All Forum Posts by: Erik Stewart

@James Wise

Wow man that's awesome!! RadioShack haha that alone good motivation to leave the ratrace. Thanks for sharing and Happy Thanksgiving!!

@Kyle Holmes

Hi Kyle, what's great about the BRRRR strategy is that it can work with properties of all sizes and types! At it's core, it requires a value add component, which might be harder to find in commercial deals, and easier to find in residential deals. In my opinion it's easier to find single-family homes with value-add components just due to the sheer volume. Homeowners tend to be motivated or have distressed properties more frequently than professional investors. That being said, there are still opportunities at every level to do a BRRRR deal. Just because they're harder to find doesn't mean it's not worth it. My own personal experience has only been in single-family homes, but I plan to start small and get bigger with more experience and more of a foundation portfolio. These have been great deals for me in my market, but there are just so many variables that you will have to consider your own strategy and what will work best for your goals, what works best in your market, your skill set, and time you are able to commit. Hope my rambling advice has helped just a little! Good luck!!

Calling all underdog RE investors.

If you got into real estate because you were an engineer, lawyer, doctor, or otherwise have large amounts of discretionary income, that's cool, but I want to hear from the unlikely heroes out there: the dark horses, the longshots, the defiant ones who found success despite everyone's expectations to the contrary.

Are you an average person whose desire for more in life has helped you to overcome huge obstacles?

Did you drop out of school but never stopped learning?

Did you decide that a dead end job wasn't good enough anymore?

Has your path to real estate success been anything but "conventional"?

I want to hear from those who struggled, failed, tried again, pulled themselves forward, and made it through to the other side. Please share your story, lend us inspiration as we dig deep to get that first big break, that first great investment, that next one or even that last one.

Investment Info:

Single-family residence buy & hold investment in West Fargo.

Purchase price: $22,000

Great Fixer-Upper house that will make a great candidate for either a BRRRR deal or a Flip. It needs foundation repair and extensive exterior/interior work. My overall plan is to BRRRR houses and add to the portfolio until I reach the freedom number. The purchase price is so low on this property that I am also considering a knock-down and build-new but need to do further research into the viability of going this route.

What made you interested in investing in this type of deal?

This type of deal is in line with my overall investment strategy: Continue adding Fixer Upper BRRRR deals to my portfolio until I hit ~ 20 income properties that cashflow and have equity.

How did you find this deal and how did you negotiate it?

I found this deal using the "Driving for Deals" strategy, mailing yellow letters, and dealing directly with motivated sellers.

How did you finance this deal?

Financing of this deal is essentially a construction loan. The idea is to get the same end result as a BRRRR but only having to close once, which saves money. I pay 20% of the purchase and repairs, then once the project is complete, reimbursing my out of pocket expenses up to a total loan amount of 80% of the Tax assessed (less than true ARV but no appraisal). The loan will end up being ~75k which will be less than my all in costs, leaving me with $0 into the deal.

How did you add value to the deal?

The way I added value was to purchase a home in need of major repairs and bringing it back to functionality. This added value to the neighborhood as well. Dealing directly with the seller, I gave him the option of a fast close without the normal appraisals, inspections, and contingencies. I also offered great flexibility and a great experience to the seller.

What was the outcome?

I close on this deal tomorrow morning, but I expect the outcome to be similar to my other fixer upper deals. The goal is always a perfect BRRRR :)

Lessons learned? Challenges?

Every deal presents its own challenges and lessons you can take away. The more deals I do, the more the lesson becomes: "There are solutions to every problem, and it is my job to find them and implement them in the best way I am able to." This deal specifically, the rehab cost estimates and repairs timeline is a little tricky. Also, exploring the option of a knock-down, re-build is an interesting wrinkle.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

You cannot do a deal without working with great team members! My wife is my ultimate teammate! Next up, I worked with a great lender to get this deal done! This is our 4th deal together, so it is great to continue building that relationship.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $74,000
Cash invested: $50,000

This is my 2nd BRRRR deal. I implemented many of the lessons I learned from my 4 flips and other BRRRR deal. Top to bottom Rehab of a 4 bed 1 bath SFR near colleges. Rents for $1350/mo, tenants pay all utilities.

What made you interested in investing in this type of deal?

BRRRR Strategy = Faster accumulation of cash-flowing properties which = Faster financial freedom!

How did you find this deal and how did you negotiate it?

Direct Mail!

How did you finance this deal?

Private Money for purchase and rehab
Commercial loan for long term financing after lease was in place.

How did you add value to the deal?

Fast closing ability for the seller, large rehab to bring the property back to life!

What was the outcome?

I was able to achieve an ARV of 175k with ~125k all in, and a Cash-out Re-fi of 140k loan. BRRRR + extra for the reserve account.

Lessons learned? Challenges?

This project was a lot easier after having gone through it all once before. Challenging parts are staying within budget, finding great tenants, and determining how each property fits into your long term strategy.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $105,000
Cash invested: $55,000

My first attempt at a BRRRR. It is in a neighborhood where the high home prices don't justify the Value:Rent ratio and thus it might be more effective use of the equity to deploy it elsewhere. Current Value ~212,000 and Rent is 1450/mo tenant pays all utilities. I could always leave the equity in this property and keep the house as a low-cashflow property but have appreciation in mind for the long term. Plenty of time to mull it over as I have a 2 year lease signed with amazing tenants!

What made you interested in investing in this type of deal?

