All Forum Posts by: Jack Medford

@Christin Ross You hit the nail on the head with why BRRRR's are a lot easier to recommend than they are to pull off. #1 reason being that properties, even full rehabs, are not priced accordingly to make the strategy work. Not to mention that everyone and there mother is attempting a BRRRR. It reminds me a lot of when those HGTV shows about flipping got really popular and then all of a sudden every new investor was going to be a flipper.

You seem like you've got a pretty good bit of knowledge already, and a good head on your shoulders. Probably don't need a whole lot of advice. I'll still chime in with a little, but it may not apply. All depends on where your perspective already is. 

My advice: Don't go big for the sake of going big. I've seen this so many times (and even done it myself) where people buy more house/land than they need simply because they can. It is easy to become lured in by lots of land and/or a large home, but it takes a lot more money than most people realize to upkeep all of that space! 

@Liz Stewart Any market can be a good market or bad market to buy, it just depends on the deal and what your plans are. In a volatile market, cash flow is the important factor. When you say that rental income is $1680 for the past 2.5 years, do you mean that is the gross monthly income? In other words, gross income of $20,160/year?

These don't seem like terrible numbers, especially with no mortgage. However, it sounds like you are concerned with the area, so perhaps a 1031 could benefit you to move your money to a new asset. 

For reference, I am still buying properties. I understand that a lot of investors are concerned with what might happen with the economy in the next 18 months to 2 years, but that is why I am focusing on cash flowing properties in B and C class areas. I'm also not purchasing anything that I plan to sell within 3-5 years. Lastly, I'm being very careful with debt and not becoming over extended. 

Let me ask, what is your biggest concern with purchasing a new property in an uncertain economy? Is it mainly about what might happen to the price? 

Where is this property actually located? Inner city Milwaukee is pretty rough. I think your vacancy assumption is way too optimistic, especially if this is in the rougher areas. Also, 15% total for CapEx/Repairs is probably on the low side for the inner city.

I also agree with @John G. that your insurance numbers are way too low. Water & Sewer is also likely to much higher since it is standard in Milwaukee to have landlords pay for that utility. 

I agree with @Allyssa McCleery in that this sounds like you're heading down the road toward syndication. I would suggest learning everything you can about it first to see if it is the right fit for you. Joe Fairless has a Syndication School, which consists of podcasts detailing the various aspects of apartment syndication. Theo Hicks is a pretty consistent contributor on the BP forums, and he is the actual host of the podcasts, if I'm not mistaken. Maybe try reaching out to him directly to get some advice beyond just the podcasts. 

@Yaniv Kehat I agree with the overall sentiment provided by @Marcus Auerbach. My first attempted BRRRR was in Milwaukee, and it was a challenge even living 1.5 hours away. I was able to be there often, but certainly not everyday and had to trust the team I had found. It worked ok, but definitely not a homerun. It is not to say it is impossible from afar, but your first deal or two will likely need to be approached from the viewpoint of learning as opposed to expecting a big payday.

Are you only interested in flipping, or are you also planning to buy and hold any properties?

@Andy Ramdeen You can start with the BP events page, found here. I filled in all events within a 25 mile radius of NY, but scroll down if you'd like to change the search. You can also search for your local REIA group (Real Estate Investors Association). Lastly, I'd check meetup.com for anything that might look interesting. 

I imagine NY would have a lot of options. Just gotta dig around a bit. 

Depends on the property and the overall candidate. I have a couple properties in a low income area, so good credit scores are pretty much non-existent. I tend to focus more on rental history and income to rent ratio. 

That said, for nicer B class properties I expect a higher score to go along with these metrics, since tenants tend be more secure financially. 

I agree with what @Theo Hicks said, which is that you should qualify for financing before pursuing deals. Not only will this give you an idea of what you can afford, but it will also provide you with credibility. 

Selling agents expect to see proof of funds, or at least some sort of comfort letter from a bank stating that you are in fact lendable. You are not likely to get any accepted offers without some way of showing proof of financing. If you somehow do, just make sure you have the financing contingency as @Patrick Shea suggested. 

I've done this a number of times. Pretty typical, especially for tenant occupied. Just make sure you have an inspection contingency in place so you can back out if it looks a lot worse than you were expecting. It is a little annoying at times, especially paying for an inspection when a quick visual would have brought about an easy no. Still, it is nothing to be worried about as long as contingencies are in place. 

@Andy Ramdeen I found both of my through a local meetup. It is actually put on by local BP members, so the format is very laid back compared to a lot of typical real estate meetings. I highly suggest getting involved in local groups if at all possible.