All Forum Posts by: Mendy M.
Mendy M. has started 3 posts and replied 17 times.
Post: I’ve used the BRRRR method nearly 40 times
- Rental Property Investor
- Posts 18
- Votes 18
Quote from @Jorge Vazquez:
I've used the BRRRR method nearly 40 times, and it's still my favorite way to grow a rental portfolio that pays for itself. I hunt for ugly houses with good bones, rehab them for function over flash, rent for steady cash flow, refinance to pull out my initial money, then do it again. The momentum is the magic—you build equity and cash flow at the same time. How have you used BRRRR in today's market, or are you sticking with flips instead?
Post: I’ve used the BRRRR method nearly 40 times
- Rental Property Investor
- Posts 18
- Votes 18
Quote from @Jorge Vazquez:
I've used the BRRRR method nearly 40 times, and it's still my favorite way to grow a rental portfolio that pays for itself. I hunt for ugly houses with good bones, rehab them for function over flash, rent for steady cash flow, refinance to pull out my initial money, then do it again. The momentum is the magic—you build equity and cash flow at the same time. How have you used BRRRR in today's market, or are you sticking with flips instead?
I’m looking to do my first BRRRR/Value add in another area, that is a few hours drive from me, but I plan on making occasional trips over, to be on top of the job.
What would you say are the biggest challenges and areas you can go wrong doing a BRRRR, and how would you try to avoid them?
Post: Asking for Advice
- Rental Property Investor
- Posts 18
- Votes 18
Quote from @Elden Korber:
I am a junior in college. I am a nuring major and an athlete. I want to invest in a small multi-property in the Dayton, Cincinati, or Columbus area in ohio ASAP when I graduate. With the free time I have, I am trying to educate myself and use this time to get ready to hit the road with a running start when I am able to invest.
That being said, what are things I can be doing/learning now? Should I be working on learning to analyse deals? If yes, do I need to buy BP pro to get the calculators? Should I talk to a lender to try and get pre-approved, or at least see what I can do to get that ball rolling? And how do I even do that? Where are these banks people talk about? I have some RE mentors back home, but at college, I am 3 hours away and struggling to find a mentor to teach me the ropes.
What else should I be thinking about and doing right now? Thank you in advance!
Post: Just ran the numbers on potentially my first deal - What would you do?
- Rental Property Investor
- Posts 18
- Votes 18
Quote from @Jonathan Warner:
Quote from @Mendy M.:
Quote from @Jonathan Warner:
Quote from @Marcus Auerbach:
Quote from @Jonathan Warner:
Quote from @Marcus Auerbach:
Quote from @Jonathan Warner:
Hello. I'm a newbie investor with minimal experience analyzing deals.
My agent sent me this one off-market deal yesterday and sort of got me fired up about its potential. However, I underwrote it quite conservatively and it has around -150 a month in cash flow.
Could you guys please take a look at how I underwrote it and tell me if you think I did everything properly?
1. The purchase price is around $210,000. It's a 1,000 sq ft 2BR/1Bath that has about 700 sq ft in basement space that could be converted into an extra bedroom and bathroom. I put in a conservative estimate of $50,000 for the rehab. It's ARV, based on similar comps in the area (I did this myself on ChatGPT), would be around $330,000-$340,000. I set it at $335,000.
2. A conservative estimate for the annual maintenance and repairs would be around $2,500 and annual CapEx comes out to around $1,117
- I used ChatGPT to help me with this part. It took into account the new roof and HVAC and gave me a 30-year budget estimate and annualized the costs.
-
| Expense Item | Schedule | Cost per Event | Total 30‑Yr Cost |
|---|---|---|---|
| Roof Replacement | Year 30 | ~$11,000 | 11,000 |
| HVAC Unit Replacement | Year 15 | ~$7,500 | 7,500 |
| Water Heater Replacements (2 cycles) | Years 10 & 20 | ~$2,000 ×2 | 4,000 |
| Flooring/Interior Cycle (2×) | Years 15 & 30 | ~$3,000 ×2 | 6,000 |
| Major Systems Update | Year 20 | ~$5,000 | 5,000 |
| Routine Annual Repairs & Maintenance | Every Year (30 yrs) | ~$2,500 × 30 | 75,000 |
| Total Over 30 Years | $108,500 |
Property taxes would be $490
Insurance would be $2,100
Property management would be 10% of rent which is conservatively estimated at $1,900 post-rehab, so $190 per month and $2,280 annualized
I'd likely pay around $25 a month for garbage, so $300 annualized
I assumed a new tenant every 3 years since it will likely be a family rental, so I estimated $63 a month leasing fee budget.