The BRRRR strategy is amazing at utilizing high velocity when investing your money. I suppose the REPEAT portion of the BRRRR is where your imagination can really get going. If you can accomplish a BRRRR Deal on a SFR scale, who is to say you cannot do it on a commercial scale? If you are a dreamer, like me, this gives you all kinds of ideas to put into action!

How did you find this deal and how did you negotiate it?

I found this deal by door knocking and following up with the sellers for a year until they were ready to sell. My "negotiations" were basically just me backing into a purchase price. Big numbers to consider: ARV, Market rent After Repairs, Cost of Repairs. When I made my offer, I was only a little off from where the sellers wanted to be and we came to terms from there!

How did you finance this deal?

I sought out private money to finance the purchase and half the rehab, used 10k of my own money as a down payment and paid for the remaining rehab, after we inevitably went over budget :). Long term financing using a commercial loan was successfully implemented after the repairs were done and a lease was in place.

How did you add value to the deal?

I added value by providing a fast and headache free sale for the sellers and by making 55k in repairs!

What was the outcome?

Pretty good outcome! I have about 60k in equity in the proeprty (~15k my own money). I learned a ton about the BRRRR process and it's repeatability. I made a lot of great connections, including my private money lender, commercial lender, a few new contractors, and more!

Lessons learned? Challenges?

Lessons Learned:
1. Be open to change and suggestions from others.
2. Don't be afraid to fail or to have setbacks, expect them. They are good, they mean you are making moves!
3. Sweat equity is great, leveraging other peoples time is better!
4. There is no right or wrong, just your goals and your decisions.
Challenges:
The mental grind of a long rehab and constant problems that need attention.
Leaking roof after lots of rehab has been done
Old pipes, foundations, windows
Scammers CL

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with many real estate professionals on this and other deals that I would recommend to others.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $105,000
Cash invested: $55,000

My first attempt at a BRRRR. It is in a neighborhood where the high home prices don't justify the Value:Rent ratio and thus it might be more effective use of the equity to deploy it elsewhere. Current Value ~212,000 and Rent is 1450/mo tenant pays all utilities. I could always leave the equity in this property and keep the house as a low-cashflow property but have appreciation in mind for the long term. Plenty of time to mull it over as I have a 2 year lease signed with amazing tenants!

What made you interested in investing in this type of deal?

The BRRRR strategy is amazing at utilizing high velocity when investing your money. I suppose the REPEAT portion of the BRRRR is where your imagination can really get going. If you can accomplish a BRRRR Deal on a SFR scale, who is to say you cannot do it on a commercial scale? If you are a dreamer, like me, this gives you all kinds of ideas to put into action!

How did you find this deal and how did you negotiate it?

I found this deal by door knocking and following up with the sellers for a year until they were ready to sell. My "negotiations" were basically just me backing into a purchase price. Big numbers to consider: ARV, Market rent After Repairs, Cost of Repairs. When I made my offer, I was only a little off from where the sellers wanted to be and we came to terms from there!

How did you finance this deal?

I sought out private money to finance the purchase and half the rehab, used 10k of my own money as a down payment and paid for the remaining rehab, after we inevitably went over budget :). Long term financing using a commercial loan was successfully implemented after the repairs were done and a lease was in place.

How did you add value to the deal?

I added value by providing a fast and headache free sale for the sellers and by making 55k in repairs!

What was the outcome?

Pretty good outcome! I have about 60k in equity in the proeprty (~15k my own money). I learned a ton about the BRRRR process and it's repeatability. I made a lot of great connections, including my private money lender, commercial lender, a few new contractors, and more!

Lessons learned? Challenges?

Lessons Learned:
1. Be open to change and suggestions from others.
2. Don't be afraid to fail or to have setbacks, expect them. They are good, they mean you are making moves!
3. Sweat equity is great, leveraging other peoples time is better!
4. There is no right or wrong, just your goals and your decisions.

Challenges:
The mental grind of a long rehab and constant problems that need attention.
Leaking roof after lots of rehab has been done
Old pipes, old foundations, old windows
Scammers CL

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I worked with many real estate professionals on this and other deals that I would recommend to others.

@Christopher Bell

I would really need to dig down into the numbers and the condition of the house and it's big items like mechanicals and finishes. From the info you provided, it could be a good deal. It really depends on what your strategy is. I think you definitely should do the deal if your getting a steep discount and could sell for a great profit after a year.

@Mikayla Parris

Lots of great questions here! A lot of it starts with the partnership arrangement you have with your partner and setting expectations up front before any deals are done. If you have a partner who is going to be involved but doesn't have experience, just know you're going to have to teach, explain, communicate, and be patient.

Many of your questions are the same ones I have asked myself when I started out. I try to put myself in my partners position and ask myself the same questions. If I were a lender and lost trust in my partner, why would that happen and what could be done proactively and retroactively to correct it at least reduce the damage done. If you want to continue to do business with your partner and you make each other better investors, I would go to great lengths to persevere the long term relationship above short term profits. Every deal is a learning experience and the next one should be better.

To address the question about project management classes, I don't think it's necessary but it definitely can't hurt anything! Constant self improvement and learning is super important over the long term. Hope some of my rant helped!

-Erik

@Christopher Bell if you are getting a great deal with instant equity, you could always take out a HELOC and use that to invest in your next deal. Another possibility is to wholesale the deal. I'm looking at options for you to take advantage of the equity in your deal without keeping it as a rental. Then snowball the funds to a more desirable rental.