4th and 5th Property

[Johnny Quilenderino]

Good afternoon BP,

So today we closed on two properties, a quadplex and a triplex, 6 of the 7 units were rented. I also turned them over to a property manager at a 7 percent rate.

Property number 1) The Alamo

Quadplex in a C area, within walking distance of town hall and gentrification is in progress in the area. This house was on the market for 135k that appraised for 79k and I got for 75k. Similar quadplex in the area that are rehabbed go for 250k and up. I nicknamed this one the Alamo because of the all brick walls and four chimneys that look like guard posts.

rent roll is as follows: 2200 gross rent

Monthly Expenses:

PITI - 550

PM - 174

Water - 300

CAP Exp - 220

NOI = 956

Property number 2) My First Victorian

Triplex also in a C area, within walking distance of town hall and gentrification is in progress in the area within a mile of house number 1. This is a Victorian that needs windows, roof, and siding painted but the inside has hardwood floors an 80 percent of the 2000 sq ft. This house was on the market for $80k and I picked it up for $60k and it appraised for 80k. There are similar houses in the area that are rehabbed that go for $200k and up. 

rent roll is as follows: 1700 gross rent

Monthly Expenses:

PITI - 490

PM - 105

Water - 180

CAP Exp - 170

NOI = 755

I had to use conventional financing to get these two houses. Each one was 30 percent down and has chewed into my safety net for now. My intentions are to build up the safety net again, surpass it, then work on the curb appeal of both houses. Also, my intentions are to update all interiors over the next four years to get a better market rate on all apartments. These are my first set of MF properties in my quest to get 30+ in the next seven years. I have plans to get two more this year via a 1031 and maybe one more next year after I fix up the curb appeal and refinance. 

These were not the best deals out there, but for what I could afford and my skill set these were the ones that made sense. 

Lessons Learned:

1) Secure financing, I repeat secure financing before you start looking for your dreams!

2) If you are taking a property "as is" see if you can inspect it anyways and see what lies under the rafters and in the crawl space.

3) This actually was a three for one deal ... three properties for $180k but I was afraid to say yes because I did not have #1. I ended up pulling the trigger two days to late!!!!

4) Section 8 tenants are tenants are not that bad, but the inspectors will get you!

5) If you are buying from a guy that is using an "under the table" PM, make sure you get all the keys at closing. I actually had to get two sets of keys from the PM and tell him he is no longer employed.

Well that is my story, hopefully this adventure goes well and we start pulling in some of the potential cash flow. Thank you for reading

Johnny