Improvements would run me around $40,000-$50,000 so I put it in as a $50,000 budget
I assumed a 20% down payment on the purchase price at a 6.85% interest rate.
Overall, it came out at around -$110 in cashflow. Despite it's negative cash flow, considering the rehab budget and ARV, I am still considering other ptions for the property. However, even if I were to flip it, I'd prefer the have a good exit strategy should I be stuck with the property for whatever reason. If things went sideways and I was stuck with the property, I'd be down $110 a month just hold onto it.
Any help would be greatly appreciated!
It looks like a deal mostly because of the lower price. And the price is lower, because it's a tiny house. You are correct, you are short a bedroom and a bathroom to be a family home. Adding them in the basement does only partially count. Both the market and an appraisla will not give you full value.
Financially, the issue is that most of your expenses come from things you have 1 count, regardless of home size: HVAC, water heater, plumbing, electrical, appliances, kitchen, chimney, driveway etc
Income is a function of the square footage and bedroom count and you are very low on both. Fixing up a house that has almost twice the square footage and 3 good size bedrooms will cost you almost the same. But rents will be much higher. So, the house will always have a poor income to expense ratio.
Our minimum is 1,200 sqft, 3 bed and 1.5 bath. We do finish the basment as a rec room for kids have a place to go & play during Wisconsin winter, which does not give us higher rent, but tenants stay significanlty longer.
When you start out, you think cash flow is the most important thing. After a few years you start to realize that buying a desireable home in a good location is long term more important than year 1 cash flow!
Your comment about the income to expense ratio is valid. It's something I haven't deeply considered. I may have to increase my buy box into the uncomfort zone to improve that mertic. The problem is it's my first deal and I wanted to come in a lower price point given my inexperience.
I wouldn;t consider myself a "Cashflow investor" however, again given that it's my first deal, I'd like a little cashflow padding for security in case any unexpected expenses arise. Thoughts?
I felt the same way (and did the same thing) when I bought my first property in 2009. Depends on your income: will a couple of hundred dollars make a difference in your life?
In 10 years from now, your initial cashflow will not matter, the quality and location of the property will matter
To be honest, no it wouldn't. Maybe it's a pride thing knowing that I "won" and found a good deal to be honest. I just don't want to lose money at all. I just got burned as a financial equity partner in a small business. I hate losing money...
I personally would be wary of buying a property that is not projected to cashflow from the start. The future and especially the near future is hard to accurately predict .
There can be lots of hiccups and expenses especially when starting out - things that need to be fixed, vacancy before you find a tenant, more things needed to get fixed when a tenant moves in, 1st months rent going to the property manager… during those times you’ll be bleeding out significant amounts of money.
Unless you have deep pockets, you may not be able or willing to continue to bleed losses for (potentially) years straight.
Yeah that's my understanding. How much cash flow would consider a good minimum?
I’m honestly not investor with a ton of experience. I own a couple properties, and I’ve been in it for a bit over a year. It depends what your goals are, if you’re gaining a lot of equity, by doing a value add rehab, there’s a much more reason to do it.
I personally use this calculator to analyze my deals https://www.calculator.net/rental-property-calculator.html just punch in all the numbers over there, and you’ll see how it returns in every aspect.
On a sidenote: I see that you put in $63 a month for leasing fees, that may not be enough. If you’re using a property manager, it’s common practice that they take half of or the entire first months rent when placing a new tenant, and that’s besides if there’s vacancy in between.
On your cash flow question: it depends where you’re buying, but assuming you’re buying in a pretty good neighborhood, if your projecting to cash flow flow $100 to $200 a month, and you have a steady job and income you could put into the property if needed in the short run, I think it could be a good a good investment. But you really have to punch in the numbers and experiment and check.
Post: Just ran the numbers on potentially my first deal - What would you do?
- Rental Property Investor
- Posts 18
- Votes 18
Quote from @Jonathan Warner:
Quote from @Marcus Auerbach:
Quote from @Jonathan Warner:
Quote from @Marcus Auerbach:
Quote from @Jonathan Warner:
Hello. I'm a newbie investor with minimal experience analyzing deals.
My agent sent me this one off-market deal yesterday and sort of got me fired up about its potential. However, I underwrote it quite conservatively and it has around -150 a month in cash flow.
