Greenville SC - Buy - Rehab - Rent

[David Miller]

BP squad, here's what I'm looking at: 

nice looking 3/1 brick ranch a right turn away from thriving Augusta Rd in Greenville, SC. 

30K purchase price 

ARV of 75K (most pessimistic scenario)

15K of rehab costs (pessimistic scenario)

Hard Money Loan (HML) terms:

• 10% down ($4,500)
• $3,500 origination fee 
• interest only loan at 10% for 13 months - ~$400 per month x 13 month  = $5200 max holding costs - goal to have property rehabbed and refinanced in 120 days
• no prepayment penalty
• total cash needed to get into deal: $8k 

expected rent: $1000 / month

goal is to hold onto the property for the long term and have a property that cash flows as area continues to appreciate. 

my only other deal so far is a rehab / rental that i purchased through a combination of cash out refinancing the down payment and having the seller hold the note. 

i've never dealt with HML so any advice you have would be greatly appreciated.

thx!

[John Coleman]

I haven't tried to flip them to retail.  I think most of the market under $125k is investors.  When you think about a retail buyer, those that could afford/qualify for a mortgage on a $125k house of this nature are probably more inclined to rent for another year or two and step up to a $140k-$200k house where you are getting stabilized neighborhood, not fringe and much more house.  Again havent tested it but my inclination is that I'm in these properties (with nice cashflow) until the neighborhood really takes off or I'm exiting to an investor at a cap rate that is attractive to them which is prop high single digits ie $65k-80k.  It all works and a year or two after the 8,000 multi family units downtown/west end that are currently under construction come on line there will be tremendous demand for the single family houses .5-1 mile away.  Its happening in a big way it just needs to play out.  I believe these houses are a 3-4 year double on a total return basis.