All Forum Posts by: Jake Baker

@Jon B. Good question. I am interested in this as well.

@Wai-Ming Lau

It is not unreasonable to ask that and see what they say. 

If you are looking to rehab, it is more efficient and cost-effective to rehab all units at the same time. 

@Ernesto Miguel Credito

Most BRRRR investors will finance with a hard money loan and refinance into a DSCR loan.

HM lenders will require a 10% downpayment.

The refinance lender will let you refinance 70-75% of the after repair value (appraisal)

@Nicholas A.

It is easy to underestimate your rehab budget. - make sure to get bids from multiple contractors and have adequate reserves.

It is easy to overestimate your ARV. - Have an agent pull recent comps for you

It is easy to underestimate the timeline. - whatever a contractor says, add 4 weeks.

@Nathan Cox

The "2 out of the last 5 year rule" in real estate allows homeowners to exclude up to $250,000 ($500,000 for married couples) of capital gains from the sale of their primary residence if they lived in the home for at least two out of the five years before the sale. This exemption can be used every two years.

Consider living it for one more year to give yourself this option down the line. Pluse you can save more to have reserves when you make the next move.

@Noyessie Hubert

If you plan to rehab all the units, if is more efficient and cost effective to do them at the same time. Then you can refinance. 

@Teho Kim

I agree with @Dave Meyer here about understanding your ARV. Have an agent pull comps for you to determine this.

Refinancing means extra closing costs and you will have a seasoning period. To me the interior looks fine and has plenty of rental life. I would keep as is personally. 

@Tim Robbins

I agree with Greg about calling the assessor's office. Another thought I had is that you might run into trouble with insurance if you file a claim and work is done unpermitted.

 Indeed, I beleive the reduction in competition was the main factor in driving up my ADR. Dan's point is very interesting though. I am near downtown. Prior to the permits, I believe there was oversaturation there... seems like every out property was an airbnb.

@Andrew C.

Great question. There are various ways to do this in QBO, but this is how I typically do it for myself and my clients in the Chart of Accounts.

Real Estate Owned
> Land
> Buildings
> Closing Costs
> Capital Improvements
> > CapEx 5 years
> > CapEx 15 years
> > CapEx 27.5 years
> Depreciation

Once the tax return comes in I will adjust for depreciation.