Could you guys please take a look at how I underwrote it and tell me if you think I did everything properly?
1. The purchase price is around $210,000. It's a 1,000 sq ft 2BR/1Bath that has about 700 sq ft in basement space that could be converted into an extra bedroom and bathroom. I put in a conservative estimate of $50,000 for the rehab. It's ARV, based on similar comps in the area (I did this myself on ChatGPT), would be around $330,000-$340,000. I set it at $335,000.
2. A conservative estimate for the annual maintenance and repairs would be around $2,500 and annual CapEx comes out to around $1,117
- I used ChatGPT to help me with this part. It took into account the new roof and HVAC and gave me a 30-year budget estimate and annualized the costs.
-
| Expense Item | Schedule | Cost per Event | Total 30‑Yr Cost |
|---|---|---|---|
| Roof Replacement | Year 30 | ~$11,000 | 11,000 |
| HVAC Unit Replacement | Year 15 | ~$7,500 | 7,500 |
| Water Heater Replacements (2 cycles) | Years 10 & 20 | ~$2,000 ×2 | 4,000 |
| Flooring/Interior Cycle (2×) | Years 15 & 30 | ~$3,000 ×2 | 6,000 |
| Major Systems Update | Year 20 | ~$5,000 | 5,000 |
| Routine Annual Repairs & Maintenance | Every Year (30 yrs) | ~$2,500 × 30 | 75,000 |
| Total Over 30 Years | $108,500 |
Property taxes would be $490
Insurance would be $2,100
Property management would be 10% of rent which is conservatively estimated at $1,900 post-rehab, so $190 per month and $2,280 annualized
I'd likely pay around $25 a month for garbage, so $300 annualized
I assumed a new tenant every 3 years since it will likely be a family rental, so I estimated $63 a month leasing fee budget.
Improvements would run me around $40,000-$50,000 so I put it in as a $50,000 budget
I assumed a 20% down payment on the purchase price at a 6.85% interest rate.
Overall, it came out at around -$110 in cashflow. Despite it's negative cash flow, considering the rehab budget and ARV, I am still considering other ptions for the property. However, even if I were to flip it, I'd prefer the have a good exit strategy should I be stuck with the property for whatever reason. If things went sideways and I was stuck with the property, I'd be down $110 a month just hold onto it.
Any help would be greatly appreciated!
It looks like a deal mostly because of the lower price. And the price is lower, because it's a tiny house. You are correct, you are short a bedroom and a bathroom to be a family home. Adding them in the basement does only partially count. Both the market and an appraisla will not give you full value.
Financially, the issue is that most of your expenses come from things you have 1 count, regardless of home size: HVAC, water heater, plumbing, electrical, appliances, kitchen, chimney, driveway etc
Income is a function of the square footage and bedroom count and you are very low on both. Fixing up a house that has almost twice the square footage and 3 good size bedrooms will cost you almost the same. But rents will be much higher. So, the house will always have a poor income to expense ratio.
Our minimum is 1,200 sqft, 3 bed and 1.5 bath. We do finish the basment as a rec room for kids have a place to go & play during Wisconsin winter, which does not give us higher rent, but tenants stay significanlty longer.
When you start out, you think cash flow is the most important thing. After a few years you start to realize that buying a desireable home in a good location is long term more important than year 1 cash flow!
Your comment about the income to expense ratio is valid. It's something I haven't deeply considered. I may have to increase my buy box into the uncomfort zone to improve that mertic. The problem is it's my first deal and I wanted to come in a lower price point given my inexperience.
I wouldn;t consider myself a "Cashflow investor" however, again given that it's my first deal, I'd like a little cashflow padding for security in case any unexpected expenses arise. Thoughts?
I felt the same way (and did the same thing) when I bought my first property in 2009. Depends on your income: will a couple of hundred dollars make a difference in your life?
In 10 years from now, your initial cashflow will not matter, the quality and location of the property will matter
To be honest, no it wouldn't. Maybe it's a pride thing knowing that I "won" and found a good deal to be honest. I just don't want to lose money at all. I just got burned as a financial equity partner in a small business. I hate losing money...
I personally would be wary of buying a property that is not projected to cashflow from the start. The future and especially the near future is hard to accurately predict .
There can be lots of hiccups and expenses especially when starting out - things that need to be fixed, vacancy before you find a tenant, more things needed to get fixed when a tenant moves in, 1st months rent going to the property manager… during those times you’ll be bleeding out significant amounts of money.
