All Forum Posts by: Joshua Manning

Hello BP family,

I have finally passed my real estate license exam for Louisiana. This is a huge step for me personally.

For so long I have been merely studying and talking about the industry, but now I can finally actually get out there and

experience firsthand what it is like to work in real estate. 

I have decided on having Keller Williams Realty as my brokerage and I start with them next week. If any in the northern Louisiana area is looking to buy and sell property let me know! Especially if they are looking to acquire a rental property I have some great leads for you!

Also if any of you guys have any tips or advice on how I can succeed as an real estate agent or what my next step should be please do not hesitate to give it!

I was wondering if any agents knew of any good alternatives to errors and omissions insurance for LA.

I don't want to use my commissions insurance policy. 

@Edgar U. Thanks for all of that info, I'll give that a try.

Edgar U. Thanks for the advice I've talked with a few agents in my area that work in for Keller Williams and it seems like an awesome company. What I meant by supplemental pay is that I've heard that at some agency's they offer a person a low wage maybe like $5/ hour while they are employed at the agency. Just to supplement their commission earnings for slow months or something like that.

Hey guys, I'm about to take my real estate license test in a few days and I've started shopping around for brokerages. Does anyone know brokerages in Louisiana or just in general that offer supplemental along with commissions for agents. It doesn't have to be much of course, but it would really help me in my current situation if I could find one like that. Also what are some good ways to generate leads for agents who are just starting off like me? I know about direct mail and door knocking but I was wondering if y'all had any of other tips or things like that.

If your okay with the added risk of the other way with the benefit of a higher MAO, then that rule can be just fine for you to use, because afterall it's only a guideline for your property investments

But that is assuming you actually have to pay the MAO, as investors we strive to get a Purchase Price that is lower than our MAX so we can have a greater profit. Basically we use the ordinary 70% rule because if worse comes to worse we can refinance and pull out our initial investment from a property, but as always this rule isn't perfect and there are ton's of ways a deal can go wrong even if you follow this rule.

At the end of the day it is mainly a safeguard agains't the risk associated with an investment property

@Brian Garrett When you subtract the rehab costs from the ARV your assuming that the rehab costs directly reflect the added value from the rehab, which it doesn't. The 70% rule isn't used to find the current value of the property. It is used to find a maximum cost of the investment that you can afford to pay. Using the other way misrepresents what you can really afford to pay on the property.

One reason it does this, is because your way it multiplies the cost of the rehab by .7 instead of using the full cost of the rehab. If you only pay for 70% of the repair costs your gonna end up with a lower ARV then what you originally projected. Which can be a problem when you try to sell or refinance the house.

For example:

ARV is $100,000

Your method you get an MAO of $56,000

Lets say you actually end up buying the property for $56,000

Then you rehab for $20K

All in cost in $76,000 which is 76% of the ARV not 70% which is why this is not, and can not be the 70% rule.

So lets say you refinance it. The Bank only lends you 70% of the ARV which = $70,000

Which means you can't pull out your initial investment, and you will only end up having $14K after the refinance which means you lost $6K that you put into the property

Now with the 70% rule you have a MAO of $50,000

So lets say you pay it. Then you do the rehab for an all in cost of $70,000.

Then you refinance for a cash out 0f $70k you can pull out your entire initial investment  out of the property repay the 50k and your left with 20K for a new deal.

This example assumes you went out of pocket for the rehab as well, if you had to take out a loan to complete the rehab then you would be in an even worse position.

Hello everyone,

So I've been doing some research trying to see if you can Utilize the house hacking a BRRRR strategies on the same property. Combining the two basically. There are a few questions that I can't answer though.

1. Do you have to use an FHA loan to buy your multifamily property?

Normally I would assume the answer be NO, but everyone always suggests getting a FHA loan for house hacking. I know it doesn't require a huge down payment and all, but can't you also just use a Hard Money lender or a Conventional Loan to buy the property as well, or id there some real reason why you can't house hack without a FHA loan?

2. How much equity do you need in a property to cash out refinance?

I want to know the cash out refinance requirements for an FHA loan as well as a Conventional Loan.

3. Building up equity in a property.

So one argument about not being able to combine these two strategies is that you can't build up the necessary amount of equity in a property over the course of the year you are required to stay in a property. But this doesn't make sense to me because aren't you building up equity in the property by forcing it to appreciate through the renovations you do on the property? If the ARV of the property is significantly higher than the Purchase Price than that should already give you a lot of equity.

4. If you are living in one of the units is this still an investment property?

I have also heard that Banks won't cash out refinance on a investment property with a FHA loan. But is the property still considered an investment property if you are living in one of the units?

If anyone can answer any of these questions I would be extremely grateful.

Interested to here people response so I'm gonna follow this thread