All Forum Posts by: Matt Jones

@Joseph M. Refi went well, we close tomorrow and after closing costs I’m getting 94% of my money out on a 75% LTV loan. I went with a local bank and they actually don’t have a seasoning period, which is the main reason I chose them. I waited almost six months because I kept the tenants I inherited for 3 months, 6 week rehab, 1 week to find the tenants and then I started the process which took about a month.

@Adrian Tilley I don’t remember hordes of people talking about the coming crash back in 2008 either. Click bait and fear mongering have become so much more popular today that it makes since financially for writers and reporters to talk about “the coming crash” because they will get more attention than if they talk about how we will transition to slower appreciation and a more balanced market. Loans have loosened up but I still see properties that don’t appraise, I still see self employed borrowers and borrowers with less credit have to go to great lengths to document their situation and get through under writing. We don’t have stated income loans running wild, foreclosures are still low and demand is still high. If you see something statically pointing toward a crash let me know but I’m not going to listen to the article on Twitter or the news that’s just trying to steal my attention and spread fear in order to boost their ratings.

@Sharon Tseung I’ve been in Anaheim all week for a real estate agent conference and the consensus between the 5500 top agents and presenters is that in the next 18 months we will see a transition to a more normal balanced market. The double digit appreciation will slow down to a more sustainable 5-7% and the bidding wars will slow down as inventory increases. I say that just to balance everyone who says the market is going to “crash” soon. I can’t think of any top minds in the market that think we will have a major crash or anything close to 2008 - things will change but not that drastically. It sounds like you’ve got a solid plan for looking into different markets, be sure to check out Pensacola while you are at it. We still have solid returns and lots of Colorado, Washington and California investors have been buying here the last few years.

@Mike Dorneman You could also stipulate in the contract that the owner must provide written month to month leases at closing. That shouldn’t be a major hardship on the owner or tenants, it’s the basic arrangement they have now but in writing so everyone is on the same page.

@Ellis Hammond Go back and listen to the podcasts with guest who have been in real estate at least 20 years. Have you ever noticed how many of them went bust or nearly did at some point? There is one thing for certain in real estate and that is that the market will cycle up and down over time. For that reason I choose to keep my personal debt to $0 other than my own house. If the market shifts down not being able to pay for a rental property would suck, not being able to pay for the rental or make your car payment from that cash flow you were counting on would be much worse though. Rather than leverage everything to the maximum now, when the market is good, I’m leaving a wide margin of error to make sure I’m ready when the market turns and even better that I have some equity to tap and money in the bank to buy like crazy when prices go down.

@Lesley Resnick  I repaired a roof leak and generally checked it out to make sure I didn't see any pending issues but did not replace it.  Same with the AC, Cleaned the coils inside and out and replaced a faulty fan motor but did not replace it so I'll need the cap-ex money eventually.   I will be opening a property management business in the very near future, I'm getting ready to test for my brokers license this month, so I have set the price for my own portfolio of rentals at $50 door.  10% is more common for the area, I've seen 8% for owners with multiple properties and I've even seen as low as 6% but that definitely seems to be a case where you get what you pay for based on my observations...

@Erica Osborn Thank you!  PM me for contractor details.

@Darrius M. Thanks man!  I'm trying to pick up a few more around it to do the same!

@Jeremy England thanks man, hopefully we will get to work together on one soon!

@Patrick Daniel  Thank you!  I found that particular wood look tile @ Jones Flooring at the corner of N Palafox and Fairfield, it was only .99 per sq ft!  Lowe's also has a wood look tile for that price but it is significantly darker in color.

@William Allen  West Pensacola, not too far from NAS & Corry Station.  I was shocked to find a major shortage of 3 bedroom rentals in the area and that rental rates were shooting up.  It rented so easily that I wish I had priced it at $1k per month.

@Sam B.  I estimate it to be about $75k but I'm waiting on the appraisal to come back.  My contractor was slow but he was really reasonable on prices and I found some great deals on the material as well.  

@Caleb Heimsoth it's bundled in with my Cap-Ex. Because I have been doing exclusively BRRRR properties I have little to no routine maintenance and cap-ex for the first few years is very low because of the up front rehab. So I set aside 10% for future repairs and cap-ex in one line. I'm in my 3rd year of doing it like this and my properties are still using way less than the 10% because almost everything is new when I put them in service. I'm sure I will have to increase that over time but rent increases will help cover that as well.

@Cheryl Vargas  Thank you!

Hi BP!

I thought I would share the pictures and numbers from my most recent BRRRR project in Pensacola, FL. I picked this one up from a wholesaler(first time buying from one) back in January. The wholesaler agreed to take my offer verbally but never returned the signed paperwork and ended up taking a much higher offer. Rather than up my bid or get overly upset I just let him know that I was a serious buyer and that if anything happened where his contract fell through I could close quick. Sure enough, the wholesaler reaches out and his deal fell through so I end up pick up this 2/2 townhouse for $39,500. I put new tile flooring throughout, added a closet to make a 3rd bedroom, new appliances, new paint, new counter tops, refinished cabinets and added new hardware, gutted and updated bathrooms, landscaped outside plus lots demo, fixed a roof leak, sheet rock work ect.. for $13,500. My total investment is right at $53,000. I used a contractor that had done some smaller jobs for me before but nothing this big. He hired some additional help and said it would take him a week(I estimated 3-4) to finish. It took him 6 weeks(at least he was cheap). It rented in less than a week for $950. Now that it's occupied I am in the middle of the refinance and it looks like I will be able to pull out most if not all of my money. I'm going to have the outside vinyl sided which will be the only cash I have left in the deal.

Actual Monthly Expenses:

Mortgage Principal & Interest: $380

Monthly Taxes: $68.92

Monthly Insurance: $63.75

Cap-Ex: $95

Vacancy/Credit Loss: $47.50

Property Management: $50

Total Expense including estimate for vacancy and cap-ex: $715.17

Rented @ $950 per month

Expected Cash Flow: $234.83

Living Room:

Master Bed/Bath:

Under the cardboard box in the pictures were about a hundred cigarette burns in the carpet...

Between the 5 people and 3 dogs living here when I bought it there wasn't a blade of grass in the back yard:

Still haven't done the vinyl but it sod does wonders and it only took 1 pallet.

 Kitchen:

Thanks for reading, I look forward to your questions and comments below!