All Forum Posts by: Kenneth Garrett

@Tony Gorokhovsky

I just bought a property in the Florida Panhandle.  Doing great with the help of @Avery Carl and her team.  Took 6 months to find the right property and got outbid many times, but persistence is the goal.  I live 950 miles away.  Spent three weeks there rehabbing and furnishing it.  I’ll have my investment for rehab and furniture back in the first year.  Cash on cash return in excess of 20%.   I looked at Airdna but I followed at @Luke Carl concept of enemy method.  Search your competition and see your actual competition versus some algorithm.  

@Devan Wilson

Brandon is referring to this because we’re forcing the appreciation through the rehab and we’re keeping the property for cash flow on a long term basis so you can pay more. Be very careful.  That doesn’t mean you can pay 20K more.  Analyze the deal as always.  The 5K more you pay is the difference between getting the property or not.  Currently the market is out of control, so you’ll need to find off market deals or a creative deal.

@Nathan Gesner

I just evicted a tenant in Illinois which is not easy as it’s very pro tenant.  Per state law we had to serve the tenant with the form.  Had to serve them three times throughout the process. Sheriff would not serve so we had to hire a process server.  Illinois had a no eviction executive order until recently where you had to prove you were impacted by COVID.  Lost 8 months of rent,  but we got the unit back.  Hang in there everyone.  It can be done.

I've completed many BRRRR's and have been very successful forcing the equity into the property. I think the concept of putting money in your pocket at the closing, no money left in and a great cash flowing property is overblown. To hit the trifecta you'll need a smoking deal. I usually have all my money out in the first 12-18 months. In theory , no money stuck and good cash flow. If you take all the equity out you will have negative cash flow. Let's be happy with no money left in and a healthy cash flowing property.

I have completed many BRRRR projects and like all investing has its risk. I tend to rehab the same as a flip. I could flip or hold. I have completed many flips as well. Do all strategies work all the time, NO. Be prepared for the unexpected. The BRRRR and flip strategies are very similar. Yes, I have encountered many surprises during rehabs, that's part of the deal. Be prepared. You still have to buy right, have the means to refinance and be a landlord or hire a mgmt company. It is not the holy grail of investing. It takes hard work and above all you must buy right. The market is insane now and unless your buying a smoking off market deal market your better off waiting. That's tough to say, but if the numbers don't work don't buy. It's not the strategy that doesn't work, it's the execution of the strategy.

I recently bought a short term rental property (beach house) out of state.  The potential is way better on cash flow.  In just two months I have booked 15 weeks of the year.  At this rate the return is unbelievable.  Could something go wrong, of course.  A guest destroys my property, hurricane etc; it’s real estate investing.  Once again, It’s not the strategy, it’s the execution of strategy.

Good Luck Everyone.

@Bruce Zhou

Based on your numbers of a $200 monthly cash flow with a 20K down payment that equates to a 12% cash on cash return; it’s actually not bad.  Could you do better with other investments maybe.  Remember you do get to take advantage of tax advantage deductions such as; property taxes, mortgage interest and depreciation so your return is actually better.  Don’t forget mortgage pay down and if your fortunate appreciation.  Although, I do not consider appreciation.  If it occurs it’s a bonus.  So your return could actually be closer 20% depending on your particular tax return.

You did not include any repairs to the property upon purchase.  Your numbers might need to be adjusted based on the condition of the property.  Let’s assume there are none.  If you were able to cash flow $300 per month then your cash on cash return is more like 18% plus the tax deductions so maybe your annual return is closer to 25%.   Then I think it’s better then the stock market or other investments.  My goal in this economy is a minimum of $300 cash flow.

It really comes down to your type of investment vehicle. I typically invest in BRRRR projects where upon refinance my return has been as good as 100% within the first year. I was able to force the appreciation through the rehab and my return became infinite after the first year. No money left in the deal. I just bought a short term rental out of state (Florida). Those numbers are looking to be fantastic. Better then a 20% cash on cash return before the tax advantages.

Just offering other opportunities to improve your returns.

Good Luck.

@Pete Pernal

If you are refinancing with a residential loan then you own the property in your name. They will confirm W-2 income, DTI and other requirements. If you go commercial financing you will need to own the property in a LLC or other entity. The property will need to cash flow which is typically a DSCR of 1.25 or better. Your rate with be approximately 1% higher then a residential loan. Usually 70%-75% LTV. The larger the bank the more red tape you have to deal with.

I found it best to use small local lenders in the area.
Good Luck.

@Joe C.

So I bought a STR in the Destin area and I can tell you first hand there are no prices declining there. It took 6 months to find a property. I got out bid numerous times and many multiple offers I lost on. I closed in February, furnished and rehabbed the property in 2.5 weeks and the vacation market is fantastic. Definitely a great area.

@Samuel Akinrotiba

I started out with using the BRRRR method. Bought the property using a private lender I met a REIA meeting. I paid for the rehab ($17,000). The project went vary smooth. Rehab took about 2 months found a tenant in about 10 days and refinanced in another 60 days. It went very smooth. A few surprises during the rehab, but all in all went pretty much per the BRRRR method. That was 6 years ago. Same tenant is still there.

@Julia Maddox

Are you getting the property at a discount or is that the market price.  I am assuming these are hardwood floors.  Provided the floor joists aren’t damaged, this is not a major rehab.  In  many cases you replace the bad boards and have the floor refinished and it will look brand new.  The frozen pipe occurred so the seller will need to repair it.  Make sure you have the repair inspected.

If your buying at market price, get some quotes on the floor repair.  It might only be a couple thousand dollars.  Not a deal killer in my mind.

As an STR, a couple thousand can be made up quick.

As part of your due diligence contact some flooring contractors to get some prices.  Your home inspector should be able to help.