All Forum Posts by: Denis Ponder
Denis Ponder has started 22 posts and replied 274 times.
Post: Using a Heloc to BRRRR first long term rental question
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
I would echo what Janet is saying. I would explore hard money or bridge loans and maybe use the HELOC to fund a downpayment or something. Use someone else's money when you can and keep your own money available for emergency situations. In your proposed situation, here is what I would do:
1) Make sure you have a good/solid/reliable contractor that can actually do the work and has capacity to handle the project.
2) Apply for the max HELOC and get it established. Other than closing costs and loan fees, they are free to have. Then you have the full amount available to you, ONLY IF YOU NEED IT.
3) Secure funding for the property using someone else's money. Hard money, private lender, bridge loans, etc. Use the HELOC for down payment and closing costs, if needed. You will also have the rest of the HELOC available to you if things don't go according to plan. But, that will add to your holding costs so make sure you are in a position to support the payments in the interim.
4) Purchase the property
5) Fix the property
6) Rent the property
7) Refi the property (Private, DSCR, Conventional, etc)
Post: New Investor with $100k - Where would you start?
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
If someone infused $100k into my bank account right now, I would do more BRRRR projects.
Post: Off Platform Bookings - Too Risky?
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
I will book off platform for a repeat guest; never have for a first time guest. I don't use a special lease or anything, and my guests are only staying days at a time. So far, it hasn't been an issue for me.
Post: How many use “Instant Book” on VRBO or Airbnb?
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
I do Instant Book as well, but I have the same parameters as many have mentioned. We are approaching 100 guests, if we haven't surpassed it already, and only 1 of them was an issue that required AirBnB to get involved. So, I would say it's working pretty well for us so far.
Post: Looking for advice: seeking B-class SFH for buy and hold
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
Quote from @V.G Jason:
To get a B-Class that cash flows is all about the initial purchase price and the amount of leverage. People say cash flow as if 20% down will always do the trick, we're not in 2010-2022 anymore. We're in a high rate era, you need to put more down or put more into the property to get it to cash flow.
Don't read stuff from 2010-2020 and ask why it isn't working like this anymore. REI is a different ball game.
Best advice is to buy distressed, fix up, and rent it out.
@Wayne Lee This up above is really solid!
I bought a property outside of Detroit off the MLS. It hasn't cash flowed yet. Additionally, I wasn't able to get the original rent amount I estimated, so that had an impact on the deal. Lessons learned along the way.
I pivoted to buying distressed and fixing them up. This came with a different set of challenges and lessons learned, but I'm happy I did. I will have a few properties that cash flow solid with some solid equity in them, too.
Post: For Those Of You That Have Done Multiple BRRRR's, How Did You Finance It?
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
Kiavi has served me well thus far, too.
Post: Quitting everything for full-time investing, big mistake?
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
I have a regular job and work the investments on the side. I don't make enough from the investing, yet, to warrant quitting my job and going full time with investing. And, even if I did make enough to replace my salary, I'm not sure I would go that route anyway. I go back and forth on the idea. I originally started investing with the idea of replacing my W2. But as I get further along, I'm not sure what I will do when that time comes.
Post: For Those Of You That Have Done Multiple BRRRR's, How Did You Finance It?
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
Quote from @Lucas Schlund:
Just trying to get a better idea as to what the financing process was like for you experienced investors, that did not do all cash.
What kind of loan(s) did you use for the purchase, rehab, and refinance?
Who did you get the loans through?
How much of the deal did you finance?
What were the lengths of the loan(s)?
Hard money to purchase the property and fund the rehab.
Kiavi
10%-15%
12 month I/O
Post: Sell our current business to start full-time flipping?
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
Quote from @Haley Elisabeth:
Quote from @Denis Ponder:
Agree with others, don't sell until you have done a few and determine if you like it. I would recommend just doing BRRRR projects to build the portfolio now, while you are still running the business. You will know that the remodels are done well/properly, so you can hire out the PM piece and move forward. Plus, you can likely get better margins, or run on thinner margins to acquire a property in a very desirable area since you are doing much of the work in house. You could have a really solid portfolio in a relatively short period of time.
How are W2 employees different than subs? Both are people that require communication and accountability.
Thank you so much for your reply! I really appreciate it. Having many people agreeing is also very helpful.
Subs do require accountability yes - it's not quite that piece that is the struggle. They're paid by the job and if their performance ever decreases (which can happen - they're great for a time and eventually for whatever reason their quality, timeliness, etc declines) then it's easier to phase them out & replace them with a different crew.
When it comes to W2 employees, it involves HR, expectations, paying them whether they have enough leads or projects to fill their day or not, managing higher expectations (W2 employees seem to be much more "picky"), and overall they are just more expensive. If their performance drops, it requires much documentation, performance reviews, fix it plans, etc. etc. because if we fire them without heavy documentation, now we pay unemployment. They need a lot more training & accountability on systems and processes vs. the subs coming in just to do their trade they are highly skilled in. And they're much harder to hire vs. subs (my husband is very good at building his sub network - it comes very naturally to him). It's a very different relationship overall and more "gray" with W2 than "black and white" with subs. Working with W2 employees was always my skillset, but it's not something I can do anymore with our kiddos.
Fair enough, that makes sense! Best of luck!
Best thing I can say now is take your time! Slow is smooth, smooth is fast.
Post: Sell our current business to start full-time flipping?
- New to Real Estate
- Yuma, AZ
- Posts 280
- Votes 245
Agree with others, don't sell until you have done a few and determine if you like it. I would recommend just doing BRRRR projects to build the portfolio now, while you are still running the business. You will know that the remodels are done well/properly, so you can hire out the PM piece and move forward. Plus, you can likely get better margins, or run on thinner margins to acquire a property in a very desirable area since you are doing much of the work in house. You could have a really solid portfolio in a relatively short period of time.
How are W2 employees different than subs? Both are people that require communication and accountability.