All Forum Posts by: Account Closed

Quote from @Brian Burke:

Yes, they might call the loan with a new policy, and they might not. If this is a flip, consider leaving the former owner's insurance in place and also get your own policy without the lender being on it. The former owner's policy protects the lender and your policy protects you. I've also heard of people having the former owner add them as an additional insured on the former owner's policy, but I haven't done that myself.

If this is a buy/hold, having two policies is problematic because of the cost. In that case, I have no advice for you, there is probably someone else that can comment on that with a brilliant idea.

For anyone reading this today…this is terrible advice. The seller has no equitable interest in the property once the deed is transferred. Naming you as an additional insured on their policy does NOTHING to protect you! ABSOLUTELY NOTHING!!

I feel like condos with an HOA fee get a bad rap!! As a new investor with a limited amount of time to perform maintenance and coordinate pest control, pool cleanings, landscapers, etc…..I am more than happy to pay an HOA fee and make zero phone calls to maintain my property.

Now obviously you need to find the right condo that's not facing disrepair or a massive assessment/increase history. That said…lean into the HOA as a newbie.

Investment Info:

Condo buy & hold investment in Flagstaff, AZ.

Purchase price: $360,000
Cash invested: $36,000

This was my first syndication as the managing member. I identified Flagstaff as an emerging market in 2021. After getting under contract I brought the deal to some college friends of mine and together we took it down. In just 1 year of ownership we’ve seen our equity increase almost $100k on a brand new build condo in the center of town.

What made you interested in investing in this type of deal?

I identified Flagstaff as an emerging market with a supply and demand imbalance that was worsening.

How did you find this deal and how did you negotiate it?

I found the deal through the builders website being advertised as coming soon.

How did you finance this deal?

Conventional 30 year

How did you add value to the deal?

I added no value to the deal.

What was the outcome?

300% ROI in year one.

Lessons learned? Challenges?

Honestly, the lesson here is to trust your gut. I knew I was early to a market and early to the development itself (1st building). As usual, I had my hesitations. DON’T LET THE DOUBT WIN!!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Whitney Bowling with eXp Realty. Shameless personal plug.

@heybeansy on instagram

Send me a DM

As a realtor and investor here myself…I would just say that BRRR is more or less dead at the moment. Interest rates have changed everything. If you're listening to 2 year old episodes of the BP podcast you might as well be living in the age of the dinosaurs. Those strategies are dead in the water. I would encourage you to become an expert in assuming existing loans whether through FHA, VA, or creative finance. These strategies are a Time Machine to an era where deals made sense in Phoenix.

You're speaking as if there NEEDS to be market scenarios that allow MF development immediately in every market. That's not the case. This is why these developers move around the country almost in packs to where the metrics do make sense at any given time. These target IRR's of 15% are long gone in a lot of markets. Rents are stagnating. Forced NOI has its limits. Pricing isn't going to reset 30-40% without some kind of pressure. Where is that coming from? If you're suggesting it's coming from debt service I would argue that there are a TON of exit strategies to mitigate debt service obligations, particularly in the short term. You know as well as I do that someone who has underwritten something of this magnitude in Q4 2022 has evaluated the downside risks of increased vacancy, lower LTV, higher interest rates, etc. You also know that anything that reached cert of occupancy in 2022 was underwritten in 2019-2020 and has experienced rent growth beyond anything they could have possibly baked in.

These guys aren’t the use case for being over leveraged. They made a massive run up the last 3 years. Millions and millions of dollars were made taking on risk at pace. Why does everyone act like people at this level don’t have the sophistication to have multiple exit plans?? I don’t feel bad for guys like this. I feel bad for the people who watched the last 3 years play out from the sidelines. Can you imagine waiting on “better timing” while rents and values skyrocket? SMDH

Realistically…if you're buying deals off the MLS in Scottsdale right now you should expect rents to be about 0.5% if your purchase price. Do with that information what you will.

Ouch. If you're buying at 80% of ARV that means the market is crazy tight. Hopefully you're doing this at volume!

Quote from @Eliott Elias:

Quote from @Account Closed:

I feel like most of these answers are a bit short sighted so I'll throw my two cents in. The goal is to stack assets and bank on inflation/appreciation. If you get to $3M in assets that appreciate at a modest 3% per year that's $90k per year in passive equity you earn every year. In my market that's 10 houses. You could get there in 1 year if you're buying right and doing the BRRR method to recycle your liquid cash. Now sure…you can make $90k doing 2-3 flips per year also…but that's not passive and it's at a much higher risk.

Most people flip for a while to get cash and then transition to being more passive. The BRRRR is the shortcut to getting there in essence.

This is assuming the market will still appreciate. If I refinance based off of current appraisals (which are still coming in high) and market tanks you will be under water. 

I’ll always bet that the market will appreciate over the span of 30 years. And for all of human history, I would be right.