All Forum Posts by: Joshua Manning

@William C. Possibly so the 7,000 Sq Ft includes a pretty huge Garage that could probably be converted into another room. And there is also one main kitchen in the property but also two smaller kitchen like areas, as well as two living areas in the property. So it would be doable although the areas are all connected (aside from the garage) so I don't imagine the separate areas would have much privacy.

@Brian Garrett That's awesome man, there's definitely no one way to invest in real estate. And many different ways can bring about success. I'm glad that way works for you!

@Brian Garrett Not trying to start an argument or anything but I don't think that is right.

The 70% rule is the ARV * 70% and then minus any repair costs.

Its set up this way especially for BRRRR properties since most lenders will only lend up to %70 of the New Appraised Value (i.e. the ARV) in a cash out refinance. This ensures you will be able to pull out your entire initial investment, including your rehab costs in the cash-out refinance.

Here is the link to the BP 70% rule calculator you can use my numbers and see for yourself.

https://www.biggerpockets.com/house-flip-estimatio...

@John Leavelle Thanks for the response and those are excellent questions.

And yes this is a SFR. The house in a college town and the rental market here is huge and is really booming right now, so I'm pretty sure I would be able to rent it out as long as I market it well.

As for the kitchen and bathroom remodel costs, what would seem to be more reasonable cost to spend on those? I assumed that since it would be a BRRRR property I would need pretty nice improvements to maximize the ARV value.

The proper would rent for about $2,150 per month

I'm expecting the monthly mortgage payments to be from around $1,500-$1800 per month initially. Since I would have to use a hard money lender initially. And then refinance to a lower rate later on.

So the initial cash flow would be $350 - $650 per month. and then hopefully more after I refinance.

Corny Topic Title aside. 

This post is about a potential BRRRR Investment that I found in my area. Full disclaimer this is pretty much just a hypothetical deal, as I am currently not in a position to purchase this property at the moment sadly. Mainly want I'm looking for is whatever or not the estimates I have for this property seem OK. And with MAO that I got using the 70% rule do you think I could potentially negotiate the buyer into selling this property. I know that these I kind of vague as you guys only have limited information on the property, so at the very least tell me if this sounds like a good deal to you. If so why, and if not then why not? I'm trying to train myself into being able to analyze potential deals better, that way when I get ready to buy my first property I can do it with the numbers as precise as possible, and with as few mistakes as possible.

(P.S. If it wasn't clear above this is indeed a real property that is currently for sale. The ARV is based on real comps in the area. The rehab costs are mainly rough estimates with minimal research since I'm not actually able to take on this deal, which is also why it is a hypothetical deal)

Asking Price: $160,000

Sq Ft: 7000

Bedrooms: 5

Bathrooms: 5

After Repair Value: $310,000

ARV * 70% = $217,000

Rehab Costs:

Kitchen Remodel: $25,000

Refinishing Floors: $10,000

Patio Deck Re-Paint: $1,500

New Paint Job: $3,000

New Window Shutters: $1,100

New Concrete Driveway: $6,000

New Doors: $9000

Bathroom Remodel: $20,000

(4K per Bathroom)

Landscaping: $2,500

Misc. Flooring: $1,500

Pesk Control:$1,050

Light Fixtures: $525

Cleaning (Before & After): $1,000

Misc. Expenses: $2,825

Total Rehab Cost: $85,000

Maximum Allowable Offer: $132,000

Problems with House:

Dirt and Grime Literally Everywhere

Bug Infested

(I'm talking bees, wasps, spiders, mosquitoes, etc)

House is Outdated:

(Wierd Bulky Ceramic Tiles everywhere,

Tin RooF)

Located far away from main part of city

Has A Garage but the Garage is basically unusable. At least for a car anyway.

I figure since there are so many issues with this house that I would have to see to and take care of that I could negotiate the seller down to a lower price.

Hello BP fam,

Just a quick question for those out there willing to answer. How much on a yearly basis would you say your income is from soley your real estate investments.

Also if your willing share how many units do you have, and do you do utilize

house flipping or buy and hold strategies more?

I'm just trying to get a good gauge on expected long term profitability and income from REI while putting together my investing strategy.

Why not just have him pay you up front for half the cost and then take 50/50 on the rental income?

If your concerned with @Michael Totman point about one of the other kids leaving with one of the adults. You could set up the requirement that since they are paying to stay there along with the adults that they put the minors under a sublease under the condition that the sub-lease of the minors be equal in length to the lease of the regular tenants.

I would keep only the four adults on the lease since they are the ones you made the original arrangement with. Also the 17 yo's are not likely to be able to pass your rental application after they turn 18, if your looking at things like Credit score, income Level, References, etc. many times 18 yr. olds are not in good standing in one or all of these areas, although their are exceptions to the rule I suppose. 

I would keep the original lease agreement with them, and if you want, you could add a clause that gives them the option to claim the 18 yr olds as sub-leasers. It wouldn't really change anything the four adults would still be responsible for paying the monthly rent. But it might make it easier organizing the information for record keeping purposes