Unless you have deep pockets, you may not be able or willing to continue to bleed losses for (potentially) years straight.
Post: Just ran the numbers on potentially my first deal - What would you do?
- Rental Property Investor
- Posts 18
- Votes 18
Quote from @Jonathan Warner:
Quote from @Mendy M.:
Quote from @Jonathan Warner:
@Dan H. My standards are pretty high for this one. I don't think I'll be moving forward on this deal because no matter which way I cut the underwriting, it doesn't seem to cash flow, despite what my agent told me. And according to someone else here, a big portion of my costs was excluded from my CapEx and Maintenance assumptions. So it's likely even worse than my current underwriting. My biggest hurdle seems to be with comping. The comps that I have right now seem a little higher-end than the property I'm considering. And there seems to be a "financial means cap" (not sure how else to put it) for the area I'm considering. The school district is subpar and the salaries are only about $75,000 per year. I'm worried that the improvements I'm making might go slightly above what can expected from people in the area in terms of rent payments and sale price. I'm having difficulty figuring out how to nail that down more precisely. Man, I'd kill for someone to just sit down with me for 30 minutes and take a look at it.
I’d recommend looking into and speaking to a good property manager in the area, they can help guide you by giving you an unbiased opinion of what the house could pull in rent, and what it’s worth… given that is what they do daily.
They don’t have much incentive to sugarcoat things, because when you’re stuck with a poor under-performing investment later, you’re going to be dealing with them…
Another side point: the interest rate you’re assuming seems to be too low - I did a cash-out refinance investment property mortgage about 2 months ago and the rate is 7.25%
Wow thanks for the heads up on the interest rate. I do have a property manager, but herein lies my problem: My "mentor" and agent are now on the same team (my agent just joined my mentor's company), and they have in-house property management. All of my opinions are coming from the same business and I feel like there's a conflict of interest. Would it be unscrupulous to contact an outside property manager for an opinion? I feel like I'd just be wasting their time and backstabbing my agent's business.
Look, I don’t know the specifics of your situation. But in general, I would say that you shouldn’t be pledging allegiance to any single person or company. It’s a free and open market, and you’re entitled to use whichever company you want, for whatever part of the process.
So I think you should have interviews and conversations with other companies, to get a feel and sense for alternative options, and you can get a unbiased opinion while you’re at it.
Quote from @Francis Bernadel:
@Mendy M. Glad to hear you were able to evict the tenant with little hassle. The property is very close to the RGRTA (Rochester Genesee Regional Transportation Authority) on Hayward Ave. Purchase Price: $230,000 (appraisal came back at the same price).
That’s in a bit of a better pocket neighborhood. The price does seem a bit high to me for there, but it really depends on the size (square footage) and condition of the property. Good Luck!
Quote from @Francis Bernadel:
@Jules Aton Property is in Rochester, NY. I'm making plans to visit the property at the end of the month or early September. Work has me hostage for these next two weeks.
Trying real hard to not lose my cool about the missing room. It's more money out of my pocket now to make the unit into what I already thought existed. Believed I would be adding a room to one of the units once I fixed the attic, not getting the advertised room that was already factored into my purchase price. The reality is that unit is a 2 bed, so lower rent than projected.
Getting in contact with my agent as I type this post.
I actually have experience there, and I’m onto my second home purchase there...
I’d be happy to try to help you with some contacts if you’re interested. I have some quality contacts there. DM me if you’d like.
Thank G-D I haven’t had to deal with an eviction or non-paying tenant as of yet, but my property manager said it would bot not be terrible, he thought it would cost about $500-$800 in legal fees, and take 0 to 6 months. It’s not as bad as it is in NYC.
I’m interested in where you bought, and what price range? Keep in mind property taxes are very high there relative to values.
There are are areas where crime is really bad, but I found the prices relative to the neighborhood quality are much better there, than the rest of the country.
Post: New Member - Exploring Out-of-State Rental Opportunities
- Rental Property Investor
- Posts 18
- Votes 18
Quote from @Christopher Rubio:
They are not as bad as NYC though
Post: New Member - Exploring Out-of-State Rental Opportunities
- Rental Property Investor
- Posts 18
- Votes 18
I personally have invested in Rochester NY, which has its advantages and disadvantages... My property manager there has been amazing...
Feel free to DM for details or contact info