All Forum Posts by: Jon Kelly

@Amanda Rose Take the emotions out of it and let the numbers tell you what to do. 

Run the 3-unit through the BP calculator. What's the COC return? Does that or the monthly cashflow meet your standards?

Compare these results to other deals you would target. Which one is better? 

If dealing with tenants is your biggest concern then consider hiring a property manager. 

@Leon Lee Option #2. This allows you to earn some $$$ while you're rehabbing. It will take longer but you'll have a very nice motel in 1-2 years. 

The only issue you're going to have is attracting guests to pay the higher prices for the newly renovated units WHILE the rest of the motel is rundown. 

I would also invest in landscaping and fresh paint throughout the exterior. You need to make it obvious this is under new ownership and bed bugs / moldy bathrooms / stained covered mattresses are a thing of the past. 

@Luther A. How many properties have you purchased so far? I hope you're at or beyond 100

@John Geldert I'm interested. I've been investing in the area for the past ~5 years

@Jason Charter it's a great question but this is 100% a personal choice. 

If this were me I would allocate $0 to my personal house and $235k to the next BRRRR(s). Since you want to remodel your home then you allocate as much as you like... 

The amount needed for a BRRRR is entirely dependent on your market. Most BRRRRs are purchased for cash and then you fund 100% of the rehab costs in cash. So, can you find a property in your market for $100k, needing $20 worth of work that appraises for $160k+? If so, then you need $120k for the BRRRR.

You're in a fantastic position to start your real estate investing career. Most people never get started because they don't have any funds or they spend them on personal things (e.g. bigger house, newer car, new watch, etc...). Don't fall into that trap. 

@Ruby Oliver start looking in your own backyard 

@Mike Bloom What do we do if our units won't rent??? We don't buy in markets where units won't rent... 

You have 2 easy options: 1. Lower rent until you receive qualified applicants. 2. Upgrade the units to make them more marketable

@Jennifer M. it depends on the condition of the property. Most traditional loans require the property to be habitable. If you can't find a traditional lender you can look for construction or hard money loans... 

@Chris G. It's part of doing business and living in a rental. If the tenant owned the place what would they do? Likely the same exact thing you're doing. The only time this becomes an issue is if you ignore the complaint or were negligent in finding a solution. 

The decision to compensate the tenant is entirely up to you, unless it's stated in your lease (which it likely isn't). You should consider the relationship with the tenant before making the decision. How long have they been there, do they pay on time, do they have any complaints against them, is this the first time anything has gone wrong in the apartment, etc... 

@Jeff Miller sounds like the perfect strategy. 

Don't be afraid to borrow money to give up some monthly cashflow but maximize your ROI.