All Forum Posts by: Tim Johnson

Congrats @Wyatt Pearson! I've been there and it can feel overwhelming...but although things may start slow, they can also pick up very fast.....

1. Call all your friends and family (your SOI -sphere of influence) - be sure to tell them that you're now a realtor and excited about it. Biggest lead gen failure of most agents is to NOT really work with their SOI.

2. There are 100 more great things you could do for lead generation - but why not grab a copy of "The Millionaire Real Estate Agent" by Gary Keller and read through that? Don't be put off by the title. This book is not a gimmick. It's loaded with good information on how to move from where you are right now....to a more solid place, including in the area of lead generation.

Best wishes!

Hi @Timothy Allen, I wouldn't worry or overthink it too much. Any good PM would welcome the business (and maybe the challenge!) and wouldn't feel threatened by the set-up you've described. I think your plan sounds totally cogent, beginner or not. 

And in regard to the PM  that has seemed to "withdraw" a bit after your talks....why not just ask them openly how they feel about the set-up you've described? Good communication (especially around expectations) never hurts. You may get some good data....and possibly find out that your intuitions were wrong. Who knows?

The fact that it was a foreclosure (and probably now REO) neither adds nor takes away value from the property. Generally, it would be put on the MLS (open market) for whatever the comps for such a property would / could command. As @Russell Brazil has pointed out.....there's no set formula. But along with the remaining note, the bank would have holding costs plus real estate transactional costs to recoup....no reason for them to be offering any bargains.

Hi Malvin, no one here can tell you if it's a good investment for you or not.... depends on what you're looking for.

As I run it through one of my calculators it shows good potential. Here's a screenshot.  I've inputted 6K for taxes, 900 for insurance on both units, 5% for vacancy, capex, and maintenance, 8% for PM (you could of course do this yourself and the numbers get better), for finances I've inputted a 30-year amortization at 6% and 25% downpayment. It still comes out to a cap rate of 6.51%. 

You still don't have a final answer, but using some of these calculations gets you closer to seeing the possible outcomes.

(sorry, the image is super small and not helpful. If you'd like a copy of the excel file just pm me....)

You first financed your purchase with $2,500 of cash. That's also a form of financing. Next, you go to a bank and get a mortgage loan. In your case, since you aren't formally paying off an initial mortgage loan I put the word "refinancing" in parentheses. No matter how you word it, the result is the same: You used cash to purchase the home, you used someone else's money to rehab it, and now as a final stage you will borrow money from a bank (based on the new ARV) to pay that "someone else" back. And hopefully, for the foreseeable future, your renters will pay the bank back on your behalf. Home run.

You would pay off the hard money loan by financing (refinancing) the home after your rehab. A LOC is one way, but maybe a regular 30-yr fixed rate mortgage is best for your long-term rental plan and cash flow? If your ARV / appraised value is $95K you should be able to pull out at least $70,000 of that.... pay off the HML and have some left over for the next project. If you've done your numbers correctly your renters will now be able to cover all other expenses.

Yes, it would pay off the hard money loan (hopefully, you've run your numbers correctly so that you CAN pay it off.) Your renters should then be covering not only your new mortgage payment but hopefully all other expenses related to owning the property, such that there would be positive cash flow each month. This would be a home run. In many cases, it's not unusual to leave a certain amount of money in a deal, but the theory is that if you can actually pull all of your initial investment out, you could repeat this scenario multiple times and quickly scale.

Hi @Winston Jimenez II, the BRRR method sort of assumes that you will be adding considerable value to a property (in order to later pull the cash back out through refinancing). In many, if not most cases, this means that the property you're hoping to purchase and work with will not be one that you can get a conventional loan on. You've either got to have the cash yourself, get a partner with cash..... or procure a hard money loan or some other creative financing. Your downpayment is not really the issue here.....

Sure, I get it Parker, that makes sense. Lots of factors to consider. 

I was thinking more of the case where an agent is actively looking out for deals for a specific investor. He finds one.... the investor buys it....it turns out to be a great deal.... and the investor rewards the agent by using him on the listing side later as well.... thus, insuring that the whole process can repeat.

But this assumes you trust each other, have a relationship, and want to keep the cycle going. Sometimes you just need to find a different agent. 

Investors who are constantly on the look-out for good deals know that promising to then list it with the same agent after the flip.... or several years down the road.... is good incentive for that agent to keep finding them deals. (after all, there are plenty of other investors interested in great deals.....)

But this isn't just for investors. As an agent, my goal is to create great relationships and offer "above and beyond" service with EVERY client I work with. My hope (and goal) is that every client who buys a home through me will (of course) want to list it with me when they sell. Believe me, Parker, NOTHING is hit or miss.....