All Forum Posts by: Andrew Syrios

Nothing is impossible, we are speaking in general terms. With what specifically do you not agree? That low inventory makes junk sell for too much money? Or the notion that in a normal market buyers will choose move in ready properties over project houses? 

Or let me ask you this: how many BRRRR's have you found for 50% of ARV in the last years? Because the best I see is about 20%, so with 30% rehab you are 10% over ARV. I can see that you have somewhat of a different perspective: KC has currently a list to sale ratio of 97.1% while Milwaukee is at 101.7%, so you have a slightly better market there.

Yeah, it's not dead because it is a poor policy or business mindset.....

Everything is a bit off right now......

@Andrew Syrios possibly, but a critical component to BRRRR is a market with at least 4 to 6 months of inventory. In such a market buyers have choices and will buy nice places, which forces sellers of dilapidated properties to accept a discount. There are no discounts for condition anymore! We have about half a month of inventory in Milwaukee and literally everything is seller with multiple offers.

"Fix and rent" will never be dead, but the days of 25% equity gain and infinite cash recycle are gone I am afraid, at lease until we are caught up with the housing shortage.

Hi @Andrew Syrios

Thinking this through.... it may be possible. Potential lenders will consider the net cash flow of the HOA (HOA dues collected minus total budling expenses + 10% to reserves for future unknowns). Suppose the HOA were able to get a 400k @ 25 year amortization at 10% with a 3634 principle and interest payment. That's $43,608 additional line item expense to that HOA budget.

How many units are there? What is the total HOA revenue now? Is it enough to cover the expenses of the building + the additional 43,608 loan expense + 10% reserves? How much would the HOA need to increase the owners HOA monthly to cover the loan payment? Last question which will be lender specific, what debt ratio will a lender feel comfortable lending on? Certainly not more than 50% which means the total HOA income must be at least double it's expenses (which is unlikely).

In addition, what will be the collateral for the loan?  (entire building?)  Not likely, Therefore we need to make the deal more appetizing for the bank. For example if there's 100 residents, maybe we could convince 100 residents to open their personal checking account at the bank. Far fetched I know, but if that's what it takes to get the deal done The residents might decide to do it.

How many residents are there? Maybe half the residents have 50k set aside for a cash call And the other half do not. For the half that don't have the money, maybe we can do a HLOC equity line of credit or cash out refinance for each of them.

jim