All Forum Posts by: Nicholas L.

@Stewart McMillan

my understanding is that there are approximately 16M single family rentals, and the owners of this asset class still tend to be mom and pop landlords who own 1-4 units:

https://www.jchs.harvard.edu/s...

https://fortune.com/longform/s...

larger properties tend to be owned by institutions and LLCs

does this help?

interesting idea!

@Sandy Salazar

if I am understanding you correctly... you have funds you want to deploy but you don't have a deal.

typically the deal would come first

is that the question?

have you done a BRRRR before?

@Mary Eubanks you're right that a BRRRR and a flip are similar. With a BRRRR, you are hoping to boost the ARV and the amount it will rent for, so that when you refinance, the rent can cover the new debt service and all the expenses.  With a flip, you're done - you sell and move on.

The point I was trying to make is that it's more expensive, and more difficult, to buy a property that is a candidate for a BRRRR with financing - any kind of financing. The key to a successful BRRRR is to boost the ARV as much as you can and so it's often more difficult, and always more expensive, to buy with financing.

@Eric Olsen

setting aside your mentor question - here are a few questions for you

do you have an agent?

have you been prequalified for a loan?

do you have money for a down payment, reserves, and a personal emergency fund?

@Mary Eubanks

stepping back for a second - how do you plan to source your BRRRR deal?

it's tougher to both purchase one and recoup all your cash if you use financing.

@Alex Kesner

just curious - why are you partnering at this stage?

what if you both house hacked separately?

@Eric V Harding

forgetting all cash vs. financing - i wanted to address 2 other items in your post

1st point - turnkey is not BRRRR

if you can't force substantial appreciation immediately, it may take many, many years to have enough equity to refinance cash out. turnkey is just about the opposite of BRRRR

2nd point - down payments for several properties - depends on your DTI and the loan type

ask one or more lenders

@Marcos Carbi I don't know if you mentioned this previously, but you're hoping to cash out refinance in 2-3 years to either lower your rate or pull cash out? This is not something you should count on being able to do - and many cash-out refinances have expensive fees associated with them. Your DSCR loan might also have a penalty associated with doing this in the first ~5 years.

@Marcos Carbi well, if you're not planning on living there, you're tying up a bunch of cash.  20% down + repairs + closing costs... seems like that's over $100K outlay here.  But only you can know if something fits your goals - if this property fits your goals, great.  One consideration is the velocity of your money.  I think that's what @Eric James is saying.

Specific recommendations if you move forward - screen tenants well, enforce the lease, and be sure the budget supports property management - you don't want to self-manage forever.

@Marcos Carbi OK - good breakdown.  So you're planning to self-manage?  I always recommend that even if you start that way, you budget for property management.  That's another 8-12% of gross rents.