All Forum Posts by: Kenneth Garrett

@Valentina El Frih

I used a second home/vacation home for my STR. 10% down. I had to agree to use it 14 days a year, which was no problem to enjoy family time there once or twice a year. I could not have a lease on the property (more then 30 days), but STR no problem as long as stays are less then 30 days, which typically is the case.

@Thomas O'Donnell

Refinancing is acquiring a new mortgage and the idea is at a lower rate. A $200,000, 30 year mortgage at 7% is a monthly payment of $1331, but at 5.5% it’s only $1136, that’s a $195 savings each month or $2,340 a year.  Yes, there is a cost to refinance, depends on the lender.  1% and some closing cost as an example.  The first year of savings might be washed away by cost, but after that you are saving money whereby your profit becomes larger with cash flow from rent.  While you are waiting to refinance in a year or two you are reducing your principle so when you do refinance it might be at $195,000 or $190,000 which will reduce your cost and Increase cashflow.  You definitely want to wait till the reduction in interest rate and terms are worth the refinance as there is a cost.

Years ago you might have gotten an interest rate at 8%.  You might have refinanced multiple times, by the time it came down to 3%. 

My Bentley’s in the shop otherwise, I would be driving it to all my rehabs.  It’s a little tight to load up 2x4, 2x6, 2x8, 2x10, etc., but that’s life as a rehabber.

Those shows are based on entertainment not reality.  I think the average flipper doesn’t make 100K or more per flip and of course the market went up while they are working on their project.  If I had to pick a show I prefer to see ones with small profit amounts it‘s much more realistic.  Good Bones shows very little profits for the most part, but they are in Indianapolis.

Let’s face it flipping houses is boring.  They have to create drama, which of course in the real world, there is no lack of drama when you work on projects.  I also like battle of the beaches where there are 3 or 4 teams competing on different same home layouts.  That’s good for different designs ideas of course it’s generally beach related.

@Kyle Curtin

Let me add some other resources.  

I like to go to the local hardware store in my area and find local contractors.  They are always willing to share there own experiences and I have had very good luck this way. You can also use the big box stores, like Home Depot, Lowe’s etc, but I’ve done better with the local hardware stores.  After you find one good contractor you can get referrals from them that is another great way.

Of course, word of mouth is the best as @Kyle Curtin had mentioned from other investors, if you can get them to share their contractors.

Attend local REIA meetings and seek out contractors and as always get referrals and always check those references. You would be surprised what people will say even if they are satisfied with someone.

@Carlos Ventura

Overall the market is tight, but there are opportunities depending on your specific investing market. When I look at BRRRR projects I look at the spread of the purchase and after it's fixed up and what the ARV will be.

My first BRRRR I bought a 3/1 SF for $85,000, put 17,000 in rehab and the ARV was $125,000 (this was back in 2014). I recouped most of my money at the refinance, but had a couple thousand left in. I was able to recoup the rest of my money within 6 months of refinance. The key is to know your market, have a good contractor in place and speed of the rehab. Time cost you money. I would also say don't be cheap on the rehab, a good rehab will avoid tenant calls on fixes/repairs, you'll get a better ARV and better quality tenants. When I BRRRR I take a flip approach to the project. Look at your competition and see what there finished projects are and always try to make yours one step above there's if possible.

@Zach Fagas

When you have a meth building it gets into everything.  The remediation process is to replace all electrical connections.  That means all light fixtures, receptacles, switches, etc.  The HVAC should be replaced as well, it is possible it could be cleaned, but it is very difficult.  The duct work may be able to be cleaned, but I see replacement of that as well.  I would find out what they did and how it was done.  They should have hired an environmental clean up company that specializes in Meth clean up.  If it’s not cleaned up properly new tenants could get sick from it.  It absorbs in many products where if it can’t be cleaned properly and they have to be removed and replaced.

Again find out what process they took to remediate it and get a sign off from the company that did the clean up.  There is no formal process you can go to there are just guidelines.  It’s an environmental headache if not done correctly.

@Wilder Fuentes

Many cities don't have an actual ordinance prohibiting STR's. They use the zoning ordinance to prohibit them by uses.

By definition, they use hotel/motel which generally states a “A building in which there are guest rooms designed for temporary occupancy individuals on a daily rate to the general public of 30 days or less.”

Then you look at the actual zoning district your building is located in and you most likely find a hotel/motel are not one of the permitted uses and therefore it is prohibited.

Other cities actually have an ordinance.

@Joe S.

What was your goal when you started out? If you have met your goal, then maybe it’s time re-evaluate. Goals change all of the time. You just have to figure out what you want out of investing. Nothing wrong with taking a year or two off, especially in this economic market. Do what makes you happy. Isn’t that what life is all about anyway.

@Kyle Curtin

I like to contact small local banks and ask about REO properties they are holding. I've been able to buy many properties this way. No competition, you do get to negotiate a bit and they will contact you in the future if they have any properties. The last bank I worked with forced me to buy multiple properties at the same time in order to work the deal. It was definitely worth it. You can buy them at a discount and are great for BRRRR projects.