All Forum Posts by: Michael Taylor

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $225,000
Cash invested: $52,000

Nice 2 bedroom 1 1/2 bath on one side and 3 bedrooms 1 1/2 bath on the other side. Nice ranch style in the suburbs of Dayton, Ohio.

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

Because of the lack of inventory and major price increases in Columbus, Ohio, I decided to look outside the area. The Dayton suburbs is a little more than an hour from Columbus, the prices are still decent and people are looking to live outside of Dayton in the suburbs.

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

My realtor sent it to me.

How did you finance this deal?

I went through a private lending institution. I was required to put 20% down.

How did you add value to the deal?

The property was rented on one side and ready to be rented on the other side, so there was nothing for me to do to add value.

What was the outcome?

I got the property for $25k below asking. I had a tenant ready for the empty side within one week.

Lessons learned? Challenges?

I probably could have gotten the property for a little less than I offered.

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

Yes. I worked with Brandon Wilcox in the Dayton area.
I didn't know Dayton that well, so I wanted to work with someone that knew the market.

Hi Dave,

Thanks for all of the information.  Unfortunately, they will not use the rent to determine the value on a property when it is a 4 family or less.  This property was actually pulling in $1000 per unit before I went into contract.  It would definitely Cashflow nicely.  Also, every time I have partnered with someone, it did not turn out good.  So, I preferred to do deals on my own.

I'd love to keep in touch with you for future deals.

That would be an extra $50k out of pocket.  I have to put 10% down on the purchase or $22k plus fees that can push it close to $30k down.  So, another $50k out of pocket is not feasible for me.  Anyway, I backed out of the deal.  Like I mentioned; there are way too many variable to be confident enough to pull the trigger on this deal.

Hey Dan, I am using a hard money lender for the first loan (Purchase and Rehab) and then looking to refi on a 30 year note.  Worst case scenario is not being able to refi unless I come up with $50k.

Austen Mueller, I tried using the duplexes and square footage to formulate the value of my 4 plex but was told that they do not translate and they would only compare another 4 plex.

It seems like I may have to walk away from this deal.  Too many variable that are not working in my favor.  It's either going to be a Homerun or a Strikeout. lol

Austen, after the property is put back together I have to get it refi'd. I'm only going to get 80% of the ARV. If the ARV comes back at $400k I will be able to receive $320k from the refi. That's already putting me $2k plus fees over what I have invested. I can handle that. But, if the ARV comes back at $350k I'll have to come out of pocket $52k plus fees. There is only one comp in the area similar to my property. There are no inside pictures, but it is fully occupied. It sold for $380k in September. I know my property will be nicer, but you never know how the appraiser is going to respond. The appraiser has to use 3 properties for his review and I can't find any others in the area that are similar. That's why I'm nervous about pulling the trigger. A mistake can cost $50k or more. I was thinking about paying to have it appraised now, but I don't know how good that would do me since it needs to be completely rehabed. I have done several single family homes and a few doubles, but this would be the first 4 family. That's another reason why I'm nervous. It's easy for me to figure out the where the numbers are going to fall on singles and doubles, but not 4 family and above.

I am in contract to purchase a 4 family apartment. The contract is for $222,000.00. I estimated that the ARV would be $400k and I budgeted $75k for rehab. 3 of the units need a lot of work. My contractors are coming back with quotes of $75k - $100k. My broker asked me if I am 100% sure the ARV will be $400k. If not, I will have to come out of pocket to make up the difference. Now I'm nervous because there aren't very many comps in the area. Also, every time I get a property appraised I feel like the appraiser tries to low ball me because I'm an investor. Any suggestions on how to confirm an ARV?

Thanks for the feed back, everyone.  I have another lender from BP looking into the refi's and/or blanket loans.

Greg Scott, I do have my properties in an llc.  Most lenders that do investment property require them to be in an llc.

Also, the interest only loan was for two years.  I will have a balloon payment due in August, that's why I am refinancing the property.

I don't have lot's of debt on my credit cards, but they are at 33% utilization.  Anything above 30% hurts your credit score.  I used my credit cards when I went over budget on a rehab project.

Your suggestion to take out a mortgage at 3% instead of paying 15% on credit cards.  That was one of the whole reasons why I'm trying to refi.  To get out of the interest only loan and pay-off the balance of the credit cards.

Thanks Stephanie

I'll let you know how it works out.

I have 14 properties and I only have loans on 6 of them.  My credit score is running about 750. It will be higher because I am paying down credit cards.  I ran them up doing a rehab. I also have a job paying $80k per year.  I'm trying to refi out of an interest only loan.  My broker is unable to provide me the refi because, I am showing a loss on my corporate taxes.  I write off anything and everything, as most business owners do.  Any suggestions on financing, other than a high interest hard money loan?

Hey Chris

Did you ever get a resolution from BP?  I am going through the same thing and getting no response from BP.  I have reached out 5 times, but I get a generic response that just says; they don't have me listed as a Pro member. Very frustrating.