All Forum Posts by: Bram Spiero

real estate, unlike stocks, allow you to leverage. That's the big difference when comparing to other forms of investment.

Indy, Milwaukee, Memphis or any other 2nd or 3rd tier city with diverse employment.

Pick one and spend a month looking at everything on sale there to get a feel for where and what you want to invest in.

Then spend another month becoming an expert in your selected market, again by looking at absolutely everything.

After two months you'll know a deal when you see one. When you do see one, pounce.

My bias is 80-100k SFHs.

You may be able to pull off 4-5 with that money. Doing so without a W2 will be rough and they are not likely to replace your income.

"Hi, I'm buying mobile homes in the area. Call or email me if you're interested in selling yours."

only to have them realize that you left them neither your number nor your email.

:-)

@Zach Shrader, that book is very helpful.

Hey Suzanne,

Let me get this straight, you're looking at a buy & hold with renovations, correct?

Can share numbers on rent, taxes, insurance, ARV in your area, asking price. What is the current repair cost? 20K and you want to understand what your ROI is at 40k repairs, 50k repairs?

Hey Brandon,

If you refinance with a non FHA loan then you are no longer FHA and can rinse and repeat elsewhere.

Check to make sure you have met requirements for minimum occupancy time as primary residence.

Hey there Mahmoud,

To be honest, equity is theoretical until you sell or refinance. It's a function of how the house sells or appraises and the debt associated with the property.

In your example, you purchased a house that appraised at $100k using a $80k loan.

If the house then appraises at $130k and you still owe $80k, your equity is now $50k.

However, this is entirely theoretical until you try to do something with it, wether that is a HELOC or a refinance.

Let's say you refinance at an evaluation of $130k and get an 80% loan to value like your original loan. You could pull out $24k in cash, own $26k in equity and have $104k in mortgage debt.

If the house loses value, you can go into negative equity, which is also theoretical until you try to sell the property.

If the house is now worth $60k and you sell it, you now owe the bank $20k. If you don't sell it, the fact that the house is underwater doesn't matter.

Hope that helped.

Hi Rachel,

I ran your numbers and got a cashflow of $196.

My assumptions for repairs is higher (10% of rent) and I assume the same for property management (10% of rent).

HOA covers you for CAPEX.

I'm also not getting the same number for mortgage, what rate and amortization are you assuming?

Good luck!

Hi Cave,

Can you give a little bit more background on what kind of partner, how much money, are you putting any money in the deal, etc?

Hi Zach,

Have you determined for yourself what constitutes a deal?

First step is being able to recognize what's a deal and more importantly, what's not.

In order to do so you need to work in reverse.

1. What is the ARV (after repair value) for a similar, rehabbed property in that neighborhood?

2. What is the repair cost (yes, getting several contractors to price the work is  a start to learning to price these yourself).

3. How much do you need to make on this deal?

Now you know your max offer on the property.

Let's pretend that the ARV is 200,000, rehab costs are 50,000 and your minimum profit is 20,0000. This makes your max offer 130,000 (this is before you calculate cost of sale, holding costs, cost of acquisition). Maybe that makes your max offer closer to 115,000.

A great way to get the hang of this is practice establishing your max offer on as many properties you can manage to go see.

If you share your results here, I'm sure you'll get plenty of useful feedback.

As far as your original question, find deals first, then financing. 

Good luck!