All Forum Posts by: Jaysen Medhurst

Can you clarify, Amanda? What do you mean by a "mother/daughter" house? A duplex (a.k.a. two-family)?

Diane, take the time to look at local/regional banks and credit unions. They often keep the mortgages they make on their books (not sell to Fannie/Freddie), so they make their own rules and can be a lot more flexible.

Hi John, a few things here:

I wouldn't buy a house for your daughter and her friends to live in. That's a recipe for disaster--on several fronts. If one of those friends don't pay, are you really going to evict them? It's going to be very difficult to be a good landlord with those close, personal ties.

Instead, I would recommend buying an investment property and use the profits to help your daughter with her college/living expenses. I think this is a good opportunity for you to teach your daughter about financial responsibilities, living with roommates, etc. If she knows daddy is the landlord, she's not really getting the dose of reality that college kids need at that age. Forgive my digression, I'm a dad, too and think a lot about this stuff.

With regards to financing: I would recommend using your home equity to buy a property and renovate it with cash. That's the quickest and easiest way to get deals done. Once the property is rented out, refinance and pull most (or all!) of your money out. Then you can do it all over again. Great BRRRR opportunity.

Good luck!

Hi Meghan,

You have the ARV at $675k. So you saw an instant $300 in appreciation with not rehab/value add? Is that correct?

That's the reason your return is insane for the first few years, it's figuring that you made $300k right off of the bat.

Hi Marco,

What you're doing is called "spec building," because you're speculating that you can build the house and then sell it for a profit. If this is your 1st foray into REI, I would be cautious. This is a big lift and it could go South very fast.

If you have a partner (like an experienced developer/builder or RE Investor), this could be an amazing learning opportunity. If not, I would pass and find another way to get your feet wet. 

There's a ton of risk here. Not the least of which is that the market turns and you're left with a half-built house and stack of bills.

As far as taxes go, you'll be responsible for income taxes on any profit. Same rate as if the money came from a normal job. You can reduce this by holding the property for at least 2 year as a rental and then selling. The profit is then "investment income" and taxed at the lower rate. Review this strategy with a tax lawyer first. The IRS has specific rules.

Mike, are you currently paying the electric? If so, I suspect your ROI will be fast and very worth while to submeter.

I'd certainly get a few quotes, but $1300 sounds reasonable to me.

Hi Michael,

Month-to-month leases carry more risk for the landlord. Since a lease is a "guarantee" of rent for 12 months and m-t-m potentially means more turnover and vacancy.

If the return is higher in your specific property, the additional risk may be worth it, but I'm skeptical of tenants who won't commit to a full year.

I would sell it.

Unless the cash flow is seriously outsized, it represents a great appreciation opportunity, or you want to build your portfolio further with similar properties, the effort and lack of standardization is going to be a bigger and bigger drag.

As you scale, being able to standardize processes (like tenant screening and qualification) is critical. Focus on properties similar to your others. That way your leveraging all of your resources to support each other.

Good news, Alek! The world's finest institution of higher learning is right around the corner from you and they have an MBA program just for Real Estate.

HI Jim, need a bit more info here. CapEx is usually ~7% of gross rents, so $250 might be super high or low depending on the circumstances.

The 5 BRRRRs you did may only have worked BECAUSE you did the work yourself. That's fine as long as your time was worth it. If you can't make the numbers work using professional quotes, it's probably not a deal worth pursuing.

Lastly, if the homes are "like new," then there probably isn't an opportunity to BRRRR, unless there's seller distress for another reason. Even then, unlikely.