All Forum Posts by: Jon Kelly

@Matthew Laughery you can create an LLC if that's the way you want to go. No need to wait until you purchase a property to setup.

BRRRR, house hack or wholesaling are great options for "newbies" to get started.

I wouldn't worry about what option is "best." Perfection is the enemy of the good. Just focus on finding deals, underwriting conservatively and networking with the right individuals.  

@Kaiya Sherriff you can get fantastic real estate advice since this is a real estate focused platform. Skip the IRA / Brokerage account and find yourself a househack opportunity. Reinvest the proceeds into SFH or MFH buy and hold. You'll be able to retire before 35.

@Rekha Kesharwani do both. It's one thing for an agent to tell you what they think about the area / market. It's even better if you can verify it with your own eyes. 

@Daniel Miller definitely look into 1031 exchange for tax savings. I would do one of two things: 

1. Purchase a large multi-family property. Let's assume you take home $1.8M after expenses. With 25% down you purchase a multi-family property up to $7M. If you purchase a large enough complex you can hire an on-site property manager. 

2. Become a limited partner in a syndication. This is a truly passive option that yields 8%+ per year. 

@Peake Nasrallah can you hold this and turn it into a rental? 

Use this as a great learning opportunity for your next flip. I promise it gets easier after the 1st one. 

The one thing that struck me was when you said, "we pulled it off the market and began to address some mild cosmetic issues with the home that buyers were pointing out: all new interior doors, replaced the rest of the old trim, new front door, and various other cosmetic touches." 

How do you spend $50k on a $350k+ property and not address some of those issues before putting on the market? Your agent should be your best eyes and ears. If they didn't tell you this before you listed the property it's a bit concerning. If they told you this and you completely ignored them then that's on you. 

@Christopher Nichols two things: 

1. It's hard for us to provide feedback because we don't know the current condition of the property... 

2. Look at other similar properties for rent in your immediate market. What is the condition of those properties and what is the asking rent amount? You can make improvements to be as nice as other comparable properties in your market. 

@Mike Lynch why don't you actually run the numbers and post what you're seeing? What are the numbers if you turn your property into a rental? What are the numbers on a BRRRR property in your market? Run the numbers through a calculator don't just make this theoretical. Compare the monthly cashflow, COC return and/or IRR between turning this into a rental and purchasing new rentals.

As @Greg Scott said, both options 1 and 2 are great. Option 2 is your easiest path forward.

Roc Capital lends in Oregon. Feel free to reach out

@Paul K. McCoy haha, now it makes more sense. I read your initial post as "inspection" instead of appraisal... 

100% you might have issues. What's the best comp for the appraiser to you? Your property! The appraiser would factor in renovations, but if you aren't doing any then it's hard to justify the higher price. I would suggest speaking with the lender / appraiser and describe the circumstances as to why you received a good deal on the property. Did the seller need the money quickly? 

Your other option is to wholesale the property. Put the property under contract and then go find a buyer to assign the contract to. This will save you on closing costs because you're not closing twice and will remove the appraisal issue. 

@John Matthew Johnston They seem decent. 

Pros: 4.89% rate is strong. 

Cons: (1) Amortizing over 20 years instead of 25 or 30. This increases your monthly payment. It might be tough to find a 25-30 year loan with these low loan amounts though. (2) It's better to find a completely fixed rate. 5-year ARM is OK, but better if you can have it fixed throughout the life of the loan.

Two other considerations: 

1. I assume you're using the same lender since the terms are similar. Ask if they can package these into one loan. You'll reduce your closing costs and you may get better terms because your loan amount is 161k instead of two smaller ones. 

2. How long is the prepayment penalty for? It should expire after 3-5 years. If it's over the life of the loan (which I doubt it is) then you should change that.