All Forum Posts by: Kyle McCorkel

Sheesh, meant to say an appraiser will NOT appraise higher with granite countertops. Not typing well today.

@Brian Tran Sorry, had to extend to 2 posts due to app issues... Anyways I shoot for C2 condition which basically means all major components to the house have been rehabbed in the past year. Roof, HVAC, floors, kitchen, bathrooms, paint. Now you can get away with a C2 condition by saying you had a 5 year old furnace serviced and doing roof maintenance on a 7 year old roof, as long as you can show all the other items (cosmetic) have been updated. So you can get the C2 rating with cheap finishes because technically it is still freshly rehabbed. An appraiser will usually, in my experience, appraise higher if you have granite vs laminate countertops. Of course you also need the buyer to see the value as well, but the appraiser will most likely be the constraint more often than the buyer.

@Brian Tran Appraisers value based off size (sq ft, beds, baths, garage y/n) and also condition. So if you have a 3 bed 2 bath in “C4” condition then he will compare your 3/2 to other 3/2’s in C4 condition. Condition ratings are ridiculously subjective in my experience. But the best way to get this as high as possible is to at least update something in all the major components of the house

@Kevin Tuttle Have a mortgage. Returns from real estate are mediocre without leverage. End of story. If you don’t leverage you might as well invest in a passive index fund.

@Jay M. The banks always price their properties for the uninformed primary home buyer. I frequently see those kinds of numbers where if I were to do the math my offer is less than the banks asking price. Many times it sells like that to the uninformed buyer! Sometimes it is an uninformed investor, or an investor that doesn’t value their time. So they will get it for $10k more than me and either blow the budget on the rehab or do all the rehab themselves to “save money”, while spending 6 months working on the property and paying themselves $5/hour.

@Chris Tolstoy

I was just recommending either private or hard money as another option for funding.  This can help you get into larger deals.

@Brian Dickerson

I've had contractors discuss partnerships before but I haven't pulled the trigger yet for the same reasons as you.  I'm not sure how to structure it either.  Similar to you I don't need a money partner, so I'm not sure how it would benefit me to enter a partnership with a contractor.  The only thing I would think of is you should fund the deal, the contractor does the work for a discounted rate, and then you split the equity gain 50/50.  But of course the contractor could play some games with the "discounted rate".

I'm hoping others will chime in as I'm sure others have done this.

Oh and I would also consider private money sources to fund rehabs if you're doing BRRRR's.

Strategy - BRRR is the superior strategy. Who cares about the interest rate if you can find a loan product with a fixed rate that allows you to cash flow?

Return - You can get outstanding returns with BRRR (possible for infinite returns) but I say at least 15% cash on cash.

Location - there's a lot of good markets, check your local market first, then look into the Indianapolis, Memphis, St. Louis type markets

Lending - Find a good local portfolio lender.  Ask around BP for referrals.  

With your $225k to invest, never tie it all up on any one property.  Maybe half at most.  Then you can use the other half if another deal comes along.  Using that rule, I'm assuming you can't go bigger than 1-4 unit properties.

Only other question is do you have a personal finance plan in place to continue "adding fuel to the fire" i.e. can you add $1K, $2K, $3K a month from your J-O-B's to the $225K RE investment pool? Because even if you do BRRRR's most of the time you can't get ALL of the money back.

My personal strategy is I have an investment pool which I add to every month from my J-O-B.  My RE goal has been to keep buying properties that cash flow while keeping the investment pool steady or rising with additional "fuel" from my J-O-B.

@Eli M.

I think the Realtor's document would be a good start.  I understand what you're asking for, but I'm not sure it exists.

I think the bottom line is in this business, and any other business, is you should treat people as you expect to be treated.  Be polite, honest, straightforward, transparent, and on-time, and you will set yourself apart from 99% of the competition! Sellers, lenders, property managers, etc. will love dealing with you because you are a pleasure to deal with.

It's really a simple formula but very few people actually do it.  There are a lot of scum bags out there...