get out in days and the other investor may really need to get out at 260k and they have to sit and compete with the top line comps and then their listing gets stale and they start reducing every week or two until they get some nibbles. Meanwhile investor 2 is on project 2 and they pocketed more money at a lower exit.
Would love to connect with you to discuss things a bit more, if you don't mind. I'll PM you.
Quote from @Clayton Silva:
Quote from @Daniel DaSilva:
Quote from @Clayton Silva:
Hey Daniel, you Portuguese or Brazilian? (I have a lot of relatives named Daniel Silva lol).
Not to copy and paste an answer from another forum, but it seems to be pretty applicable to what you are asking here. This is my personal take on BRRRR strategy in this market:
I don't do BRRRRs personally, but I work with a lot of investors who do as their lender. I will say, I have not seen a perfect BRRRR in a number of years for a few reasons. (Perfect BRRRR meaning they paid off their loan AND recouped ALL of the capital they put into the project via a cashout).
1) Cashout rules have changed to hedge for risk on almost every loan product. In 2021 and 2022, you could cash out a property pretty quickly and conventional loans were at 6 months if there was debt on the property. That changed when conventional loans required a mandatory 12 month seasoning of the prior lien and forced a lot of BRRRR investors to hold onto high-interest rate hard money longer (conventional loan changed in Apr of 2023). DSCR loans are often 6-month minimums as well with few exceptions as well so investors are not able to recycle capital as quickly as they would always like to.
2) Home values and rates have both climbed faster than rents. The other limiting factors I see are restrictions on cashout refinances on vacant properties and rents not being high enough to support the new debt so the cashout LTVs are often lower than what the investor was looking for.
3) Tax, insurance, labor, and construction costs have all risen as well which further compresses margin.
Summary: most "BRRRRs" I see these days are lucky to get enough equity, enough rent, and what not to pay off their hard money and maybe pull a small amount of the personal capital out of the deal. The investors usually have a lot of equity left to tap into, but the rate on the debt often prevents them from being able to tap into more equity. It definitely slows down the velocity of money and scaling but can still be a good strategy if cards are played well, and a longer time horizon is considered. Hope this helps!
Hey Clayton. I'm Portuguese, I may be bias but that's a great name to have haha. Thanks for your comment!
I've heard that BRRRR is "dead" in several podcasts and forums but as you said, if played well then it can still work. I agree with all your points which shrink the margin; the way I see it is even if a deal does break even, we're still adding another property to our portfolio with tenants building up our equity and potentially some cashflow to trickle into that pile. With that in mind, we have a long term play on it. Though if hard money is used, wouldn't that avoid the 6/12 month requirement? (Which thank you, I was not aware it got extended to 12 months for conventional!!)
However, I'm curious if you have any other strategies in mind that might play better in the current market. It's tough out here recently but there seems to be a shift happening, and it's starting in the south. Very curious to see if that spreads to the NE/MW or if these markets are more resilient.
Correct, it still works, it just means people are leaving more equity in the deals than before, and the 6-12 months is across the board for most cashouts from the date of the last lien. Meaning the new loan requires you to hold the old loan for 6-12 months. So that just means most cashout lenders have that requirement not the hard money lenders.
Honestly, for most investors right now. A lot of them that I work with at least are shifting to flips and development to build up cash should the market correct soon. Keep making money in real estate where they can, and prep for whatever comes up in the near future.
I do not believe there is a one size fits all strategy in any given market, and ultimately comes down to goals, strategy, ability to execute and other factors. Each market is being impacted differently right now.
Switching to flips is interesting, not something I've considered doing and figured it may not be advantageous in the current market due to cost. Though doing 1031's there could be useful perhaps. I noticed there are now many more sellers than buyers in the national market in a report that came out this weekend. They haven't had trouble selling at their asking?
Quote from @Ezekiel Trevino:
Hey Daniel, welcome to the BiggerPockers site.
Thank you, Ezekiel! Excited to get involved and network with everyone here. Been a bystander for some time now and felt the need to jump in as I continue to learn and gain experience!
Quote from @Clayton Silva:
Hey Daniel, you Portuguese or Brazilian? (I have a lot of relatives named Daniel Silva lol).
Not to copy and paste an answer from another forum, but it seems to be pretty applicable to what you are asking here. This is my personal take on BRRRR strategy in this market:
I don't do BRRRRs personally, but I work with a lot of investors who do as their lender. I will say, I have not seen a perfect BRRRR in a number of years for a few reasons. (Perfect BRRRR meaning they paid off their loan AND recouped ALL of the capital they put into the project via a cashout).
