All Forum Posts by: Ian Livaich

Hello everyone,

I am starting to analyze some deals in my local area as I am looking to purchase my first property.  I am generally looking at 3BR, 2BA properties and some smaller multifamily properties.   A few questions keep entering my mind when I crunch the numbers.  How much should I budget for rehab costs?  Also, what are some of the items that you regularly choose to rehab for rentals, such as painting, flooring, counters, cabinets, appliances etc. (other than capital expenditures).  

I have noticed that a few listings in my area will state a dollar amount that is needed to get the property "rent ready" (e.g. $25k).  Do you find those type of statements to be accurate or do they often entail more work than is actually needed?

I understand that the numbers will vary based on the location and the condition of the property.  I am curious as to what everyone's general approach is in their markets and what works for you.

Thanks in advance.

Thanks @Sung Park.  The interest only loan makes sense.  What if you fund the deal with a conventional loan?  Do fees generally apply for paying off a conventional loan early?

Have you been able to BRRR any properties in Philly? If so, what difficulties have you run into? What areas seem to work best for BRRR? I assume South Philly would be one of them.

Thanks for looking out, @Odie Ayaga.  I plan on attending if the date does not conflict with my exam schedule for my last semester.  

Hello everyone,

I am still new to BiggerPockets and real estate investing, so I am churning through the podcasts and soaking up the information on the forums, blog posts, and in books.  I plan on house hacking  my first property and buying and holding SFRs and multifamily properties thereafter once I begin investing.  

I find the BRRR strategy very intriguing for its ability to generate passive income and provide a pay day down the road (if you find the right deal). I see it as a hybrid of buy and hold and flipping. However, I would like to buy a couple of properties to gain experience before jumping into BRRR. I have two general questions re: BRRR:

1) If the first loan for the property is funded with private or hard money, what is the process of paying that money back to the lender once you refinance?  I understand that you take the funds from the bank loan to pay off the lender but if you are paying back the original lender early, do you pay them the entire principal and interest that would have accused for the time you agreed to?  For example, if you borrowed $100,000 from a private lender at 8% interest with a maturity date of one year but you refinanced the property within 8 months, would you pay the lender the $100,000 plus the full 8% interest?  Is it in your best interest to pay off the lender as soon as possible once you refinance?  Is there a penalty for paying the original loan off too early?  

2) What are the downsides of the BRRR strategy generally? I do worry that if I employ this strategy and start acquiring 1-2 properties a year, I will become over leveraged with too many mortgages, which can be risky in a market downturn. I would welcome everyone's thoughts and opinions on this.

Thanks.

Welcome to BP, Joe. Good to have another new NJ investor here on BP. Very interested to hear how your house hack goes as I am considering the same thing for my first investment next year. If you don't mind me asking, what class is the property and the location? Also, do you have a lease that you will use? If not, where/how did you get it? Did you consult an attorney? Thanks, Ian

Hi @Edward Schenkel, very helpful information on this thread.  I am graduating from law school in May and will be practicing real estate law for a law firm in Philadelphia, serving mostly large commercial clients.  I plan on investing in real estate in the next year.  I am debating as to whether I will complete the legal work for my properties or not.

I was wondering if you invest in real estate and if you do, do you handle all of the legal work for your properties?  If you don't, is that something you would recommend doing or not?  I can see the advantages of completing your own legal work (familiarity with your business, more attention/time/care, and saving money) but also the disadvantages (spending too much of your time completing legal work, too close/emotionally connected to the business, and not being an expert with residential leases).  I would love to get your thoughts on this.  

Thanks.

Thank you both @Odie Ayaga and @Steve Babiak.  I should clarify that while I attend law school in PA and will work in Philly, I plan on investing in South Jersey primarily and Philly to a lesser extent.  I have heard great things about SJREIA so I plan on starting there.  

Brie,

Thank you for the warm welcome and taking the time to answer my questions. I have only been on BP for 3 weeks, so I appreciate you helping me with these "low hanging fruit" questions. Your answers were very insightful. I definitely overlooked the property class factor and will focus on learning more about this topic. Before investing, I will be sure to learn more about the property classes in my local market and speak to a local agent. I think B/C classes will be my best bet early on as that appears to match up with my SFR/Multifamily interests.

Thanks again.

Hi Everyone,

I am new to BP and real estate investing in general.  Except for my introduction post a couple days ago, this is my first substantial post on BP.

Around this time when I have a full-time job after graduating law school next year, I plan on acquiring 1-2 SFRs or multifamily properties and utilizing the buy and hold strategy.  While I have been listening to podcasts, watching webinars, and reading the forums and blog posts, I still have a few questions regarding the strategy:

1) For those who are making their first investment, is a SFR, rather than a multifamily, a logical first step? I originally thought a SFR would be a good chance to get my feet wet in real estate investing but as I learn more, the benefits of multifamily properties are very appealing to me.

2) For a buy and hold property, is there a rule of thumb on how much should be attributed to rehab costs before bringing in a tenant?  What would some of those low budget costs be (shutters, carpeting, paint, appliances, etc.)?  

3) For your first property, would you recommend taking on a partner who can finance 100% of the deal or obtain a conventional loan?  I understand that the answer to this question can vary based on everyone's personal circumstances. 

4) On a few webinars, I have seen Brandon Turner use a BP calculator to evaluate a deal.  For the "variable landlord paid expenses" (e.g. vacancy, repairs and maintenance, capital expenditures, management fees, and other fees), is there a rule of thumb for what the percentage of these costs should be?

5) What is the one piece of advice that you wish you knew before buying your first buy and hold property?

I appreciate any input that you could provide.

Ian

Thank you to everyone who has reached out so far.  I am excited that there is a New Jersey / Philly presence on BP.  I look forward to chatting with you all more on the forums as time goes on.