All Forum Posts by: Jake Baker

@Vincent Weselak

It’s a good idea to get an estimate for your insurance costs upfront since this can vary based on the property type and location, and it’s a key factor in evaluating your cash flow. 

@Ryan Leach

I agree with @Brandon Croucier that 80LTV is much more costly. I recently explored that option on two refinances. I stuck with 75LTV to allow for a prepayment penalty to decrease the rate so I could see more cash flow. 

I am assuming this is for a BRRRR. Be sure to confirm the lender's terms, as some may have specific requirements for cash-out refinances on non-owner-occupied properties.

@April Smalls

Several things to consider here. Are you aiming to lower your monthly payment, shorten the loan term, or switch from an adjustable rate to a fixed rate?

Interest Rates – Are current rates significantly lower than what you’re paying now?

Closing Costs – Remember to factor in refi fees and how long you plan to hold the property to determine if refinancing will save you money overall.

Since you mentioned owning the property for only a year, your equity might still be limited, impacting your options or leading to higher costs.

I agree with @Ronald Rohde. Focus on building and maintaining active income first. While many gurus glorify the strategies they’re selling through courses or books, methods like out of state investing aren’t easy and can put you in a tough financial spot if you’re not careful. My bookkeeping firm provides me with a steady active income, which allows me to keep doing deals, cover unexpected expenses, and navigate the occasional black swan event.

My Take on Cash Flow:
Cash Flow is a hedge against corrections. Cash flow (in my portfolio as a whole) covers my expenses. Forced Apperception (BRRRR or buying at a discount) is also a hedge against corrections. Forced appreciation allows me to build equity from the beginning of the investment, so if I need to firesale for an unforeseeable reason, I will likely not be underwater. Debt-Paydown and Tax Benefits are also a result of time. Market Appreciation is the least predictable, but historically, where you will make the most money.

@Joanna Highet

Regarding bookkeeping, most companies are not worth the money, so vet them carefully. However, if you partner with the right one, they will be instrumental to your real estate growth. Your bookkeeper needs to specialize in Real Estate or thoroughly understand the industry because it is very balance sheet-heavy. I recommend staying away from companies that outsource bookkeeping overseas. Many firms will offer bookkeeping, but they outsource overseas and mark up the price. Most of the time, quality is sacrificed due to lackluster systems. 

My recommendation: Find a US-based bookkeeper who specializes in real estate and doesn't have too much on their plate.

 @John O'Leary , we rent by the room on a one-year lease and do not use a pad split. Pad Split tends to have shorter stays. 

@Eli Joffe

Given that it is your first deal, you may want to consider partnering with an experienced flipper/brrr investor in the Cincinnati area on your first deal. You're in a solid position with your credit score for the refinance.  Hard Money will fund 90% of the purchase price and 100% of the rehab on a draw schedule. You have a good amount of savings to add value with. As well as some hands-on experience to be more involved in the process. My point is to take it slow. I got crushed on my first flip. 

@Magda Rose

Is this a 5% return on investment? or return on equity?

@Jennifer Fernéz

House Hacking a primary residence is the best way to generate wealth for the typical American. Do this every two years within your means and willingness to sacrifice comfort.
No matter what strategy you pick, sacrifice is required. Whether you are sacrificing your comfort to house hack, money for a down payment to cash-flow more, or one of the wealth generators based on the market itself, there is no one-size-fits-all perfect investment.

@Kyle Kline

My Take on Cash Flow: 
- Cash Flow is a hedge against corrections. Cash flow (in my portfolio as a whole) covers my expenses. 
- Forced Apperception (BRRRR or buying at a discount) is also a hedge against corrections. Forced appreciation allows me to build equity from the beginning of the investment, so if I need to firesale for an unforeseeable reason, I will not be underwater.
- Debt-Paydown is a result of time. This is the easiest to predict. Tax Benefits are also a result of time, good bookkeeping, and tax advisory.
- Market Appreciation is the least predictable, but historically, where you will make the most money. Real Estate values, nationally, have never decreased over any 10 years.