1) Cashout rules have changed to hedge for risk on almost every loan product. In 2021 and 2022, you could cash out a property pretty quickly and conventional loans were at 6 months if there was debt on the property. That changed when conventional loans required a mandatory 12 month seasoning of the prior lien and forced a lot of BRRRR investors to hold onto high-interest rate hard money longer (conventional loan changed in Apr of 2023). DSCR loans are often 6-month minimums as well with few exceptions as well so investors are not able to recycle capital as quickly as they would always like to.
2) Home values and rates have both climbed faster than rents. The other limiting factors I see are restrictions on cashout refinances on vacant properties and rents not being high enough to support the new debt so the cashout LTVs are often lower than what the investor was looking for.
3) Tax, insurance, labor, and construction costs have all risen as well which further compresses margin.
Summary: most "BRRRRs" I see these days are lucky to get enough equity, enough rent, and what not to pay off their hard money and maybe pull a small amount of the personal capital out of the deal. The investors usually have a lot of equity left to tap into, but the rate on the debt often prevents them from being able to tap into more equity. It definitely slows down the velocity of money and scaling but can still be a good strategy if cards are played well, and a longer time horizon is considered. Hope this helps!
Hey Clayton. I'm Portuguese, I may be bias but that's a great name to have haha. Thanks for your comment!
I've heard that BRRRR is "dead" in several podcasts and forums but as you said, if played well then it can still work. I agree with all your points which shrink the margin; the way I see it is even if a deal does break even, we're still adding another property to our portfolio with tenants building up our equity and potentially some cashflow to trickle into that pile. With that in mind, we have a long term play on it. Though if hard money is used, wouldn't that avoid the 6/12 month requirement? (Which thank you, I was not aware it got extended to 12 months for conventional!!)
However, I'm curious if you have any other strategies in mind that might play better in the current market. It's tough out here recently but there seems to be a shift happening, and it's starting in the south. Very curious to see if that spreads to the NE/MW or if these markets are more resilient.
Hey Everyone! NJ resident here investing in PA, and possibly soon in NJ. I have 3 other partners that I own a RE investment business with. We recently cash-out refinanced our most valuable property, out of a total of 2, and are looking to scale our business faster then we have been. We manage our own properties (for now) so we can maximize cashflow and have developed a pretty decent system of operations.
New here and really just looking to meet people and hopefully network with fellow investors and wholesaler/agents to help us find some great deals and scale up our portfolio. Our strategy in focus now is BRRRR after using the sluggish buy & hold strategy. I'm very ambitious and would love to scale using the BRRRR or other strats that allow it, my partners are more traditional and prefer the buy & hold with tenants already placed. I've been trying to bring them over to BRRRR for some time so any help is appreciated to convince them this is the way!!
I do also plan to go at it alone in the next few years and so would love to network for that not so distant future too! Feel free to ask me any questions or introduce yourself. Would love to get to know you!
Post: 1st Property was a 5 unit in 2021
- Posts 7
- Votes 2
Investment Info:
Large multi-family (5+ units) buy & hold investment.
Purchase price: $345,000
Cash invested: $70,000
Originally purchased for $345k in 2021 and renovated 3/5 units since owning in 2021. Refinanced at appraised value of $695k in 2025.
What made you interested in investing in this type of deal?
Partnered up with my partners who were interested in Real-estate and this property was introduced to us shortly after by an agent we knew. Our initial goal was to buy and hold.
How did you find this deal and how did you negotiate it?
It was introduced to us by an agent we knew. Original asking price was around $380k, if I'm remembering correctly. We negotiated it down to $355k. When inspection was done, we used several items on there to negotiate it down another $10k to $345k.
How did you finance this deal?
We had to use a commercial loan since it was a 5-unit. Using a local bank, we were able to secure a loan at 3.85% requiring 25% down. Commercial loans have a maturity date, this one having 5 years, with 25 year amortization.
How did you add value to the deal?
We bought it fully rented, rents were below market. As tenants began leaving, we renovated the apartments and were able to renovate then rent each at market value. 3 of the 5 units have been renovated, with the remaining to having very long-term tenants. Their rents have slowly increased and are nearly at market rent for their quality.
What was the outcome?
After purchasing we were cash strapped for a couple of years. We used a private loan to help with renovations in 2024. This then allowed us to feel comfortable with refinancing the property to cash-out some equity to purchase our next properties.
Lessons learned? Challenges?
The size of the property was too large for us as we were inexperienced. Going into a commercial deal expended all our cash leaving us immobilized for a few years. There was a property manager that was used by the previous owner that was not great. After learning from their processes we decided to manage it ourselves from NJ. This allows us to hold onto 8-10% of our revenue. Tenants became a challenge but all left without evictions being needed.