All Forum Posts by: Douglas Mathenia

Flipping is really a three legged stool.  You need to find the property but you also need to have people that can do work you are not able or willing to do and then you need the financing.  Without any of the three you are dead in the water. 

When we started, we could find deals but by the time we lined up financing, another investor that had financing already got the deal. So without knowing where you are in terms of having the funds for a flip (savings, HELOC, PML, HML, bank, etc.), probably spend a little time getting that in order.

As far as contractors go, how much are you planning on doing yourself?  Do you need a GC one simply subs for certain tasks like electrical, plumbing, roofing, etc.  One thing that a lot of first time flippers expect is that they can find a property and then get a contractor to come right over for an estimate.  Too much work for the good ones to spend time giving free estimates hoping you even get the property.  You need to be able to get a ballpark number on your own to see if the deal is even worth pursuing.  Once you lock it down with a contract, you can get them to give you an estimate and use the inspection period if you need to. 

If there is a local REIG, join it and see who they recommend for contractors in the area.  You might see if one of the members will let you come through a property they are doing and see what estimates versus actual numbers look like.  We have done that with several people starting out and seeing how to do a walk thru and what costs are will help you make that offer without putting yourself at too much risk.

So in answer to your question, try to get some contractors lined up that will work with you as a flipper but do not expect them to come look at every property you are thinking about putting in an offer on.  Spend more time getting your financing in order.  We willing to come here and put up a property and ask for input on what we see that might be a deal breaker . . .

Good luck and hope  this helps

Hey Douglas, 

From my experience the best case scenario is to have a team established first, of people you can trust. On the contractor side of it making sure your contractor is good with investor friendly numbers. That way when you find the right deal you just need to lock it up then there is no time in between to let a deal sit and you can get rocking and rolling right away! 

Hope this helps, feel free to reach out with any other questions in this space! 

@Douglas Mathenia

I spent a long time watching the MLS and then pounced on something in a decent neighborhood when it hit. i bought in cash so i didn't have to worry about financing costs. but i know that's a much tougher option in a high cost market like Austin.

i did a rough, back of the envelope estimate of the rehab when i walked the property with some input from my agent, and we came in about at budget.  appraisal was a little low, but it's a great rental.

as @Jordan Moorhead said, the power of BRRRR is increasing the ARV and therefore creating a bunch of equity, rather than necessarily having a lot of cash flow.

Best of luck @Douglas Mathenia, I am confident over time you will figure out a way to accomplish your goal.

Hey @Douglas Mathenia - all the answers to your future questions already exist in real estate books. I recommend starting out with BP's books available on Amazon. 

@Douglas Mathenia you'll need a tremendous amount of houses to make $20k a month in passive income. Most BRRRR's don't cashflow extremely well after refinance either. Have you looked into commercial real estate or short term rentals?

Welcome Douglas! A few notes- 

If you're looking for BRRRR opportunities around Austin they are still very difficult to find even with the softening market. Most professional BRRRR investors with large off-market lead gen budgets and their own internal crews, plus wholesale materials are still leaving 5-10% locked up in their deals. Additionally, now that rates are in the 7-8% range, finding cashflow after the refi is challenging.

WE ARE, however, seeing some flip opportunities which might be a good avenue to start building a capital stack which can then be used to pick up your long term portfolio. There are plenty of options out there now that can earn 10-15% as a flip. An example might be purchasing something for 300k, put 30k into it and sell for 385k. These style deals were impossible 6 months ago but we're seeing them more now.
Last- if your goal is specifically to generate the highest level of cashflow possible you'll have to look at more esoteric management options (rent by room, STR, Travel Nurses) or in markets with more favorable rent:price ratios.

Good luck! 

@Douglas Mathenia

Do you have any specific questions? I'm looking for my next BRRRR as well and it's very tough right now - contractors are booked up, prices are still high, materials are expensive...

@Douglas Mathenia

Do you have any specific questions? I'm looking for my next BRRRR as well and it's very tough right now - contractors are booked up, prices are still high, materials are expensive...