All Forum Posts by: Brian Larson

sounds like a solid plan. I will be following along and watching the progress

congrats Chelsea. Good for you dragging your husband to the courthouse :)  as long as you are able to refi out at 75% and the repair budget comes in at your estimate with some contingency you should be good to go. Thats awesome. 

One word of caution, because you are rehabbing yourself you will save $ but there is a good chance you will grow tired of the project, its rehab issues, etc. That, coupled with a long timeline (May) eating up holding costs makes the deal less attractive amd i would hate for you to hate the house at the end of it. 

Is there any way others coukd do the rehab l, shrink your timeline and still.fit in budget? Trust me, i get why you want to do it yourself, I just think a faster rehab to rent to refi will keep your enthusiasm up. Just a thought and good luck!

How awesome is making equity and net worth out of thin air? :) BRRR is awesome if done right and again, good luck.

thats awesome Michael. You wrote was, does they mean you have made it? If so,  how did you get there and when did you start?

**This is the intro to a possible multiyear diary. Sorry for the long first post, I wanted to give context. My goal is to update this every month when I update my personal balance sheet**

So today is my 38th birthday. I do not mention this because I want a nice comment or seek something, I mention this because I use my birthday as my fiscal year. I have set a goal to be able to retire/full-time invest starting on my 45th birthday (if I choose to do so...I love my current day job so maybe I will do that forever). So my fiscal year runs 11/1-10/31 when I do budgeting and planning for my family/investments

As I track towards my 45th birthday, I have set some very clear goals ahead of myself.

• Earn $10k in Passive Income per month by 10/28/2022
• Have a Net Worth of $2M by 10/28/2022

I have been tracking against each of these numbers off and on for a few years but have not been crystal. About 9 months ago I read the Millionaire Next Door and it helped crystallize where I am today and then a combination of BRRR and the Millionaire Next Door made the steps necessary to hit my target net worth today and tomorrow tangible. (you can see from chart below that I am where I am supposed to be per the formula)

I plan to get where I need via 2 asset types:

• Rental Properties (SFR/MFR) - leverage BRRR in order to buy and rehab for cash then refi into portfolio.
• Notes - First Position with a minimum yield of 13%

And have set some minimum goals to how I now acquire each of these assets.

• Rental Props - add 6 units that average out to $150/mo cashflow and $25k equity per unit
• Notes - Add 2 notes of $25k or greater that yield the above 13% minimum

My acquiring with these numbers I will add $200k in net worth and $1,520/mo passive income per year which will in turn yield the growth I need. See below You can see where I am today and where I want to go. So, with that, I hope to post lots of additions over the coming year as I need to add 8 assets this year (starting 11/1) and have already begun the process. Stay tuned Last note: I have uploaded my acquisition sheet that you can edit to your own liking. It may not be perfect for you as it only goes out 7 years but you can add more data/rows as needed. Acquisition Tracker Thanks for reading brian

that's great Joe. Thanks for the details and good luck.

This is fun to watch. Thanks for keeping us up to date @Joe Homs

I know you are busy with the rehab but if you get a chance, can you post some of the details outside of the purchase/arv. I am wondering how you financed it, how you heard about it (simply showed up to steps and bought or had insight ahead of time) and well... anything you can share.

How do you plan to seek the place? I may have some people looking in HB for a house so just wondering.

thanks

Welcome. This is the best site you can possibly hope for in regards to learning and talking REI.

I am with Joe, tell us the good stuff! :) Is this flip in OC or are you doing it remotely? If in OC that is awesome. This is a great place to sell but finding a good deal can be tough. Mind sharing some of the details? (you don't have to be too specific but I am always interesting in hearing approach, how you came across the deal, your plan of attack)

Enjoy the site and if you are ever up in the South Bay hit me up.

Brian

hey @Jeff V. thanks for the feedback. Its funny because I created this initially to allow me to quickly analyze a property per my BRRR methodology and then I would move all of the data into my 'real' analyzer spreadsheet. Over the past month I have began to use this more so I should probably take your feedback and@Brandon Stevens feedback and just evolve this into a full calculator/analyzer.

Making your change will be super easy and I also want to have a variable for ARV% target. if you are refiing into conventional with units 1-4 than 75% is fine, but with 5-10 it needs to be 70%.

Look for an update in the next week+ I will update here.

b

To follow-up the question by @Andrew Hofing and my post above, I came across a deal today that is very interesting. This spits out that scenario that Andrew asked. What do I do if my metrics are mixed?

Here are the outputs on this property:

At first glance it may not seem worth it due to the DSCR and Price to Rent ratio but when you dig in and know the neighborhood of this house and the schools (all are 9-10 rating) and he fact that its an A+ area...well then it starts to make a lot more sense.

Especially with that ARV%. This may turn into a flip and then walk from there.

As you can see, the spreadsheet can do what it does but NOTHING is tried and true rule and you have to add outside factors that may not be quantitative in nature.

Brian

hey @Andrew Hofinggreat questions.

I have the long answer for delta and short. :)

LONG: Delta of offer over 75% of ARV is a figure showing how much we are paying over the 75% ARV threshold. This is in the case where maybe you make an offer that puts your purchase+rehab right at 75% but then they counter back a little higher. If you plug in the numbers you will see exactly how much over 75% threshold you are and if you want to do the deal anyhow. Think of it this way. Lets say you have a solid deal, great cashflow, location, DSCR, etc but you have to pay $2500 over the 75% mark, would you do the deal and just consider that the cost of a down payment once you refi? Maybe, maybe not.

SHORT: BRRR is not perfect and sometimes you cannot get everything under the 75%, this cell tells you how much you would have to pay in order to refi with the current ARV and costs to purchase/rehab

NOI Ratio is what I am applying against the monthly rent (think 50% rule). This is net operating income thus the higher this amount the more you are getting to keep with that rent. The lower the less you keep. You are stating it in terms of expenses which is part of the equation but this is the income part of equation thus higher is better. Example: 50% ratio says I keep $500 of $1000/mo rent. 55% says I keep $550 of that $1k.

As for gauging the deal, the greens and yellow are simply quick glance items. you have to apply your personal preferences. I put more weight into Cashflow and CoC Return than I do the others. So for instance, lets say you have a property spinning off $200/mo cashflow in years 2+ but the DSCR is yellow because its at 1.3 and the cap rate is yellow because its at 7.5%. That is a deal I would still do. I strongly prefer to have 1.4 or higher DSCR and I like a higher cap rate (as compared to the notes I buy) but they do not outweigh the $200/mo cashflow and are not BAD ENOUGH to kill the deal.

With that said, you mix in reds and we likely have a problem.

I hope that helps