All Forum Posts by: Jake Baker

@Robert Medina

I agree with @JD Martin that you’re in a strong position with $600/month cash flow and a solid equity base. It’s about balancing your goals: paying yourself back versus scaling quickly. Renting it out while strategically leveraging the equity could be the best path forward.

As @Jaycee Greene said, DSCR looks at your credit rather than DTI. Either way, $600 in cash flow should actually help your personal DTI if you go for conventional financing on a primary again. House Hacking a primary residence is the best way to generate wealth so I always recommend that as the next move.

Regarding the HELOC question, consider the interest rate on the debt. Consider a HELOC for value-added BRRRRs or flips if you have a low interest rate. If you already have a high interest rate, consider a cash-out refinance with a fixed rate rather than a HELOC. A third option could be to sell. Consider the "2 of the last 5 year rule" to avoid capital gains. If the signs point to selling, consult your CPA about the tax implications.

@Pixel Rogue

I agree with @Jonathan Greene about the difficulty of BRRRRs these days. It is still viable if you pair it with other strategies. (example - STR on the back end to increase cash flow)

To me, forced apperception (BRRRR or buying at a discount) is a hedge against market 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.

@Maria Jeanette

Renting to tenants in assisted housing programs, like Section 8, can have both advantages and challenges. 

- Consistent Payments: The rent portion covered by the housing program is guaranteed and paid on time, reducing the risk of late payments.

- Large Tenant Pool: Housing programs often have waiting lists, so demand is high. You’ll likely find tenants quickly.

- Tenant Accountability: Many programs have strict guidelines for tenants, and breaking those rules (e.g., property damage) could jeopardize their assistance, encouraging them to be responsible.

- Inspections: Some programs require annual property inspections to ensure compliance with their standards, which can occasionally be demanding.

- Damage Risk: As with any tenant, there’s potential for property damage. Ensuring a solid lease agreement and security deposit will help mitigate this. I have not seen a significant difference in this area between section 8 and non-section 8 tenants, personally. 

@Lenny Montesano

Join local REI meetups or groups to connect with experienced investors who can mentor you. https://www.biggerpockets.com/forums/521 I have found all of my best connections at local meetups.

I agree with @Benjamin Aaker that it may be best to wait for steady income. Focus on building and maintaining active income first. While many gurus glorify the strategies they're selling through courses or books, methods like BRRRR aren't easy and can put you in a tough financial spot if you're not careful.

@Jacob Hrip

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.

Savvy or more experienced investors may have access to Private Money. This can provide more lucrative opportunities by allowing you to take advantage of lower closing and holding costs while keeping much or all of your money out of the deal.

Every investor starts somewhere. Hard Money is often the first stop. A private investor will want to see a few successful deals before taking out large sums as a debt loan. Even still, investors will often want equity in the projects.

I agree with @Caleb Brown that you don't have a lot of equity to stand on for a HELOC solely. As @Nicholas L. said, HELOC and Hard Money is very expensive money right now. It is rather difficult to make BRRRRs pencil out right now, so you should budget to leave some capital in the deal on the refinance. 

@Ryan G.

This sounds like a great off-market opportunity!

Confirm with the solar company if the loan is transferable and review terms carefully—it’s a potential hurdle with lenders or resale.

A DSCR (Debt Service Coverage Ratio) loan might be an option since you're focused on rental income. Many lenders allow for low-down-payment options if the rental income covers the loan.

You’re approaching this deal thoughtfully, but be sure to communicate the benefits of your offers clearly to overcome resistance from the seller's representative. Best of luck

@Gabriella Pellolio

It sounds like you're in an exciting position to leverage the equity you've built to grow your portfolio. HELOC vs. Cash-Out Refinance: A HELOC might be a good option if you need flexibility to fund repairs or invest in another property, as you'll only pay interest on what you use. If rates improve slightly, a cash-out refinance could lower your mortgage rate, but ensure the numbers work with your long-term goals.

One thing to consider is your return on equity (ROE). If you have a lot of equity and little cash flow, you may be better off liquidating that asset and reinvesting elsewhere. One factor to consider is your interest rate on the debt. If you have a low interest rate, consider a HELOC for value-add BRRRRs or flips. If the signs point to selling, consult your CPA about the tax implications.

@Philip Anderson

Multifamily properties in Ventura can perform well due to the area's high rent demand, but inventory can be tight. Areas near downtown Ventura or the college (Ventura College) are worth exploring for strong tenant demand.

@Ritu Mahajan

Build a solid local team, including contractors, property managers, and lenders experienced with BRRRR. Referrals from local investors on BiggerPockets can be a great resource. https://www.biggerpockets.com/business/finder/agents

@Mark Ainley sounds like a great person to link up with!

Attend local real estate meetups or REIAs to find other investors who've done BRRRR in Chicagoland. They might have insights on specific zip codes or pitfalls to avoid. https://www.biggerpockets.com/forums/521

@Rene Hosman

Rent.App is an awesome free solution that I recently discovered.