All Forum Posts by: Ryan Dossey

One of the easiest ways to identify a potential problem property is the chain of title. The vast majority of these we saw were bought/sold/quitclaimed around with many of them having been bought at tax auction. 

Our attorney is actually one of the attorneys going after Morris Invest. 

Make an offer based off of a ballpark repair estimate contingent on inspection. 

In Indianapolis, you should NOT be in a negative cash flow situation. If you end up with a negative Cash Flow you paid too much, rehabbed too much, or bought in the wrong area.

My guess is that you're out of your inspection contingency at this point. You will most likely lose your EMD should you walk and chances are the wholesaler won't work with you again if they can't count on you.

This is all stuff you want to research/know prior to going under contract. 

The only way I see you getting out of this deal with your EMD is if your appraisal doesn't come back with the HML and you had a financing contingency.

The broker on the transaction (Charlene) does a TON of investment deals.

Rent comps are in the ballpark of $750 +/-

If this property is in Nashville you should have no problem filling it with a qualified applicant. This is perciesely we have written criteria. We can't haggle with it if it's on paper. 

We do a non refundable fee of $250 + $35 a month in "pet rent"

If you'd like to PM me the address I'm happy to give you my feedback. 46201 has a VERY wide range of properties inside of it. 

I would also focus on BRRRR ing properties with largest pool of interested parties.

Ex: You don't want a 2/1 in a rental neighborhood that you're making the numbers squeak by on. 

If you're getting properties built in the past 20 years, 3/2+ with an attached two car, in great school districts, at a healthy discount, that actually cash flow... You're doing this the right way. 

A membe earlier posted that he bought at less than a 10% discount off of ARV and was hoping appreciation would take care of it in the coming years. I would not be playing with that startegy right now.

In the midwest we invest for cashflow and appreciation is an added bonus, not what we're chasing. Just my $0.02

@Lionel Mccrory If any lessons were learned about "turn key BRRRR providers" in Indianapolis with the Ocean Pointe / Morris Invest saga it's that @Jay Hinrichs is absolutely right. The rehab is the issue. I think one the main things that contributed to that disaster was that most of the properties being sold were from the tax and code violation auctions. These properties tend to be some of the worst of the worst. 

You would be better off buying a house from a local wholesaler or company and flying out to manage it multiple times during the reno. 

I would recommend looking for A - B class areas and avoiding the downtown. Your bread and butter is going to be the "vinyl village" type of stuff. 

So this is pretty much our business model. 

Similarly to wholesaling I would argue that there is a HUGE fail/wash out percentage. The biggest key is being able to reliably and consistently come up with A-B class assets that you're getting great deals on. 

We have the #1 Google ranking "we buy houses" site in our market, send 10-15k pieces of mail a month, and use our answering service (call porter) to filed all of our leads. We have an acquistions manager, use a CRM, and 90% of our deals come after months of follow up. I pulled a random acquisition from our CRM (Investor Fuse 2.0) and we had 18 touches including multiple automatic text messages, emails, manual cold calls, and a thank you letter. 

I just did a case study where I reviewed the 12 month real financials of our first BRRRR deal.

You can watch that here: https://youtu.be/7bEfiDbkRNo

It was on this house: 

The real killer of BRRRR deals is the holding costs. Most folks who are budgeting 75% - repairs for a BRRRR deal are going to get slaughtered.

We did a video on our holding costs for 2018 on BRRRR deals during rennovation/prior to lease up. 

You can find that here: https://youtu.be/DxjY9gqx-_4

Had we followed the 75% - repairs formula we would have lost $97,000. 

^ Most folks doing one or two at a time aren't going to have near six figures in holding costs but if you're doing them in volume (or even if you're not) I recommend following this: 75% - repairs - $5000. 

We also traget a min of a 1.2% rent to cost ratio to cover the DSCR that local banks are looking for on the refinance end.

Another silent lurker in BRRRR deals is unexpected repair costs that are uncovered during construction. @Andrew Syrios and I were just chatting about how we haven't met a single investor who struggles with budgeting too much for construction. 

Which is a great reason to read @J Scott's book on estimating repair costs if you're going to do BRRRR deals. Andrew and I are both fond of his rounding up method. 

One thing that I love to see is that we are aboslutely slaughtering the hedgefunds in the neighborhoods we are in. We are routinely buying at the best prices ever seen in our neighborhoods for properties needing relatively minimal rehabs. 

**Edit: I would never do a BRRRR deal if I thought that I was only going to cash flow $50 a month. Make sure that you're including Capex in your analysis**

 Thank you sir!