All Forum Posts by: Jason Howell

Thanks for the words of encouragement! I'm certainly working hard and putting a lot of time in to get there. It can be a bit overwhelming but I know it's possible. I'm a sponge at the moment and I'm really enjoying the journey. Advice like yours gives me the added confidence, so thank you for your time and insight.

Ahhhh infinite cash on cash return, that makes total sense now. I just assumed I had done something wrong. But yes, in a BRRRR, one would hope to get all their cash out ultimately once the refinance happens, so none of my cash would exist within the deal therefor any cashflow is gravy.

If/when I decide I'm going to do a BRRRR, I envision I'll be working directly with an agent/wholesaler to source listings per my own criteria. Will they be able to offer up a more accurate assessment of ARV when needed? I know how to estimate (very roughly) but my estimate at this stage always feels like more of a guess based on a few slivers of information as opposed to something I could bank a deal on.

Right, that's true. A good BRRRR isn't really a good BRRRR if it doesn't cash flow after the refinance. Thank you!

Agree completely! Having said that... BRRRR is all about forcing appreciation so you can get your money back out when you refinance, right? Does a reliance on appreciation come with the BRRRR territory, in that sense?

Back again in my pursuit of learning how to analyze deals in Indianapolis. This one, upon first blush, really seemed to fall in line with the idea of BRRRR. The neighborhood *seems* great actually, prices in the area are much higher than this... This is also a 2BR with an attic with enough clearance to possibly convert to a 3BR, bringing the home value up once it's rehabbed. Posted for sale at $85k. I'm running numbers on a $65k offer (no clue whether they would even take it, but again, this is for my education more than anything). As you can see, once I run the numbers on this, I get an "Inf%" in ROI during the refinance phase, no clue why.

My initial reaction was that this would fit the BRRRR model, but now I'm not so sure. What do you think?

View report

*This link comes directly from our calculators, based on information input by the member who posted.

 I love how you wrote up this formula and way of thinking about this backwards. Thank you for sharing such a cohesive strategy!

Awesome responses, thank you to all who replied!

I really hadn't considered the fact that paying up front is less reasonable when considering the possibility of a refi down the line. I don't expect these properties to appreciate like gang busters in the next 4-5 years... but I suppose anything is possible and if they did, I'll be less incentivized to refinance as a result of paying up front. Something new to consider going forward.

 Awesome, thank you so much! I thought $15k might be light on rehab (esp if converting from a 2BR to 3BR). I'm in the bay area where literally anything you ever want to do to a house costs MEGA dollars, so I'm trying to learn how to estimate roughly the costs of basic repairs versus major repairs. Sounds like $15k might be a generally safe bet on houses that look "pretty good"... and obviously upwards from there if adding an additional room.

Property management fee: Yes, 10% was my starting rate there, but I have 4 properties in the area currently and my management company has a portfolio rate of 8% once you reach 3+ properties through them which is a nice little bonus.

I should have caught the property tax difference! I see where I went wrong while pulling numbers from the listing.

Would you mind expanding a little bit on the loft conversion part of your post? 2k+ sq ft seems REALLY high for a 2BR house... I have to imagine that they are including the basement in the square footage number... but that would imply that the basement is finished, right? If that's the case, kind of strange it's not mentioned in the posting. But from what I understand from your comment, it's unlikely that the basement itself has a clearance of 7' or more and that's what would keep this from being converted to a 3BR?

Thank you for your insight! 

Background: Up front - working numbers daily to get in the routine of analyzing deals. This is part of that. At this stage, I'm not ready to buy. Having said that, I'm trying to approach this using @David Greene's model of finding 2BR units with 1000+ sq ft in an effort to buy low, convert into a 3BR, then ultimately cash out refinance. This unit in Butler Tarkington area of Indianapolis seems to fit the bill (though that square footage seems unbelievably high... are they including the unfinished basement in the calculation?) Keep in mind at this stage I'm guessing on repair cost and ARV (yes I know they are important. It's just playing with numbers at this stage) The attached report is based on the 2BR numbers, as posted to MLS.

Those of you familiar with Indianapolis, any knee jerk reactions to this? Thanks for all you do!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I'm about to close on my fourth property and up until now, I have opted to pay whatever points were necessary upfront to lock in the lowest interest rate. It just made sense at the time: Go for the lowest interest rate, especially while rates are particularly low to begin with.

But I'm now realizing that if my goal is to buy and hold for the long term (which it is), it may make more sense to accept an interest rate that's higher while keeping that extra money in my account for future investing...given that cash flow is still positive.

Example: 20% down for a loan of around $66k... IF I chose to pay $1200k for a 30 year loan at 5.1%, how can I work those numbers to see how long I will be paying on the property for that to equal or surpass what I get if I choose to pay $200 for a 30 year loan at 5.5%. 

Anyone happen to have a formula you use to determine this on the fly? Or maybe you believe that, all things considered, it rarely makes sense to go one way over the other.

Thanks all!