Austin area triplex in Bastrop [Calc Review] Help me analyze!

[Abbie Bejrowski]

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*This link comes directly from our calculators, based on information input by the member who posted.

I just wire-transferred the earnest money on a triplex in Bastrop, right outside of Austin. It's a wholesale deal through New Western, so I have to pay cash and waive inspection, seller disclosure notice, etc. which is a bit stressful. This is my first multifamily property and also first wholesaler purchase so I'd love any feedback. I will see the property tomorrow and will have 1 hour to decide. I'm trying to find a contractor to walk the property with me but it's super short notice so not sure if that will happen. Happy to send the address to anyone who wants to look at comps and the contract as well. I really appreciate this group and any feedback!

Unit B--1b/1bth w/office (2/1)= $1200/month until 10/13/2021. $1200 deposit and $500 pet deposit (1 Dog)

Unit A--Studio= $700/month until 6/30/2022. $700 Security Deposit (will increase to $900 once tenant's lease expires)

Unit B--Studio= Vacant per buyer request (will rent for $900 once I take ownership)

Thanks!

[Arvin Poole]

Hi Abby! Congrats on securing your first MFH deal. A few questions that I have to better understand where you are and your goals.

1) Is this your first ever deal, or just your first MFH? If your first ever deal, I would highly encourage you to get an attorney to review ALL docs before moving forward.

2) When is your closing? Is it a double close

You are likely going into a deal forced to do a quick double-close without knowing what your rehab costs are. In these wholesale deals, don’t trust the numbers provided. Do you own due diligence, particularly with New Western (because I just went through a deal that didn’t go through due to my numbers), you may be responsible for closing costs on both sides (seller and buyer) since the wholesaler in essence doesn’t actually own the property.

3) so I have to pay cash and waive inspection, seller disclosure notice, etc

This is a typical wholesale structure and in your contract you will see all of this spelled out. As I mentioned, those terms can cost you alot more money if you are not clear on the contract.

4) Waiving inspection means that the seller is selling property as is, but YOU (the buyer) should still order an inspection for your own due diligence. I would highly advise that you get an inspector to go over the property, including mold, lead and termites. 

5) Have you read J Scott’s Estimating Rehab expenses book? If not go purchase it now on BP and familiarize yourself with each of the 25 areas before your property walk.

Sorry if you are not a newbie at this but I am assuming you are:

Since you do not have a contractor in mind today, it is IMPERATIVE that during your property walk that you take lots of pics/vids with voice comments of the 25 areas (if they all apply, ie, exterior, interior, from roof to base, ceiling to floor). I would not wait for a contractor to come out with you. 

It would be helpful to have a friend to go out with you to walk the property to have a 2nd set of eyes.

I also would not wait for the inspector’s report before walking the property since time is of essence.

6) After property walk (assuming you haven’t secured a contractor yet), you now want to reach out to as many GCs/subs that you can to try and get them to give you a quote. Here is where your pics and vids will be super helpful if you can’t get a a GC out before your closing. Ask them for an estimate. Some GCs will refuse to give an estimate without walking the property but let them know it is a quick close and you’re looking for estimates. Go to BPs marketplace, City of Bastrop development page and/or go to the local Bastrop Home Depo or Lowes Pro Center early AM and ask them for recommendations for GCs that would be willing to come out. You may run into a few while there. 

7) Is the property 100% vacant? From the data provided, appears there may be only 1 vacancy.

8) Will you manage this property yourself or hire a property manager? 

9) I am looking at your rental numbers but don't see estimated repair numbers. You need to make an assumption that there will be repairs to come up with your estimated CoC return and where your break even point is based on your ARV. Most lenders will want this before going to closing.

10) Is your lender requiring a full appraisal or BPO (Brokers Price Opinion) before funding the deal? Please confirm this asap if you’re not sure.

Good luck through this process. I understand the stress but ensure to be very tight and intimate with all of your calculations. Don’t underestimate your costs, add some contingency because in most cases, something will come up unexpectedly.  

Best,

Arvin