All Forum Posts by: Michael Abernathy

But that calculator is used on BRRRR properties (Property is purchased with the intent to refi) where this deal is strictly a buy and hold.

Hey everyone,

quick question on using the BP Calculators to help analyze deals.

I have a $50K HELOC with a current interest rate of 6.5%.

If I want to use that money for a down payment on an investment property where do I add that info?

I am currently running the numbers for a 'Buy and Hold' and can't figure out where to include the HELOC in my calculations. It's going to have a different interest rate than the mortgage.

If I were using the BRRRR calculator I would assume I could just manually enter HELOC monthly payment as an extra expense during the initial phase of the project with the assumption that when I did the refi the HELOC would be paid off.

Thanks for your help.

/r

Mike

Zillow has pictures.

Not sure how up to date they are but there are some good pics of the inside.

https://www.zillow.com/homes/for_sale/fsba,fore_lt...

If any of you have been following my recent posts you'd of read that I am ready to find my first deal.  I spent the weekend driving around an area I used to live in.  I was looking for signs of a distressed home (old chipping paint, lawn/yard in disarray, etc...).  I wrote down all of the addresses and these three look the most promising.  They all seem to be occupied by the original owners (Late 60's) and all of the original mortgages have been paid off.  One property the owner has taken out several loans but she also has paid most of them off.

I calculated the Est. ARV by simply taking the average of Zillow and Redfin. I know that if any of these start to play out that I will need to get a more accurate estimate.

My question is.....Now what.  Do I knock on their doors, do I send them a letter, etc....

Also what about financing. I have around $50K but even if I can get any of these properties for below 70% of the ARV, that is more than I have. I would assume I would need to find a private lender and leave the banks out for now.

House 1

• 3/2
• 1,288 SF
• Est ARV $288,011
• Delinquent taxes: 2016 $1,156.12

• Notes:  I have never seen a car in the driveway and the trash can has never moved.  The lawn is mowed each week though.  I also cannot find where the original loan was paid (county records).  Zillow shows as the house being purchased in the early 80's so with a 30 year note, it should of been paid. I also don't see any failure to pay or 2nd mortgages. 

House 2

• 3/1
• 1,401 SF
• Est ARV $330,012
• Original Mortgage paid off in 2002
• Home owner has been taking out loans against home.
  • 5/1/2002 -$50,000.00
  • 6/4/2004 $50,000.00
  • 6/15/2004 -$46,291.00
  • 12/7/2007 -$25,000.00
  • 5/17/2013 -$22,900.00
  • 5/31/2013 $46,291.00
  • Outstanding Mortgages -$47,900.00

House 3

• 3/1
• 1,344 SF
• Est ARV $288,025
• Original Mortgage paid off in 2001
• Needs the most work

I just spoke to NavyFCU on Tuesday.  At that time it was 6.5%

9 months ago I posted a post titled, Pulling the Trigger in 2017, where I said that I was finally done reading, listening, evaluating, etc...  Well here it is July and I am not much further along than I was 9 months ago.  The first part of the year was pretty hectic.  I was finishing up my MBA while working full time and raising a family.

The last two weeks I've spent reviewing BP podcasts and watching Brandon's YouTube videos.  One thing that really hit me in the face was one of Brandon's videos where he talked about time management.  I probably spend at least 2 hours of my day checking Facebook, surfing the web, or watching Naked and Afraid.  That's two hours of my day I could be using to be more active here or running test deals through the BP BRRRR calculator.

Another thing I did was to actually determine what exactly I had to invest with.  In episode 40 one of the first tips was to line up your financing.  So instead of estimating what I had to spend I called NavyFederal and went over what I actually had to work with.

We used the rental I have in Va Beach and come up with the following numbers to compare a HELOC to a Fixed Equity Loan.

When I run the number the HELOC seems more attractive. It's more flexable, pays down on the principle quicker, and currently has a better rate.

During the last 7 months I've also saved up about $10,000 in cash.  So my all in investment amount is about $59,000.  This morning on my way into work I listened to another YouTube video from Brandon about ways to invest $65K. Buy one property, buy multiple properties, etc...  Flipping back to my notes on ways Real Estate can make you money buying multiple properties not only bring in multiple lines of cash flow but also multiple Appreciation values and tax credits.

So now on to the part I am really strangling with...Find the deals. I have scoured through Zillow, Redfin, REO sites, etc... When I think I find a great deal I run it through gauntlet of calculations (1-2% rule, 50% rule, Not paying more that 70% of ARV, etc..) then that great deal isn't so great.

Is there anyone local that would like to team up or provide guidance on finding that first deal. 

Thanks everyone.

Mike

I'm still in search of my first BRRRR property. During my searches I have ran across a few lots that looked very attractive (REO or Foreclosures). In one of the BP Podcasts I remember the guest talked about how he preferred to build rentals because he didn't have to worry about anything breaking for years to come (A/C, Appliances, etc...). I love the idea but I would assume you can't just grab a local builder because they are going to charge premium on the per SF costs.

I'm also not sure how the financing would work.  If I paid cash for the lot would I be able to do a construction to perm on a renal home?

As always any guidance from the gurus is greatly appreciated.

Thanks,

Mike

One issue is that she (my wife) let them sign a three year lease.  It is in an area with a great school and they wanted to make sure their son would be there throughout his last years in high school.

I also called my bank, Navy Federal, about refinancing to a 30yr fixed but we would have to bring a lot of money to the table.

My wife has a home she brought into the marriage.  She purchased it around 2006 for $200K with the intention of tearing it down and rebuilding or doing a complete upgrade on it.  It is in a very desirable neighborhood.  We all know what happened a few years later.

Fast forward to today....

She rents it out for $1,100. The note is $1,180. She has an ARM that is currently around 3.4% and she owes around $154K

She is worried that as the economy improves the interest rate will steadily rise so she is wanting to dump it and try to sell it for around $160K.

We haven't had it appraised but Zillow lists it at $185.

I would love to keep it but not sure how to make the numbers work.

Tom, 

I mentioned above that taxes and insurance are included in the mortgage.

I believe what you're saying is pull out the equity and invest in more properties.  Which is what my plan is.  I was just asking originally about the best way to go about that using the rates and methods I listed.

I think HELOC sounds like the best option. It allows me to have a ready access to cash when I need it without paying anything until I use it.

Thanks for you comment.

Mike