All Forum Posts by: Account Closed

Hello fellow Real Estate Investors!

I was trying to wrap my head around the 2 % and how I can figure out which percentage applies to my market but now that I was testing the BRRRR Calculator I've gotten more confused, because it explains the rule as being "Income-Expense Ratio" opposed to "Monthly Rental Income-Purchase Price", as I've seen in many places. Does anyone why is this?

I've read this article on the rule, (https://www.biggerpockets.com/renewsblog/2013/04/1...) which explains it pretty well but I still I don't know what number applies as a screening tool for my market. I'm pretty sure 2% is impossible to hit in my location, which is highly overpriced right now, but how can I know if I should hit 1% to even consider buying it? I don't have enough experience to know the difference between a good and a great deal.

For example, my first and only deal was all cash (which now I'm looking to refinance), and the total invested capital was 91,171.00€ with a gross annual cash-flow of 5520 €, so that gives me a COC return of 6.05%.

Is this bad? 

Of course, when I refinance this property and only have about 20% of invested capital in it this number will be much higher but that doesn't affect the 2% rule/test at all.

Cheers! = )

Thank you so much for taking your time to put everything here in detail. It's really helpful! And congrats on the deal, the house looks great!

I have only when question, do you buy furniture for the entire house every time? I'm trying to understand if there isn't any buyers who say that they don't want the furniture or want only this or that.

Cheers!

Very well done, @Chris Pohlson . Great numbers! That price-to-rent ratio is through the roof!!

I'm curious about the foundations of the house; did you have any surprise that you didn't take into account in your rehab budget or was that 35K pretty close to your estimation?

Cheers!

@John Mathewson Ok, I will do that. Once again, thanks a lot for your help.

Yes, you'r certainly right. I did the math and I would probably have double or more of my money in the house. So, I guess I just need to see if the cash flow difference is low enough that I can keep living off it. At the bank, they told that the interest rate of a mortgage to buy a new house is lower than doing a mortgage on a house I already own, but I'm not sure how much.

Thanks a lot, @John Mathewson. It was really helpful!

@John Mathewson

Oh, I see what you're saying! But I don't plan to to buy a house that doesn't need rehabbing. That's part of my plan already. 

The thing is, I could do the rehab with my own money and ask for a smaller loan because I wan't to pay less each month so I can get a better cash flow. Doesn't this make sense?

Thank you, @John Mathewson.

So what you're saying is, that if I ask for the loan based on the property value after the forced appreciation caused by the rehab I could get a better LTV? Is that it?

In that case won't I have less cash flow because the loan amount is bigger?

Hello Rob Smith,

I'm still new to all this so bare with me.

That 7 % return would be 1,750 $ per year, right? Won't you make more if you buy another house and use that 25k for the down payment?

What do you think would be the cash flow of a new property after paying all the expenses? I'm asking because if you have 145 $ of monthly cash flow with the new property you are already making the same amount of money while paying for another house at the same time.´

I'm sorry if I'm missing something here.

Hello @Shani Dixon! 

I'm thinking of doing implementing this strategy as well. Besides from reading Brandon's book I also recommend you go out and talk with a few banks just to get a hang of what they might need from you and how can you make yourself a better candidate for a better tax rate.@Shani Dixon

Hope that helps. 

Hello Hello, fellow real-estate enthusiasts!

I'm a new face here so I thought it would be good to start a discussion and learn something while meeting new people at the same time.

So, let me explain where I come from. 

I'm Nuno and I live in Lisbon, Portugal. I'm currently developing my own business, outside real-estate (video gaming industry) and have no profit from there yet. So, I live off passive income from two rental properties that I own. 

Now, in March I'm selling one of the houses (only 50% mine) and want to reinvest the money back into real-estate, specifically into a two/three-bedroom apartment and I have two options:

a) buy one property with my own money and keep 100% of the cash flow (which I need); 

or

b) ask the bank for two loans, buy two-properties and use part of the cash-flow to pay off the debt.

I'm inclined to go for option b for obvious reasons, but I've never asked for a loan before, so I'm kind of nervous about the compromise. I think I can get enough cash-flow from the two new properties (plus the other one) to survive, but I sometimes feel that I might be stretching a bit much for my experience. 

What do you think?

Any advice on things to look out for, like commons mistakes or things people usually forget?

Thanks in advance to all of you who are taking your time to read this.

All the Best,

Nuno