All Forum Posts by: Tom Murray

@Lee Berkwits - welcome to BP! As you're already aware, BP is full of resources to not only answer your REI questions but to help put together a team and a plan.

Best of luck on your REI journey!

-Tom Murray

@Andrew Syrios - thanks!

Looking for some perspectives and input on the timing of a BRRRR refinance.

@Jason Moraff and I are in the rehab phase of a BRRRR. Here are the basics:

* 13 units today with significant cosmetic and infrastructure work required throughout.

* Part of the rehab includes building out 4 additional units in an old common area.

* We're 5 months into rehab, and we plan to begin renting the first completed units mid-Sept.

* Overall timeline (including build out of new units) runs to late 2019.

* In the end, the #'s pencil, but capital available for rehab will likely result in slower progress toward until rehab completion.

And now the question(s)...

1) Does it make sense to refinance at some notional midpoint in the rehab?  For instance, when we're complete with the rehab for the original 13 units, could we refinance (which would allow us to recoup some / most of our capital) in order to reduce the cash strain required to complete the rest of the rehab?

2) If we refi at a "midpoint," what impact, if any, would that have on our ability to refinance again when the rehab is complete (i.e., when all 17 units are online)?

3) Any cautionary tales? Or experience with multiple refinances during a BRRRR?

Thanks in advance for your input!

-Tom Murray

@Cory Kerr - welcome to BP!  Good luck in the search for a house hack.

-Tom Murray

@Andrew Easton welcome to BP! Do you have a particular asset class in mind? Are you planning to do SFR flips? Don't know much about the Wilmington market, but I've vacationed down the road in Holden Beach a few times. Best of luck!

-Tom Murray

@Marc S. welcome!  Lots of good info on BP.  I'm also active duty in SoCal - I'll PM you.

Have you listened to episode 290 yet?  In addition to welcoming @Joshua Dorkin  back, @Brandon Turner and @David Greene walk through seven different REI vehicles, including pros and cons of each and a great synopsis (I learned a ton!). I really like the scale of passivity that Brandon mentions - good perspective and helped me better define where I am and where I want to be.

Best,

Tom Murray

Jacob - welcome to BP, and best of luck!

-Tom Murray

Thanks @Ray Harrell.  Get your point about the security deposit & likelihood of recouping expenses through garnishment.

Like @Brandon Turner said, it's not a matter of if, but when, you happen upon your first eviction.

After closing on a 4-plex, just over a year ago, we quickly got local property management in place (we're a few hours away) and then turned over all but one unit  with new tenants.  One of the new tenants was always a few days late for rent payments, but the tenant eventually paid.  We were slow to charge late fees, but eventually started making PM collect those too.

Finally in mid-May 2018, we decided we'd had enough and could certainly find a tenant willing to pay on time.  So we told the PM to give the tenant notice that their (now month-to-month) lease would not be renewed after June 30th.  We lined up contractors for new flooring for the unit and had a new tenant lined up by mid-June.  Unfortunately, it's July 27th and the tenant hasn't left.  And the tenant hasn't paid...since May!!!

Our PM has a process in place (including a lawyer), and we're working through the process.  PM has also verified that the tenant has not damaged the unit (whew!).  Right now we're waiting on a court date.

I'm confident that the tenant will go...eventually.

As for the money, the tenant's deposit is twice the monthly rent, so we're essentially square, as of the end of July, for rents (if we keep the entire deposit).  However, that leaves nothing to cover legal fees / eviction costs (somewhere north of $1k already).  Can we seek a judgement for collection of those legal fees and any back rent?  Would the judgement be against future earnings?

Thanks for any info!

-Tom

@Paul DeSilva congratulations! We're in the middle of the rehab on our first BRRRR.

Any setbacks or surprises along the way?