All Forum Posts by: Ryan Howell

Get creative with seller financing - maybe interest only for 6-12 months?  If you use commercial loans, you can’t o the same thing.  Our last apartment we negotiated 9 months interest only to manage our cash flow.

Good CE's are hard to come by. There is a lot of opportunity if you go that route. As far as getting your license for MLS access...unless you want to be an agent, its not worth it (in my opinion).

What about a cash out refinance for the next downpayment? I would only do this if you can take out enough capital AND still meet your cash flow numbers for the first property. This is similar to the HELOC, you would just have to decide if you want a variable rate with flexibility to pay down and draw on it vs fixed rate on a cash out refi. I tend to do the HELOC if I'm doing the BRRRR strategy and/or have a plan to pay down the HELOC quickly.

My caution is be careful - just because you can pull out equity on the first deal, be sure its wise and doesn't turn the first one into a "bad" investment just to justify buying another one...it can be very easy to fall into that trap.

@Sean C. - I'm more than happy to help you with some "rules of thumb" for the Asheville area, as I'm an investor and agent here.  I would assume 10% for property management.  For interest rates, it will vary depending on your situation but 4% is probably a good starting point right now.  I assume around 5% for vacancy knowing it can vary depending on the property/location, etc.  I typically see my annual insurance premium for small multi-family is similar to my annual taxes for the county so I use that as a "rule of thumb" when doing a quick screening before I get quotes.

@Scott Luetgenau - Deal appears to be solid, but I didn't see how much the rehab was going to cost.  For the vacation rental, what occupancy rate are you assuming?  If your concerned about conventional financing, I would look at some companies that do non-QM loans (non-qualified mortgages) i.e. asset based lenders.  If it will cash flow as a long-term rental, you will have a lot of options (Lima One Capital, Lending Home, etc).  If you need to qualify it as a vacation rental to make the numbers work, I know there are some companies that will underwrite it based on short term rental income (Visio is one).

@Mike Shulman - are you paying for any common area lighting, lawn care/landscaping, etc?  I would budget for a PM even if you do it yourself.  Don't factor in the "job" of property management into making the deal look better.  Treat it separate, and if you want to pay yourself $1000/mo to self-manage then go for it.  Are you paying cash for it?  I don't see a mortgage.  What if you decide to refinance later to buy another deal?  I would run that scenario as well.  Ultimately, its still probably a good deal.

@Weam Banna - @Joe Villeneuve is spot on. I believe the Beginner's Guide on BP used to go through all the calculations. The big thing is to understand why to use these metrics. CoC return is a great way to highlight the power of real estate investing when using leverage since it is a return on your cash invested. I look at Total ROI - factoring in average market appreciation on my cash investment as another way to explain the benefits of investing in real estate. When you analyze a deal though, be careful not to only look at these metrics. I also look at cash flow, my reserves, etc to ensure I can hold this property long enough to see those projected returns. Be sure to look at the whole picture.

Chris, check out CREIA and there is also a local meetup.  Both are great ways to connect with local investors.

@Leonardo Rodriguez - I would talk to a CPA as far as what state. In general, if you're starting out with BRRRR while working a W2, then I would take advantage of conventional loans while you have a W2 income. I didn't bother with an LLC until I had my first few properties, because I used conventional loans and they are required to be in your name. If you're looking to get started, instead of focusing on creating the LLC, I would focus on consuming books and podcasts on RE, attending every networking event and making offers on properties. That is the best use of your time. I consider the LLC a very minor decision that can be made after your first couple properties. Talk to your insurance agent about an umbrella policy and verify with your CPA, to be safe...don't let this get you hung up and prevent you from getting started.

Brian, I use Terri at TonsofRentals Asheville.  She manages my units.  I also know a few more.  I'll PM info for you.