All Forum Posts by: William Nelson

@Wade Reid - I still am using TenantCloud and I love it. If you shoot me an DM with your email address, I should be able to refer you through my account. They are offering a couple of free months from referrals (I can't remember how many exactly).

For those following this discussion - I received a lot of questions about my response, so I used a blog pose to break down the pros and cons even more.

I used three use-cases: (1) no loan, (2) FHA loan, and (3) non-FHA loan. I pulled three examples from my past that I have used for real number analysis. I hope this helps!

Link: BRRRR Method: Is the Decrease in Cashflow Worth it?

@Breelon Bryant @Jessica Garcia @Luciano A. @Eric Lubbers @Amjad Morrar @John Green

Hi John - from what you described, it sounds like you've done your basic homework on real estate (i.e. you understand the BRRRR process, converting spaces to maximize profit, etc.) so I would dive into books that focus on helping you get goal clarity and develop an action plan moving forward. I've seen a couple of good recommendations already so I'm going to focus on great books that haven't been listed.

Below is my recommendation list - I placed them in the order of how I would read them if I were in your situation. I also tried to provide a brief description of the book for you.

- Vivid Vision: short read that focuses on creating a 3 year vision of your future company, life, etc. Gives great advice on how to create it and then how to hold yourself accountable as the year goes on.

- The One Thing: short read, but great read - it is more tactical than Vivid Vision and focuses on creating tunnel vision for your goals. It has a couple of roadmapping exercises in it that help tremendously with goal creation.

- The Compound Effect: great book that shows the power of small daily steps that can result in MASSIVE results over time. It also provides easy-to-use, step-by-step processes for you to follow (which is always helpful).

- The 10X Rule: warning, do not venture into this book unless you are ready to start taking action - whenever I need a little motivation, this is the book I dive into. Grand Cardone (the author) is an incredibly inspiring guy.

- Profit First: if you want to setup your business for success from the beginning this is another very tactical book that shows how to create and grow a business that focuses on PROFIT. Mike (the author) walks you through strategies and shows you exactly how to make the "profit first" mentality work. I read this recently and drastically changed the way my five year old business did things - I've been using it for about 3 months now and can confirm it's working tremendously.

Some of these books have completely changed my life and I hope they can do the same for you. Best of luck on your journey and let me know how you like the books or if you need more recommendations!

@Breelon Bryant you are correct - you have more cashflow without a BRRR. The small detail you're missing is you have to pay taxes on all that additional cashflow, but you don't have to pay taxes on the re-financed money from the bank.

Let's give an example here to show the power of a BRRR, though. I encourage you to do the same for your own numbers!

Appraisal: $120k

Rent: $1,200 / month

Insurance: $60 / month

Taxes: $100 / month

No BRR....

Amount Owed: $60k

Terms: 4% on a 30yr mortgage

Payment: $446 / month (insurance and tax included)

Cash flow: $654 / month

Yearly Cashflow: $7,848 (pay taxes on this - assume @ 25%)

After Tax Cashflow: $5,886

Year 1 Profit: $5,886

BRRR....

Amount Owed: $96k

Terms: 4% on a 30yr mortgage

Payment: $618 / month (insurance and tax included)

Cash flow: $482 / month

Yearly Cashflow: $5,784 (pay taxes on this - assume @ 25%)

After Tax Cashflow: $4,338

Cash-Out from BRRR: $36k (do not pay taxes on this)

Year 1 Profit: $40,338

So as you can see from the numbers, you are going to sacrifice some cashflow ($1,548 per year in this example), but it would take years 23 years in this example to make up for the BRRR cash out of $36k. Plus, you'd be paying taxes on the extra cashflow every year, where-as you are not when you complete a re-finance during the BRRR process.

This doesn't even take into account every variable (like inflation, opportunity cost with those funds from the BRRR, etc.) but it shows the value in the process for sure.

At the end of the day, though, each situation depends on the risk tolerance of the investor and that is different for everyone! I encourage you to make the best decision for yourself and your situation. Let me know if you have any questions and best of luck!!

@Matt Bailey I was a big fan of the free app, Cozy, for a long time. It’s an awesome system for a do it yourself landlord who is on a budget.

However, the problem I had with cozy had was my ability to scale with it. That’s when I switched over to TenantCloud - in my opinion, it is the best out there for small to mid size businesses. For only $10 a month, it does rent collection, has tenant messaging (so they stop calling and texting you), online lease signing, to-do lists, applications for tenants, etc.

There are higher pay tiers that offer more functionality, but the lowest level extra functionality started to be worth the $10 for me after I passed the 15 unit mark. I think everyone’s situation is a little different so do what you think is best for you and your tenants, but I hope this helps. Best of luck!

@Bud Gaffney I’m happy to help.

All of my increases have been around $100 to $200 per unit - it sounds like you have bigger increases, but as long as you can provide the logic/numbers to back it up and give tenants time to prepare, I’ve had pretty good results.

As for expected push-back, you need to be firm but fair and try to be a good listener. Everyone is going to have a story, and explain that it’s not possible for them to afford the unit. So listen to them, then refer to the logic/numbers that show your rent raise is the same as every other place in the area and explain that you’re trying to help out as much as possible with the 90-day grace period and you even want to make the unit nicer for them because you want them to stay as much as they want to stay.

I hope this helps. Let me know if you have any additional questions.

Hi @Bud Gaffney - I’ve experienced this a couple of times and found a neat win-win situation:

- I give my tenants a 90-day notice that rent will be increasing to market value in the area.

- I provide the logic/numbers behind how I determined the market value rent for each unit

- Give them the option to select an improvement project within their unit for our staff to complete (up to $1,000 that both of us agree upon).

While this initially might cost more money that you had planned for, but it allows you to:

- raise rents and increase cash flow

- increase the value of the property while the tenant still lives in the unit

- show the tenant you plan to take care of the property

- build a relationship with the tenant (I find this VERY important when taking over a new property)

- provide an upgrade to the unit that the tenant desires

- reduces tenant turnover (which saves you money and time)

- 90-days provides the tenants time to adjust and prepare for an increase in rent

I hope this helps - feel free to reach out if you have any other questions about this method. Regardless, best of luck!

Best,

Will

Hi @Ian Gray - I've had some luck with the strategy here in Columbus with a couple of my units. There are tons of methods for financing, you just have to find the best method that works for you! To list a couple, you could do a: HELOC, bank loan, private money, seller financing, etc.

I have about 27 units in Columbus, so if you share your information maybe we could meet up and talk more. Regardless, let me know if there is anything else I can do to help out, and best of luck!

Hi @Josh Atchison - I’m a real estate investor in the Columbus, IN area. I have quite a few units in the area, so if I can help out in anyway, please let me know!

@Tony Guardado around 30 units