All Forum Posts by: Nicholas L.

Hi @Justin Hui I wouldn't start with a property "in the range of $500k" - it sounds like you're thinking of that because that's the maximum you can afford.  A property in that range likely won't cash flow.  You want to start smaller, make sure your initial property cash flows, and leave as little of your cash in your first deal as possible.  If you spend your $100K on a $500K property... you're done, there is no cash left for the next deal.

Are you working with a lender to see how much you can borrow? I get that you have a HELOC, but do you have actual cash for reserves, unforeseen issues, etc.?

Hope this helps.  What market(s) are you looking in?

@Izavion Joanes can you house hack so that you don't need to put as much down?

@Slaiman Atayee I don't think I understand the financing for the initial purchase - is it correct that you're using a "private lender" that is requiring 2 points, 20% "down" (from you?) and at 14% interest?

What's the projected monthly rent?

@Brandon Durkee I agree with @Aaron Zimmerman - you really need to make sure you're including all costs in your calculations.

And, one comment on your plan to take care of your parents - that's very admirable, and it may be the right thing for you to do!  It's probably going to be very hard for you to invest in the short term, though, because you'll be carrying debt and not cash flowing.  Again, there is nothing wrong with that - but check out forum posts on (1) recycling your cash and (2) debt-to-income.  This could be a time to take care of your parents, max your W2 income out, and save every penny you can, and invest in 5 years or so.

@Jean Santiago I'll take a run at your questions.

1. What average amount of cashflow are you targetting?

I have a condo I break even on (since it wasn't purchased as an investment, but I'm not interested in selling it); a condo I make ~$375 on after all expenses, and a SFH I make $300 on. For my next property, I'm going to try to BRRRR to pull all my cash out and I'm targeting cash flow of $250 a month.

2. What cash on cash ROI are you targetting?

I purchased two properties with conventional financing before learning more about investing on BP, and my cash on cash return is terrible (even though the properties cash flow well.) For my next, I'm less worried about the cash on cash return, and more focused on trying to predict the ARV accurately so that when I refinance I get most or all of my cash back out.

3. What Cap Rate are you targetting?

Cap rate is typically used more for multifamily properties rather than single family, but you can calculate it if you want.

4. Do you guys try to follow the 2% Rule?

I am not looking to purchase in markets where the 2% rule is possible, so for me, the answer is no.  This is going to vary by market, and even in markets where 2% is possible, you may be looking at C or D class properties.

5. Also, what is the 50% Rule Cash Flow Estimate?

This is a "rule of thumb" that says that 50% of your gross income will go to expenses, excluding the mortgage.  In your example the cash flow was pretty similar based on the two ways of calculating - $23 vs. $115.  That's pretty close.

Hope this helps.

@Andrew Gomez congrats on working hard to accumulate significant savings.  Just be aware that buying something with a purchase price in that range by putting 25% down is going to tie up a ton of cash.  You're going to have all of the following costs:

• Down payment
• Closing costs
• Vacancy / holding costs while placing tenants
• Commissions to find, place and screen tenants
• Repair / spruce-up costs

Be sure you've actually run a grand total before you put an offer in so you know the full amount you'll be spending.  And, there are some great threads on BP about reusing cash - take a look.

@Evelyn Castillo as @Drew Sygit mentioned, you will pay for their services somehow.  Do they offer something you couldn't get by doing your first deal yourself?  FL is a great place to invest - try assembling your "Core Four" (who won't charge you until you close a deal!)  You'll learn a lot more and you won't pay a mark-up.

@Evelyn Castillo what specifically does this company do for investors?  I couldn't tell from your post.  Are they like Roofstock?  Or are they a turnkey provider?  Or are they just a property manager? 

@Kevin Finn

I am not from Stamford but I have family there. I'm currently a part-time investor - I work a full time W2 job and have 3 total rentals, 1 in Virginia and the 2 in Stamford. The demand in Fairfield County for rentals is very strong - I'd love to do a BRRRR there but would want to buy it with my own cash. I know some investors have been successful in Danbury, Bristol, New Britain and even Hartford, but the New Britain and Hartford investors were very, very experienced landlords used to dealing with difficult tenants. I don't know too much about the rest of the state except that only Fairfield County is experiencing population growth - the rest of the state is losing population.

@James Smyth will this be your first BRRRR? You'd need to juice the ARV into the $500s to make it work based on the numbers you provided - and would it really rent for what you would need to cover all expenses?