All Forum Posts by: Ronald Starusnak

Hey guys, we're moving forward with acquisition of some properties up here in Central New York. I am hunting a very specific niche market where we're not expecting appreciation, and we're not looking to make a lot of equity of the refi. We're BRRRRing all of these properties and I'm okay with leaving a few G's in each one but I'd like to hear what you guys have encountered when you've refinanced your properties.

I anticipate potentially having to push back on some appraisals considering the properties we're buying. We've done all of our due diligence apart from hiring an appraiser for each property before we close. Some properties we know we have huge margins but others we might get stuck with $4-8k in the deal. Is there any better way to make it less of a guess? Is there any data or information we do not have access to that the appraiser will be using in their assessment? I know if we're truly worried about leaving money in the deal then we should be buying with more conservative margins, I'm not worried about leaving cash in I just want to be more accurate. 

My realtor suggested the appraiser sometimes looks at what you're requesting on the refi from the bank and pretty much says "Yeah it's worth that" / "Not even close".  If we request a refi and tell our lender we think the property is worth $120 when we really think it's worth $110, is the appraiser going to be affected by our assesment at all? 

@Nathan Asher Robson brrrr.. I only buy properties under 60k lol. Put 10% down, remodel the thing and cash out and re roll your money. I buy something for 40k, put $20k in, new value is $100k, we get 75% ltv on the refi, puts $75k in our pocket. After closing costs and loan fees you're making a good profit and you have the rental plus all of your money back.

@Cirilo Villar

Find someone to do a lease option for you. Someone that is trying to sell their property but they can't afford the holding costs. If their costs are $600/month and you can rent it for anything over that then you're making money. Hop on zillow and sort by for Sale by owner.

 Start a construction company lol

Get an Art Science degree

 Yes, too late. Just send me your deals. 

Dude, at your numbers if you got a 75% LTV, you're sticking $50,000 in your pocket and still adding another $400-$600 a month in passive cash flow. Or you can sell it for $180,000. It depends on your market. You'll have $50,000 in equity in the deal or so still after the refi. If you sold for $180k you lose 7% to realtors so you put $167k in your pocket, then you have to pay capital gains taxes on that.

If you want to sell it to put an extra $20k-30k in your pocket instead of adding $4,800-$7,200 of passive income then sell it. I'd hold it though. 

Most contractors will be garbage and don't know their numbers. Don't lump the whole job into one thing, but also don't piece meal the job. If I bid a whole house remodel for someone and the client asks me for a breakdown; most of the time I'll break down where their money is going but then they pick and choose our estimate and try to break it down and find someone to do it cheaper.

Good work isn't cheap and cheap work isn't good. I have no interest in working with other investors on their flips unless it's new construction or major flips with excellent margins. Any reputable contractor isn't going to let you dictate how they get paid. We take 50% down, 25% when we're halfway and the other 25% when we're done and that's non-negotiable. 

If you're worried about the contractor walking away, tell them to break up the job and only pay them for each section. Some lenders will only reimburse you after you've paid them or after the work has been completed in full. For the record, we do some major flips, huge rehab projects, and previously have managed hundreds of investment properties. I know it's tempting to get the cheap guy and to try and control the job but if your contractor is letting you guide him like a puppy, he's inexperienced.

As for how much do you pay them? You pay them 100% of what they bid. If you're grabbing a rehab loan and you say you want $30k to remodel the place before you have an estimate to do so; you're doing things backwards. Grab your estimates first unless you have a lot of experience estimating what a remodel should cost. We still get things wrong and we've done a bunch. 

I didn't read this whole thread but regarding the BRRRR method for us as contractors... its absolutely killer. We are finding deals where we're NET $500-$700 a month after refi. I'm 100% happy keeping my workers just working on my own projects for now lol.

I tried to do a remodel for a friend to fit within his budget and we would have had to cut corners to get it done. We ended up doing a ton of extra stuff for free and at the end we had gone way over budget and didn't even want to go back for warranty work and no one ends up being happy with it. We've done $40k full remodels on properties that make them rent ready and I've done $40k kitchens.  

The contractors that can articulate themselves and the types of contractors that you really want working on your project are going to be way out of your budget. Just to give you an idea, one of my crews costs me up to $4,000 in LABOR per week not to mention all of the extra stuff we have to pay for them. We have G&L, Errors & Omissions, commercial auto, most guys will have a truck payment or two, and then we need to make a profit. I won't even look at anything if I'm not making a minimum of $1,000 a day per crew and we're smaller than some of the big fish around here. 

Jay is absolutely spot on. The guys that think they can get full remodels done that cheap are truly mistaken, they don't know their numbers and they're going to have a rushed finish which will give you a sub-par product. I only take large margin jobs right now or I flip or have my guys work on our own stuff.