All Forum Posts by: J.R. Arebalo

Hey @J.R. Arebalo - welcome to the world of RE and congrats on making the decision to make your first move. 

Your questions can all be answered based on what you're looking for. Some people find the property they like after only 1 day of viewings, others take months - it boils down to figuring out your criteria and moving ahead on a home that fits your needs. 

I know of a rockstar agent that covers Texas, and is a wealth of knowledge. Let him know Mo sent ya: https://michaelcaraway.com/

@J.R. Arebalo

There are numerous factors to consider before tackling the BRRRR strategy ranging from your schedule to financing, tax incentives to holding periods. Read through the following pros and cons to learn more about what you're diving into.

BRRRR Strategy Pros

Any investing strategy will promise certain advantages while bearing some level of risk, and the BRRRR method is no exception. Before executing any strategy, make sure to review the pros and determine for yourself whether or not BRRRR is appealing for you:

• Potential for returns: One of the main benefits is the possibility of a high return on investment. When done right, investors can purchase a distressed property for a relatively low cash investment, fix it up, and rent it out for strong cash flow.
• Building equity: One should also account for the amount of equity that is built up during the rehabilitation phase. When pursuing a passive income strategy, many investors are merely creating cash flow off a property worth the price it was bought for.
• Top-grade tenants: If a property has been properly rehabbed to meet consumer standards in a specific market, it will most likely attract great tenants. Tenants who are willing to pay top-dollar for their rental property in exchange for certain features and amenities are more likely to take better care of the property and reduce their expenses. Better tenants often translate directly into improved cash flow.
• Economies of scale: Once you hit your BRRRR stride, you can achieve something called economies of scale, where owning and operating multiple rental properties at once can help you lower your costs overall by lowering your average cost per property and spreading out your risk.

BRRRR Strategy Cons

The following list helps to shed some light on potential risks associated with the BRRRR strategy. However, it should be noted that these points are not necessarily cons or disadvantages. Rather, they warn investors of what can happen if they are not careful and have not minded their due diligence:

• Expensive loans: When opting to use a short-term or hard money loan to finance the purchase of a property, investors can find themselves over-leveraged, especially during the rehabilitation phase. According to Brian, a real estate investor and founder at SparkRental.com, “Far too many new investors underestimate expenses such as repairs, maintenance, vacancy rate, and other irregular but inevitable expenses that don’t hit you every single month.” Investors should make sure they know how they will make mortgage payments during the time that the property is not producing any income.
• Rehabilitation: Taking on a large rehabilitation project can prove to be expensive, with many headaches along the way. Rehabbing means dealing with project timelines, managing contractors and sub-contractors, and dealing with unexpected issues. Make sure that you have the right resources and contingency plans in place before tackling a project.
• Waiting period: BRRRR is a strategy associated with a longer time horizon, which includes at least two waiting periods. The first is during the rehab phase, where the investor must improve a property before they can place tenants and start earning income. The second waiting period is seasoning, a term that describes the period an investor must wait before a lender allows a cash-out refinance.
• Appraisal Risk: Investors typically refinance a property based on the appraisal of the property, rather than how much money they have paid into it. There is always a risk that the property will not be appraised for as much as expected. This should serve as a warning that running the numbers correctly in advance is crucial.

All the best!

@J.R. Arebalo DO IT! The best way to learn is from experience. Don't put yourself into a do or die financial situation. Buy at a price point that you can sell it without loosing much or anything if it doesn't work out.

1) I make offers on almost evrything I look at. If I don't like it, my offer is very low. My logic is that the is a price for every property that makes it a good deal.

2) If you go the realtor route, please don't waste their time. Be loyal to the best one you find. 

Wichita Falls is a great market.  We have a free monthly meetup in Wichita Falls and one in Denton if you're interested.  I'd also be happy to meet you for coffee.  Keep studying.  Bigger Pockets has a lot of great information to learn from.  

Welcome to the family J.R.!

My advice would be to keep educating yourself to alleviate the fear of jumping in feet first!  The more you know about real estate investing and the more you know about the potential market you want to jump in, the better!  My advice to anyone about to jump into real estate investing is to get involved in the community first!  Search Meetup.com and Facebook Groups for real estate investment focused groups and just start attending meetings!  The real estate community is very inviting and also very education focused, chances are someone there will take you under their wing and show you their mistakes and successes.

It is good to be cautious as this is real life money we are playing with, but as long as you do your diligence and aren't forced out of the market in less than 5 years, there really is no reason why you shouldn't be able to find success!  Just always remember your why and that will keep you on track.

I wish you the best in your real estate journey!  Take Care