All Forum Posts by: Joe P.

I think I'd argue this applies to any type of real estate transaction in today's market.

You have money rushing in from nearly every source, with a RE market being propped up heavily by the government. Instead of mortgage entities writing bad loans that led to 2008, you have the government artificially propping up the mortgage market. Everyone is in. When that happens, I get ultra-leery of deals that come across my desk. The concern isn't so much that the federally backed mortgages are cheap, its that its creating a white-hot real estate market. Appreciation in the middle of a pandemic is insanity, but here we are.

A deal is a deal if you make money when you buy, and that really is step one of BRRRR...it should be called E-BRRRR, because you need to properly evaluate a deal to ensure it can be BRRRR'd.

I don't know when or if we will pay the piper for what's happening in the market. But smart buys are good in both bad and good markets, on the whole, so make sure that's what you do.

They used to be low. My old property was at 7th and Washington and I think I paid $800 for the year in property taxes. Then they rolled out AVI, which was a percentage to be used based on assessed value, and it went up to $2600 for the year in a single shot. You were able to homestead exception ~30,000 off the assessed value if I recall. I wasn't particularly happy but it basically ate all of my income on that property. I ended up selling it.

Point being when the reassessment occurs, you will likely get a single shot up as most residents did when it was rolled out. The assessed value is typically not what you bought or sold for, but in a rapidly gentrifying area you're going to see widespread reassessments. My buddy had a house at 21st and Kater and that property now is assessed at $359,900. I believe with the homestead excpetion it would be about 310. And AVI was 1+% of that value, so at least 3100 per year. I think its 1.28% but don't hold me to it and I couldn't find it. So that's Graduate Hospital area that's clearly well-gentrified. If you've got something in Grays Ferry, for example, you're probably next.

I'd argue the opposite -- if the city was smart they would properly tax those rehabbed neighborhoods. I'd plan for the worst case scenario and then be pleasantly surprised if they don't for a few years.

Welcome -- right now the best thing to do is educate yourself. Brandon Turner's book is fantastic and helps "scratch the itch", so to speak. There is lots of "right ways" to invest, and lots of avenues to make money. What's more important is knowing what your goal is (immediate appreciation, long term cash flow, passive investments, et al) and then the avenue or "what to do next" becomes more apparent.

I assume as a pro soccer player you may travel quite a bit, so anything you decide to do will need to be managed by someone other than yourself -- you can't be in Memphis and try to fix a broken window in New Jersey, for example. But that's cart before the horse...right now I'd soak up as much info as possible with RE books, follow some key BP people and forums/topics, and learn as much as you can!

Hi all, just wondering if anyone works with any lenders who fund multifamily vacation homes for less than 25% down payment?

My goal is to have a duplex/triplex with owner quarters and renting out another unit.

Looking for options as since its multifamily & vacation home -- traditionally MF needs 25% down but vacation is 10%, hoping I fall somewhere in the middle as I don't want to pump a ton of cash into a deal (especially if it cash flows).

When stupid money starts going in, that's when I take a step back. This is not limited to your market. The government has made it super affordable to buy a house, probably more so than any point in recent history. The result is people looking to sell their houses at a premium (lots of buyers, low inventory) and people buying at premium prices because, why the heck not -- money is super cheap for borrowing.

The adage of "you make money when you buy" still holds true. If you can find a property that is distressed against current ARVs in the area, then it's a good selection. Cash flow is the name of the game (for me) but sensibility is too. No reason to buy a market priced multi-family for a high price that doesn't justify the cash flow.

My point in quoting what you said is to caution you, because you alluded to it yourself -- "The only thing that stops this momentum is if the NATION goes into a deep dive." If the market we are in now is being propped up artificially, then its not difficult to envision this happening. Remember that the stock market doesn't represent Joe and Jane America. That's why if you buy at a discount, invariably when things will fall -- which is almost a given, it's just a question of how bad and for how long -- did you put smart money in or stupid money in? You can survive on smart money, but people lose their shirts when its stupid.

2016 Mini Cooper, bright orange. No joke.

I've always loved Mini Coopers, and this thing was sitting for so long (probably because of the color) and the price couldn't be beat, I had to snap it up. It reminds me of the (Philadelphia) Flyers orange and black, and I'm a big fan, so its perfect. I have street parking only, and having a smaller car with some of the bull$&!$ spots people leave on the street has made parking far easier for me.

With respect to visiting properties, I'd like to maintain that I am an investor. I drive by frequently for any visible issues and I report to my property manager. If I have to enter, well, I'm not sure what to say. If someone sees my car (and given the color, they probably will), and they think a certain way about me...that's on them. It's not a sports car, it was used, and probably cost less than their car. I don't care about what tenants think for the most part, and they shouldn't care about what I think. We enter into a lease agreement and both sides have to maintain the specifics of that document. That's it.

I thought the max you could have is 10 mortgages, but I could be wrong. Check in with a mortgage-specific lender (e.g. a Greentree Mortgage) and see what the deal is.

I think once you hit 10 you'll have to start with commercial financing which has less than advantageous terms, of course.

Maybe a cash-out refi into a 30 or 15 year umbrella for all of your properties is an option? You may lose some cash flow, but you'll get some cash out of the deals which you can use to fund more deals. If you have 400k equity, taking out 200k for 800k-1 mil complex might be a good option for you?

Could you speak with the appraiser to try and understand why he valued it lower? Maybe they don't have all of the info necessary, and are also being cautious during covid to ensure they don't overvalue properties.

I had my primary home appraised by an appraiser who only did drive-by. It was easily about 40-50k less than my expectation -- it didn't affect my refinance on my primary since my loan value wasn't near the appraisal. But then the appraiser had to do a walkthrough and told me that there is market uncertainty leading to lower values. But of course, walking through, he could see the house was updated, clean, and in good shape.

Instead of going right to shooting the guy, talk to them. See if they would be open for an in-person visit, or understanding where the value wasn't as high as it should be, and perhaps with more data they could see if it improves the value or not.

I'm a small-time investor wrapping up a rehab on a BRRRR. Here's my thought...exit strategies abound when you get into a rehab for what you just mentioned. I've flirted with the idea myself on this particular property because of how it's turning out so far.

ROI is important but when you're cash out refinancing, technically if you BRRRR'd correctly, your ROI is 100%+ - you put 100k in for purchase and rehab, refi out at say 130k ARV (80% = 104k) essentially covering every dollar you put in. But you are receiving monthly ROI in terms of rent, not paying taxes for your refi (since its not a taxable event).

So I'd offer that while flipping could make sense if you think you're going to do better, I think ROI is not the best metric to use in this case. Rather you may consider a pro forma over the course of several years -- e.g. 60k taxable profit today or say 30k cash flow over 5 years with an appreciating property and equity. Only you can answer what is more important to you and how it aligns with your goals.

I like the idea of passive income, and 60k windfall sounds great. But for my goals, its more important to build the passive income over time. You might be different and want the cash.

All of the metrics and statistics are great ways to evaluate a deal, but when comparing exit strategies against each other, I think you need to determine if the exit strategy aligns with your goals or not or gets you to your goals. Surely a negative cash flowing BRRRR would help to make that determination, or if you can't cash out refi at the value you want...but don't take the short term profit if it won't align with what you're trying to do.