All Forum Posts by: Rene Hosman

Wow $750/mo cashflow for a property that was only $118k that's incredible! What year did you purchase this property?

Hi @Ricardo Lemus ! 

This is a great topic of discussion and ultimately I think depends on your goals and what metrics you personally try to maximize. 

The first question is of course, can you get a loan with less than 20% down - but I'll assume you can given that you're exploring both options.

I recently read Real Estate by the Numbers by J Scott & Dave Meyer (shameless plug it's available through the BP bookstore here) and in chapter 36 they discuss exactly this - that in some cases using more leverage can actually boost your returns and you should run the numbers both ways to see what makes sense for you. The TLDR is that if you can take the money you would have otherwise put in the property and invest it somewhere with higher returns then you could be better off doing it that way even if it means smaller or no monthly cashflow because money in your hand now is more valuable than the same money in the future. But that does not come without risk of course. And that is assuming that you can rent your property and at least break even even without a 20% downpayment - assuming it's a rental that you're talking about. 

Thank you so much for sharing @Elaine Jackson and for giving us updates! Flips are tough, and the first one is always a huge learning curve. What was your original reason for taking on this flip? Did you ever consider BRRRR earlier on in this flip or was the intention always to sell?

I ask because it seems like you have two clear choices - Either finish the rehab and sell potentially at a loss, or hold the property while renting it out so you can hopefully benefit from gradual appreciation and using the rent to help make any principle paydowns on any loans you may have. 

While it may pencil out on paper to do one option over the other using simple math I would urge you to think big picture as well. By that I mean - yes you may take what seems like a bigger hit selling the property at a loss but then it clears you to take what you learned, and the money you did get back, and move onto something else with this experience and education you got from tackling this project. 

You could alternatively hold the property for as long as is necessary to break even but when you consider the time value of money and how money today has a greater value than money in the future "breaking even" in a few years may actually be losing money because you've lost out on opportunities to do things with that money in the meantime as well as you've lost money to inflation. I would strongly urge you if you have time to read or listen to Real Estate by the Numbers by Dave Meyer & J Scott because they do a great job of explaining the various numbers and metrics used to make decisions in real estate, it has helped me reframe financial and real estate decisions because I understand the concepts and feel more empowered because of that understanding.

The two factors in your decision here are financial and (maybe more importantly) emotional. We in the BP community can help you figure out the financial choices if you choose to share your numbers but at the end of the day there's also an emotional cost to be considered with either choice and you have to decide that for yourself.

You're welcome to respond here or message if you have any questions, I'm happy to help you take a look at numbers if you feel comfortable to help you break down your options of keeping vs selling so that you can make an informed decision

 That's great that you have a foundation in RE from your time as an agent, that's something good to build off of that a lot of us don't have. 

If you're re-starting your real estate journey and want to jump back in with detailed content that can help you hone in on what kind of investments you may want to make I have two personal suggestions - I just started the book "Start With Strategy" by Dave Meyer this weekend, and I already wish I had read this right away when I was getting into the idea of real estate. Secondly I just finished "Real Estate by the Numbers" also by Dave Meyer - even though I have a business degree and am actively involved in investing it was a really great refresher on not just the numbers and theories involved in real estate decisions but also the pros and cons of different return metrics and how all the metrics relate to one another. 

I am also a big podcast fan so I've been doing the above books as audio books with the PDF guides to follow along and take notes. I really enjoy that way but they're also available in paperback or kindle.

 Since you're an agent in Utah - I'm curious if this Utah program has helped your clients personally? 

I live in Colorado where I've noticed programs that are income restricted while they have great and important intentions - it's so limiting because the folks who both have a high enough income to qualify for the mortgage yet also low enough to make income qualifications are such a small small % of the population it makes it almost impossible to meet both criteria at once.

 This is awesome Jonathan! What does mindful approach to real estate investing mean to you? I'd love to learn more about that!

 Yes!!! I follow so many Barndo accounts on instagram I'm obsessed. Are you considering building one as a rental or are you just fascinated with them like I am?

 Welcome! Other than the BP webinar what other resources here have you found helpful? Have you invested time or money into other real estate education or is this your first entry point into the real estate world?

@Hawke Morgan This is exciting that you're inspecting tomorrow! Keep us up to date on how that goes.

I have also felt the struggle of having an independent artistic business and trying to plan to retirement with nothing built-in! It's great that you already have a home and potential ADU too since being self-employed in the arts can also have extra hurdles just getting approved for a loan.

I love the idea of renovating your carriage house - does it have any water and electric hookups already? If so that's a huge win as it could be a lot of cost savings not having to run power or water out there. 

I'm a community manager here at BP and I'm so glad that BP has been a good resource to you so far. Is there any particular topic of real estate you want to dive into learning next that I can connect you with resources for? Two of the books that have helped me when I was in your position are 
Start with Strategy - https://store.biggerpockets.com/products/start-with-strategy
The Book on Estimating Rehab costs - https://store.biggerpockets.com/products/the-book-on-estimat...
Since you like the podcasts - these are available as audio books and broken into audio chapters so you can listen just like podcasts!