All Forum Posts by: Kenneth Garrett

You can read David Greene's book on BRRRR, or you can just ask here and we will answer your questions.

I self manage my properties, but then I moved to another state. I have a handyman who can take care of the calls and if I need a new tenant he can show it. I bought a STR in Florida while I was living in the Midwest. I went down there to furnish and find a cleaner and handyman. It works well. Nothing wrong with using a pm, I just prefer to handle it myself and it really doesn't take much time at all.

@Ademola Dawodu

I've done plenty of DSCR loans. None of them ever showed up on my personal credit. The loan is taken out in your entity, not you personally. They do run a personal credit check, but the loan is based on the asset not you. Of course, if your credit is not good they won't lend to you or your paying a higher interest rate.

I found small local banks and credit unions are the easiest to work with. The process is much easier then a residential loan. Much less intrusive into every penny you have. I don’t have to explain why my 85 year old aunt sent me $10 for my birthday. It is lender specific.

@Luka Jozic

That kitchen is really outdated. It all depends on your competition. If the competition has updated kitchens and you don’t then you probably need to update. On the other hand if the competition has old kitchens like yours and you update yours, I would think you could get a higher rent. It takes time to recoup rehab costs. One thought is if by updating the kitchen it reduces days on market then that out money in your pocket. An updated kitchen is generally a positive thing, but it all depends on your market. It will definitely be easier for your pm to rent the unit with an updated kitchen.

If I could reduce days on market and get a higher rent then I would probably spend the money. It might take a couple of years to recoup my money, but if your going to keep the unit long term, I think you will be ahead. A reduction in days on market from 30 to 15 at $1000 rent is $500 plus if you can rent it for $100 more a month that’s $1700. That’s about two years to recoup your funds.

@Galit Garsiel

The only way to know if small improvements will benefit you is by looking at your competition. Go to apartment.com, there you can see what apartment competition you have. Sometimes the improvements make it easier to rent versus higher rent. If you can reduce the DOM then it is like putting cash in your pocket. If it typically takes 30 days to fill a unit, but you can reduce that to 15 and rent is $1000. You just made $500. Might not seem like a lot, but anytime you can beat your competition that’s money in your pocket. Furthermore if your competition has old worn out appliances and bad paint jobs, you might be able to charge an extra $50-$75 a month in rent. At the end it depends on your market.

@Nicholas L.

Every investment has a degree of risk. The degree of risk is based on our feeling of the particular strategy. It sounds like you feel the house hack is less riskier then private lending, which I totally understand. If your looking for a passive investment strategy then private lending is a better route to go. Some investors might feel house hacking as in a duplex situation don't want to be that close to their tenant. Some might think that is risky or just a hassle. We all need all make our choices of what strategy we feel is best for us. I went the BRRRR route and some flips. It's all based on your investment strategy and your degree of risk.

@Nicholas L.

Any investment requires knowledge and skill. Whether you are house hacking, flipping, BRRRR, rentals or other strategy all requires some skill. You have to learn what a good deal is. At some point we all started at the beginning. I spent the first year attending local REIA meetings and other real estate events. I didn't buy my first investment until the second year. It took education and networking and my time. Without it I don't know if I ever would have started. I've been a private lender and have borrowed from private lenders for years. I met the lenders at my local REIA meetings. Wasn't trying to say it was simple or easy. If it was every one would do it.

A basement suite with a separate entrance is the same as another unit.  If it’s part of the unit upstairs no problem, but if you rent it separately to a different tenant then it’s a 2 unit building.  If the ceiling height is 6’6” it’s to low unless the city allows it.  You need to check with them.  The height is measured from the top of the finished floor to the ceiling.  If you are measuring from a concrete floor, when you finish it with carpeting or flooring the measurement will be from that surface, which actually reduces it somewhat.  I’ve seen some inspectors who are ok with it lower while others are sticklers.

Good point. The best BRRRR projects I have invested in have been ones without kitchens (no cabinets, counters, appliances, etc) and bathrooms gutted. You can buy these very cheap and they have great potential for forced equity through rehab. Conventional financing is not possible. I use private money not hard money. You need fat in the deal to make the numbers work.

@Kim Parker

There are a number of things to consider here:

Does the city zoning allow duplexes in your zoning district?

Does the basement have enough ceiling height? In general, it is 7 feet minimum with some exceptions around beams and duct work.

Yes you need an emergency escape window. Your current size is to small. See section of the International Residential Code 310.1.

Where is the electrical panel located?

You will need permanent heat, smoke detectors, carbon monoxide detectors (if gas heat or other gas appliances).

I am assuming it’s currently unfinished. Lots of rules to meet compliance.

Check with your local building department on any amended rules.