All Forum Posts by: Ron Brady

My wife and I use our HELOC as our funds source for our purchases. We've fully BRRRRd one (getting all of our cash back) and we are the middle of others. To date, it has worked well.

This said, one thing to be aware of is that our with each mortgage application, the lender takes into account our overall debt-to-income (DTI) ratio, including BOTH the new mortgage and the existing HELOC. Even though we will reimburse the HELOC with the funds from the new mortgage, the bank considering giving us a mortgage has to assume we will not do this. Hope that makes sense. If not, happy to answer any questions.

I concur with your thinking about too many eggs in one basket and the benefits of a more checked and balanced team.  Good luck!

We won two auction.com auctions, and gave up on another that someone else won.  We closed on one of the two wins but did not close on another. After tracking these for some time--before, between and after our bidding--we found:

1. The final purchase prices were well below retail, and thus a good deal.

2. The final purchase prices were not as discounted as we've been able to secure through other purchase channels (HUD, wholesaler). Thus, auction.com were good deals but not great or the best possible deals.

3. Auction.com bids against you. Thus, we're never sure if we are the only bidder and auction.com is bidding us up to the seller's reserve or if we're bidding against other buyers.

4. Auction.com's closing costs were higher than with our other purchases because they pass along more closing costs to buyers than in retail purchases.

First advice would be to conduct your property analysis first.  The Bigger Pockets calculators are a good choice for a new investor and there are others you can find via google. When we started out, we tended to use several different calculators to analyze our potential returns.  After using many over time, we learned more about the critical variables in our purchase decision.  Once you've done your analysis, go into the auction knowing your highest price and then be disciplined about not going above it.

Second advice is we recommend that you identify a property or two you're not interested in, due a mock due diligence on it/them and then monitor those auctions to their conclusion with an eye on when you might bid.  Doing this will give you a sense of how other bidders behave in the auction and of where your strike price compares with the final sale price.  This will give you some mock reps before your auction and make you more comfortable during it.

Final advice is that auctions are fun--there is adrenaline that flows from trying to win. And winning is fun--IF you are comfortable with your final price. Good luck and enjoy!

Finishing new personal residence HELOC and no impact here.

@Joe Martella

The joy of real estate investing is that there are a myriad of different strategies for different investors to secure the returns they seek!

@Mark F. https://www.sayrhino.com/

Oops, forgot to add our "b)". The second issue is your Debt to Income ratio, DTI. We know a little less about this, but you can google this term and it will give you a way to figure out how much debt you can assume for your new property when you calculate in all of your other debts and income.

Good luck and keep us posted!

I recommend buying and reading David Greene's BRRRR book--we did and we find it to be invaluable as we attempt multiple BRRRRs.

As for the loan, we've found the two most important determinants to be a) Loan To Value (LTV) of the After Repair Value (ARV) of the property. We've found most lenders will provide 75% LTV of the ARV. Thus, if you but for $50K, put in $25K in repairs and the ARV of the home is deemed to be $100K (which is the same way as saying the house appraises for $100K after your repairs), you will qualify for a $75k mortgage. I just shared that really quickly, so again, I refer to David Greene's book.

So, how do you estimate the home's ARV? We do it by scouring Realtor, Zillow, Trulia & Redfin for recently sold homes in the target neighborhood and looking at their prices, square footages and room counts to create a list of 4-5 homes that match the home we intend to create with our purchase and renovations. We throw these into a spreadsheet and take an average to create our own "desktop" estimate. This is not foolproof, but it gives us an ARV ballpark.

Hope this helps.

For our tenants, we have them use a Rhino policy in lieu of a security deposit. This lowers our tenants' security deposit requirements, provides us with a wider potential customer base, saves us from the administrative work of managing security deposits and, in this moment, takes us out of a situation where Governor Murphy's order adversely impacts us.  

I'm not sure if this helps anyone who who finds themselves on the short end of Gov. Murphy's Executive Order, but we hope it does.

We don't really have cash sitting around per se, but we are cash buyers. How? We have a HELOC on our primary residence. We use the HELOC to buy houses with "cash"--admittedly lower-priced homes (C class)--and then to renovate them. We then refinance to replenish our HELOC. In short, we use our HELOC to BRRRR, including our most recent purchase which was on Auction.com