All Forum Posts by: Wayne Kerr

A 30 year fixed rate is at 6.9 today - a conventional mortgage is generally the best you are going to get 

I would expect DSCRs to be 8% plus right now - depending on a few factors like prepayment penalty/credit score etc 

I would seriously doubt anyone will beat a conventional mortgage w/ a DSCR mortgage in either rates or terms

This is why you would generally max out your conventional mortgages first, then go to a DSCR. A conventional mortgage is simply the best you can get.

There's a reason the PM companies in that area won't manage in that Zip Code - that should tell you all you need to know about that deal honestly. They have been doing this much longer than you - and it's not one PM turning it down - it's multiple.  

Location, location, location. It cannot be preached enough. You can change everything about a house other than the location. 

Strongly consider pulling out of this deal unless you would manage yourself or are ok dealing with a bad PM that is willing to manage that area. 

Secondly - instead of getting frustrated at the PM for not wanting to manage that area. Turn this into a positive working relationship and ask them where THEY DO like to manage. Where do they like to manage, why? What are the good schools in the area? What area has the most new construction? What areas seem to be getting better - what areas seem to be getting worse?

That's how you use a partnership to your advantage...

 How many leads do you generate per call? Conversion rate?

What kind of success have your clients had? How long on average do your clients stay with you? 

I've been thinking about this route myself. I don't have the time to cold call but I also don't want some person who barely speaks English spewing nonsense and ruining credibility right off the bat. 

Direct mail seems to still be a thing too - seems like every property I buy gets spammed shortly thereafter with flyers from people who will buy "as-is" 

Awesome, I'm going to follow. 

How did you choose the location? What's your previous experience like?

A cost breakdown would be awesome, if your comfortable with it of course. 

Thanks for sharing!

I don't see tariffs effecting a BRRRR model that much as long as you run conservative numbers (which you should be doing anyway)

Small rehabs is minimal materials and labor - sure it may be 10-20% more expensive - a 20k rehab may cost you an extra 3k (15%). That 3k is not going to make or break you. 

A new build on a 500k house would cost you an additional 75k (if we keep the % the same) - big difference in actual dollars. 

The interest rate is something you need to consider. I'd personally run it at 9% for a conventional loan. Also minimize your time holding the property (vacancy is a killer). Buy conventional if you can and put the rehab on a 401k loan, 0% credit cards or something like that. 

If you can't legally steal it - don't buy it. You make your money when you buy. 

I'm personally taking a break from RE for the time being - the stock market is on sale so that's where my extra cash is going. In two years I think we'll be up easily 20% from today, if not more. RE is not going to beat that in the short term. I'll take some of that cash out and diversify into RE later down the road. 

Damn - make this a lesson learned. It's going to be a painful one though. 

Best thing to do honestly, is sell, take the L, then go from there. 

That's a big L on rents - we're not talking 100-200/month, we're talking $800 + everything else is probably closer to 1000-1200/month realistically. 

The RE market seems to have slowed down a lot the last year or so too, I'd expect the same for the next couple of years unless interest rates drop big time. Which I kind of doubt will happen. 

Plus selling costs - 3% is 12k - buyers agent is going to ask for you to pay their fees too - so you're talking 24k in selling fees, plus whatever they come up with on the inspection, plus whatever loss you take on the price. I believe these are considered "active losses" though, so you may be able to take a large deduction on your taxes at this point or going forward (don't quote me on the taxes, I'd have to take a second look). Your LTR is considered passive losses, so you can take that deduction too. So it's not all bad news. Did you take depreciation on the property? If so, you'll have that to recapture as well. 

Sell, figure out how this happened, learn from it, then move forward 

I would not short sale - you seem to have plenty of money even being in med school. I had about $200 to my name back in college LOL. Don't ruin your credit this early over an avoidable mistake

Starting with a fixer upper that needs a light rehab is a great idea - this is how I purchased all of my LTRs - key being rehabs between 20-40k

I would typically buy with conventional (if it's in really bad shape you may need to use a local bank or buy with cash) then you have some options - I used a 401k loan, 0% credit cards (usually you can get 0% APR for the first year and then just balance transfer if you can't pay it off) and cash

I personally don't mess with bigger rehabs - too much time/risk. And buying a distressed property is the best way (imo) to get a good deal 

This depends on both your market and the property type 

I have a duplex that doesn't have a dishwasher - why? More "affordable property. It's in a older section of town. Many of the other units around don't have dishwashers. It's a small unit - 1 parking place and 2 bedrooms - essentially a really large studio. I would consider it a C property in a C+ section of town. 

I have another house about a block away - 4 bedroom, 3 bathroom that has a dishwasher. Nicer property. Larger property. Newly renovated property. 

Also consider it's 2025 - people want a dishwasher. Between two properties, all else equal people will choose the property with the dishwasher. 

I also have had very little problems w/ the dishwashers - in affordable areas - maybe - just throw an "as-is" clause in for those people. Dishwasher breaks? Don't fix it until they move out - it's not a law/requirement and the rental was rented "as-is". That's what we do w/ one of my four-plex's 

I left the last STR comforter smelling like sweat and regret - so I hope you wash them or rotate them every stay

Just cut it and see what happens - ideally slowly and with an escape route