All Forum Posts by: William S.

@Rebecca Knox

"I see many people start out in more challenging areas to build cash and then move in to the better areas where Marcus invests."

Do people sell their rentals in less desirable areas? If so, to who? If not, how long do investors last in C-class areas? How can the low rents / crime sustain major repairs? Maybe there's someone on BP who has held this class of investment for 10+ years that can chime in.

2 bed 1 bath. No value add opportunity here. Selling.

This was my former primary residence. It's currently being rented out until the spring. My first thought is to sell it and move on to something better. I wanted see if there is another option I'm not thinking of (refinancing into something to have lower mortgage debt, creating more cashflow)?

The house is in good condition, no major repairs coming anytime soon. It's in an up and coming area of Milwaukee as well. On the border of Tosa, which is a hot area. Another benefit is that it's brick, so no siding replacement required. The bad, it's on a slab and who knows how old the plumbing is and electrical. Numbers below:

I think I can get rent up to $1,200/m perhaps

As you can see with the current mortgage, I'm negative long term with the Cap Ex budget being applied. Is my only way out selling? Or can I refi something, reduce debt for cash flow.

@JD Martin

My initial goal is to produce $1,000/m in net cash flow. This is not to build a huge business. I want some income sources outside of my job. Some rentals, some dividends. I don't want large scale because it's going to be too much for me to take on I think.

@Twana Rasoul

I was actually thinking to purchase 2-3 with a good spread between mortgages, then BRRRR some to help with the snowball. I could BRRRR a few and hold them for 10 years or so, then sell and payoff the other mortgages. I'd prefer to have 5 SFH with not much debt on each or 3 leveraged, 2 paid off. Trying to strike a nice balance.

@JD Martin

With the BRRRR strategy is the idea to fix everything upfront and have roughly $10k of reserves per house and scale dramatically? If you have 15 houses cash flowing $150/m, if something major comes up you use the cash flow from 14 houses to take care of it?

My issue with this scale is it's a lot to handle, and that's 15 major renovation projects I don't want to take on. I'm seeking more of small portfolio (5 SFH rentals give or take).

If I'm seeking 5 SFH rentals what's the best path forward given the information I've provided?

Some do go up that high for more sq ft.

In my market (Milwaukee) I have a great team. Realtor, PM, contractors. I’d never self manage! It’s a tough market. Others have better on paper deals, but I’ve learned that the team is what gets you the return. You can have a better numbers market but if the team sucks... I’ve seen people post great brrrr numbers on here, but they’re often not in good areas. It looks good now on paper but in the long run... This market doesn’t have great on paper numbers, but it has a great team, modest appreciation, hardly any rentals in the area.

@JD Martin

A local investor tends to get $35/sq ft which is where I get the rehab budget. That includes the works, new plumbing, electrical, etc. Let's leave CapEx out of the budget and say I do a cash out Refi ate $145k (1:1) price to rent ratio... 5% interest rate 30 year mortgage.

Rent = $1,450/m

Mortgage = $583.79

Taxes = $300

Insurance = $50

Vacancy = $120.83

Maintenance = $50

PM = $145

Lease Fee (1yr) = 41.67

Net Cash Flow = $158.71/m

Out of pocket cash = $18k roughly.

Seems like a lot of risk for little reward.

Cash out Refi leaves $0/m in cash flow or negative ($145k ARV). I'd be out of pocket $20k give or take too.

ARV will most likely be higher, but still negative cash flow after Refi. No point in that.