All Forum Posts by: Jake Baker

@Christine Aledam

I agree with @JD Martin that the focus should be on good insurance. If the property is owned in your personal name, it doesn't make sense to me to create an LLC. Many investors hold properties in their name until their portfolio grows larger, then transfer them into an LLC later.

@Kevin Omoaka

I agree with @Nicholas L. that the best way to find mentors in your area is to attend local meetups. Ask to tag along on an ongoing project. You'd be surprised how many investors are receptive to that.

https://www.biggerpockets.com/forums/521 I have found all of my best connections at local meetups.

@Frank Thomas

A few clarifying questions:
Do you plan to live in it as a primary residence?
How much of a rehab are you willing to do?

Most flippers and BRRRR investors will purchase Hard Money if they don't have the funds to buy all cash.
- When paying with cash, you have fewer closing costs (no lender fees) and fewer holding costs (no interest payments). Thus, you will have a higher profit margin.
- When paying with Hard Money, you will have added closing and holding costs. However, your investment in the deal is far less. Thus, your profit margin is lower (than the all-cash offer), but your ROI is higher.

Putting more than 20% down might reduce your monthly payment and debt-to-income ratio, but it also ties up more of your capital, limiting flexibility. Since the BRRRR strategy relies on recycling your capital, it's typically better to stick to the minimum needed for favorable loan terms.

Also, consider leaving a cushion in your HELOC or reserves for unexpected rehab costs or delays.

Hello to a fellow San Diegan.

$2,500–$5,000+ per unit annually, depending on the coverage and deductible is my approximation. Be sure to ask about coverage for guest liability and loss of income due to damages. 

Steadily is a popular one nowadays.

I had a primary residence in Little Italy turned Airbnb. I simply called my insurance company and they were able to add on STR coverage without rewriting the policy.

@Sheena Varghese

@Basit Siddiqi is spot on with the two categories. 

If you want this reflected in your financial statements, here is our process: We move the COGS to inventory on the last day of the year and back to COGS on the first of the following year. This way, they are no longer on the P&L and are now on the balance sheet as inventory when you run the report for that year. This is the case for any flip that spans over two calendar years, regardless of the flip timeline.

@Lucas Schlund

I agree with @Ty Coutts that it depends on your risk tolerance and financial stability. Reserve enough cash to cover 12 months of holding costs, rehab overruns, and unexpected delays. 

When paying with cash, you have fewer closing costs (no lender fees) and fewer holding costs (no interest payments). Thus, you will have a higher profit margin.

You will have added closing and holding costs when paying with Hard Money. However, your investment in the deal is far less. Thus, your profit margin is lower (than the all-cash offer), but your ROI is higher.

@Michael Beirne

I agree with @Drew Sygit about class D properties. On the surface, they can look like great deals. 

General Contractor - Look for someone experienced in renovating older structures common in Baltimore. Many properties will need specialized attention, especially with plumbing, electrical, and historical elements. 

Agent - Work with an agent who focuses on investors. They can provide access to off-market deals and connect you with a network of contractors familiar with BRRRR projects. https://www.biggerpockets.com/business/finder/agents

Property Manager - Choose a PM with Section 8 expertise to ensure smooth tenant placement and compliance with inspections and rent guidelines. 

@Kent Ford

I agree with @Ryan Konen regarding areas like San Antonio’s outskirts, parts of Fort Worth, and growing cities like Tyler and Lubbock, which are becoming popular due to relative affordability and job growth.

We will see an interest in smaller metro areas where prices are more accessible and a surge in new construction aimed at entry-level buyers. For first-timers, leveraging programs like down payment assistance or FHA loans can make a big difference. It's still a competitive market, but Texas can remain a great place to buy with the right strategy.

@Tiffany Da Silva

At the bare minimum, you should do the following to make your bookkeeping easier:

1. Dedicate one checking account and credit card exclusively to real estate. Keep personal and business finances separate to create less headache.

2. File all receipts in a dedicated Google Drive folder. Digitize physical receipts for easy storage and use a consistent naming convention for easy sorting - 2024.03.25 Home Depot. 

3. Maintain proper records, such as contracts, settlement statements, and promissory notes.

4. You can track income and expenses consistently using software or spreadsheets.

As you scale, if bookkeeping isn't fun, consider hiring a bookkeeper for a couple hundred bucks per month. This is often one of the first things a real estate investor will outsource.

I agree with @Kevin Sobilo about Profit First. That is the best way to manage your portfolio!

@Keonhee Cho

Focus on emerging submarkets like areas outside Austin, like Round Rock, Hutto, or even Killeen. They often have more affordable properties with cash flow potential. Similarly, suburbs around San Antonio, like New Braunfels or Schertz, could offer good opportunities.

To successfully BRRRR, you need to leverage local connections. Join local REIA groups in Austin to connect with wholesalers and investors with insight into off-market deals. This can help you find properties below market value, which is critical for BRRRR.