All Forum Posts by: Kenneth Garrett

@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.

@Peter Morgan

Make sure your rental agreement covers these types of issues like bulb replacement. I use an attachment that covers all of those minor issues and who is responsible for what. It needs to be very clear. I think your always adjusting those rules as things come up.

Each tenant is different. Some are a little handy while others aren’t able to do anything. As an example, if the cabinet handle is loose; a simple screw driver will fix it. At times, I get called for these things. When I started, I would respond and I would show them how easy it is to fix it. It worked well, but I kept adding to my lease agreement. There is a line about what you want them to do. I’ve been pretty fortunate with tenants in this regard.

@Katie Miller

When I started I was working 50 hours a week and had two kids at home. Time was limited, but I felt I become super efficient with my time. Couple hours at night on the computer, attend a REIA class once a week. I did a lot of networking in the time I had available.

Things started slow. The first year I was a big sponge taking it all in and educating myself. Once I started, I flourished with BRRRR deals and at one time had over 20 units. Mostly SFR and two and four unit buildings. Did a few flips as well.

It’s like anything, if you want to succeed you need to put the effort in. It’s all worth it.

COC is the metric based on the first year. But you can extend it out until all of your cash is returned. I believe the goal is to get your cash back and reinvest in another project. This method allows you to reuse the same capital.

If you finance the property, your tenant is paying your expenses and your cash flow after your return of equity as a return is infinite. You have all of your capital back.

@Andrew Pettit

Whether you’re borrowing from parents, family, friends, etc.  You’re borrowing from a private lender.  You want to protect their interest even more with family.  Agree on the amount, interest rate, how long, etc. Are they going to be an equity lender where they stay in the deal.  As in a flip when it’s sold they share in the profits; typically 50%, but you can agree to any percentage.  A debt lender where you pay them a flat interest rate.  Say it’s 8% (family discount).  You can also do a combination of the two.  Have an attorney draw up a promissory note and a mortgage or deed of trust depends on your state.  Protect there money at all cost.