All Forum Posts by: Nicholas L.

@Scott E. serious question - do new investors have any business not getting more conventional financing?  I'm not disagreeing with you, I'm genuinely asking.  Because my first thought was... what if interest rates continue to rise?  How will they just "refinance out"?

They can likely get a 30-year, fixed rate DSCR loan in the high 7s or mid 8s. If this sinks the deal... it's not a good deal.

@Evan M. I want to know more about this property and why it appeals to you:

Is it on market, off market?  

How far away?  

Have you made any offers yet or is this your very first?  

How much will it rent for?

@Andrew Schweim somewhere you can drive to.

@Savanna Collins unless I'm missing something, you should be able to get a DSCR loan and cash out on either or both of the properties.

To make it real simple - say one of the properties is worth $100K and you find a lender that will do 75% LTV. They'll do an appraisal, then give you cash out minus closing costs. So $75K minus $5K = $70K. And now you have a mortgage on the property.

@Alyssa Patterson

What's the purchase price + rehab, and 

What's the projected ARV for when you're done?

Those numbers are the essence of a BRRRR.

It's not about "losing" the money.  If you buy the house, you'll have the house.  But if it appraises low you might not be able to pay back the loan.

@Alyssa Patterson just to try to simplify here...

It's not that the BRRRR method is RISKY, it's that it's DIFFICULT.  Why is it difficult?  Because: it only works if you can significantly boost the value of the property that you are buying.  If you can't do that, then it still might be a good deal.  It's just not a BRRRR.

I just finished a BRRRR myself - and it did not appraise for as much as I was hoping for at the end. It's still a good rental, it still cash flows, and I'm still happy with it. But, I did not get nearly as much out on the refi as I was hoping to.

So, just to be candid, I think it will be difficult to do with $20K.  You have indicated that you can get a loan, and that's great, but that just makes it even harder to BRRRR, because you have to factor the costs of the financing you'll be paying into the equation. Something that gets overlooked is that there are lots and lots of out of pocket costs to pay for when doing a BRRRR: the closing costs when you buy.  The appraisal.  The holding costs, which can include expensive utilities, expensive financing and expensive insurance.  And then closing costs again when you refi.  Lots and lots of costs.

@Eric Stalter if they're current on payments why not try to keep them?

@Sheri Fluellen OK - makes sense.  But, you could sell the 1-2 "least desirable" properties, and put the rest under management for a year and see what happens / how you feel about it. If you don't like it, you can still exit them all.

I just struggle with wanting to be guaranteed "at least a 10% return," especially in today's market environment.  It sounds like you've worked hard to build up this portfolio.

@John Anderson short answer... yes.  I'm not as worried about cash flow as long as the property pays for itself - the wealth is in the equity, the value increase from doing the project and then the mortgage paydown.

@Account Closed I hope this is accurate, but I'm still waiting for prices to come down.  I'm seeing DOM go up, but individual sellers are still holding out for what they think they should get.

@Michael Hunt if it's listed on the MLS, it's probably not a good deal.

Post the numbers here if you want a more detailed review.