All Forum Posts by: Jake Baker

@Logan L.

Congrats on your success! That is really good equity and a lot of cash flow for two SFRs. 

I assume you have been using your VA loan?

You may want to consider a HELOC - If you want to flip or BRRRR. You can fund rehabs with this.

@Adam Tyer

Every market is different and unique when it comes to ADR and regulations. I am also in San Diego. There are regulations in place, but it eliminates a lot of competition if you have the right property. Since the licenses came into effect last year, my ADR has jumped significantly. That being said, the biggest hurdle right now is finding good properties with favorable financing. 

@Danny N.

I feel if you were to build, you can cash flow, but you will have a lot of equity in the property. Hence a low ROE like you said. You could refinance, but you would be left with unfavorable terms given the higher rates and it sounds like it will be an investment loan, not a primary loan. 

I think it is time to sell and take advantage of the tax savings. Invest in a few properties that give you more peace of mind. 

@Jeffrey Albaum @Christian Styles

My flipping biz does ~20 projects a year and we track everything post-purchase in QuickBooks Online. 

Separating by classes allows for separate P&Ls for each property. With the products & services feature, you track each 'phase' of the rehab. 

Doing everything in QBO allows me to have visibility on my projects and allows my CPA to easily access the reports for tax prep. I am fan of having everything in as few software as possible.

@Chris Marette

I have successfully appealed an appraisal twice. I am 2 for 2. Once, I had to switch lenders. 

@Grayson Grzybowski

I recommend checking out the BRRRR calculator. https://www.biggerpockets.com/brrrr-calculator

This will show you the key metrics before and after refinancing a property.

 This best way I have found is through referrals. Investor friendly real estate agents often have connections to contractors. They key is to build a good relationship with the contractors that you are working with. 

Create a clear SOW
Have a written Contract
Ask for proof of Insurance/Licenses
Agree on strict timelines
Establish communication preferences
Additionally - Create Incentives for meeting timelines. Perhaps a 5% bonus for meeting the target list date.

@Kenneth Jenkins

Great point on relying on agents for rehab costs!

@Claudio Garcia Zuniga

Be careful of scam website when applying for a EIN online.

Once you open up business accounts, apply for a credit card - I recommend the Chase Business Ink Unlimited. 0% APR for 12+ months. Go into the bank and apply in person. You will get a higher limit. Be responsible putting rehabs on credit cards :)

Regarding paperwork/bookkeeping.... 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. This alone will create less headache.

2. File all receipts in a dedicated Google Drive folder. Digitize physical receipts for easy storage. Use a consistent naming convention.

3. Maintain proper records - Contracts, Settlement Statements, Agreements, Promissory Notes etc.

Additionally, you can track income and expenses consistently, using software or spreadsheets.

As you scale, if bookkeeping isn't fun for you, consider hiring a bookkeeper for a couple hundred bucks per month.

@Jalen Greenlee

Here are some BRRRR nuances that I have learned along the way:

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.

It is easy to underestimate loan costs. - look at previous settlement statements or get an estimate from your title company.