All Forum Posts by: Julien Jeannot

@Adam Foley

Welcome to BP.

I would recommend starting with the end goal in mind. What are you looking to achieve in the Real Estate investment space, then work you way backwards.

Couple areas to consider

- Passive vs active

- Risk tolerance

- Cash flow vs equity plays

- Tax implications

@Rosa Le

I agree with the rest of the feedback. Grab an experienced attorney in the space. Given the length of the leases, you'll want the peace of mind and the tools to accomplish your goals.

Remember, the DIY approach is risky when going up against seasoned professionals. You don't know what you don't know and can sign contracts which opens you to risk or are unfavorable.

 Yr1 => ($36k) net cash flow. $Value 272.5k

-$11.4k Rev

-$18k PITI

-$25k rehab unit 1

-$2.4k R&M

Yr2 => ($10.4k) net cash flow. 1 unit rented

Yr5=>$10.7k net cash flow. 2 units rented & fully rehabbed

Yr9 => $24k net cash flow. 2 units rented & fully rehabbed. Value $800k.

@Tychua G.

Just about on the rates.

Same play book. I've got 3 properties I'm prepping for sale to 103x into something bigger in Q1 of 2024. If rates goes up, then I secure a lower rate, if they come down, I refi and better the cash flow. 

If rates coming down, it will push demand in the market and drive equity up so I could also refi cash out and maintain a similar cashflow.

I'm more interested in the properties then the rates, finding deals is the hard part.

 Sure, keep in mind there are a lot of factors that does into the results. I'll provide a bit of context with first duplex house hack.

Goals

1. Start building a rental portfolio
2. Needed a place to live and did not want to rent
3. Safe location
4. Subsidized living (house hack)
5. Garage
6. Privacy
7. Able to commute to work
8. Value add play that I could do myself or hire a contractor without breaking the bank

Solution

• Property: Duplex
• Condition: Cosmetic rehab & rents under market
• Neighborhood: 1970ish, safe, long but doable commute
• Garage, big yard & subdividable – will build DADU eventually
• Did not match any of the of the “standard” rules. Ex: the 1%.

Results over time (5+ yrs)

• · 2x equity
• · Cash flows $1500/mo
• · Fully rehabbed
• · Used a HELOC to finance another property's rehab

Left 3 years in because the wife and I needed more space. At that point with rehab and rent increases the one unit covered all operating expenses and debt service. Did not cover reserves.

Then we bought a primary house. Used a HELOC to do a cosmetic rehab and convert the downstairs into an ADU to VRBO. Later refied to a better rate on the primary and paid off the HELOC.

@Corby Goade

Sounds like we have a similar story. 

@Tony Bryant Jr.

Welcome!

@Viral Jhayyy

Most loan clauses refers to the intent to live in the property for 1 year.

Do consult with a lender, there are downsides to using a strategy where you move out before the year is up on all of your purchases.

@Matt VanGorder

I play the long term game, my strategies play out the 3-5 year game. 

When you start taking the flow in to account, especially in the 10 to 15 year range, the metrics seem unreal:

- Value add strategy

- YOY increases in rents & expenses

- Principal pay down

-Conservative appreciation

With that approach, I found I'm buying base hits and growing wealth while others sit on the side looking the "best" returns.

@Christopher Morris

I use Zillow and sometimes facebook.

Here are a few items top of mind:

-1 year leases

-Have a written criteria up front. Plenty of good examples online w/explainations

-Become an expert in your local regulations and fair housing laws