All Forum Posts by: Adam Eckhoff

 would never buy there

 @Adam Eckhoff I decided to purchase for a few key reasons:

1. **Affordability**: The property was reasonably priced at $470k, fitting within my budget and investment strategy.

2. **Quality of the Property**: The property itself is of good quality, requiring minimal immediate repairs and offering modern amenities that are attractive to tenants.

3. **Rental Income Potential**: The property generates a monthly rental income of $4475, ensuring a sustainable cash flow with an expected growth through yearly rental increases.

factors that made this deal attractive:

1. **Affordability and Quality**: The combination of an affordable purchase price and property quality was appealing.

2. **Moderate Rental Income**: With a monthly income of $4475, the property offers a fair return on investment with expectations for growth.

My Net Cash on Cash is 0.6% Not ideal but with yearly expectations for rental increases and equity growth, I will eventually get a good cash flow. Until then, I still have the capability to take a sizeable line of credit to which I can use for the mentioned BRRRR strategy

I chose the buy and hold strategy for several reasons:

1. **Immediate Cash Flow**: The property provides immediate rental income of $4475 per month, ensuring steady cash flow from the start.

2. **Stability and Predictability**: Buy and hold offers long-term stability and predictable income, aligning with my investment goals for consistent returns and tax benefits.

3. **Affordability and Quality**: Given the property's affordability and quality, there was no immediate need for the extensive renovations typically involved in the BRRRR strategy.

4. **Lower Risk**: The buy and hold approach carries lower risk compared to the BRRRR strategy,

5. **Time and Effort**: The buy and hold strategy is less time-intensive, allowing me to focus on managing and optimizing rental income rather than undertaking extensive renovations and refinancing processes.

That being said, I am interested in trying the BRRRR method in the future.

At the time of purchase, I lacked the skills and knowledge necessary to attempt the BRRRR method without exposing myself to risks I was not prepared for.

Hope that answered your questions. I wrote it up very quickly..

@Adam Eckhoff

well... there is lots that can go wrong.  the main problem is that out of state investors like yourself just aren't familiar enough with either (1) the neighborhoods, or (2) the properties.  so they 'hear' a neighborhood is good, and then they 'hear' a property is OK, and they think they can rely on what they heard.  but once you close, it's all on you - no one is taking responsibility for anything.  no one is going to compensate you for anything.  no one is going to go back and fix or redo anything.

more repairs than you thought? that's on you.  worse neighborhood than you thought? that's on you.  can't get the rent you thought (or were 'promised'?) that's on you.  first tenant ruins the carpet and breaks windows and your property manager sends you a $6K bill 7 months in?  that's on you.  furnace was fine when it was inspected and then breaks?  That's on you.

@Caleb Brown does know the market... and he noted it's 'hit or miss.'  and brand new out of state investors are going to miss.

just trying to be frank with you.  i'd try to pick a market closer to you where you can  be hands on.

Investment Info:

Single-family residence buy & hold investment in Florissant.

Purchase price: $95,000
Cash invested: $30,000

This was my first rehab. I was able to BRRRR it!!! I updated the bathrooms, floors, kitchen, Mechanicals, sewer lateral, Paint, doors. I was able to do a DSCR loan and re-coop my entire investment.

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

Bigger pockets

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

agent

How did you finance this deal?

heloc

How did you add value to the deal?

rehab

What was the outcome?

cashflow baby

The % of ARV varies by market/area. I'm in Los Angeles, and the most I can pay on flips is typically 60-65%.

You want to get recently sold comps to value the property, it's the best way to be sure of the value. I usually use Redfin, but Canada isn't supported. Checked Zillow, you are right, only a few places have results in Canada. Perhaps there is a realtor association that has this information? Out here we call it the MLS, Multiple Listing Service. I'd try to call a few agents and see if they can run sold comps.

Once you have access to sold homes, there's nothing to get caught up on. Just go through them, select the renovated/closely matching ones, and enter them into a model.

Here's my fix & flip model, you can see the comps entered and some quick stats below them:

Then I use that comp data to adjust the Sale Price in the model to what I estimate it will be (double check the resale $/sf is in-line with the comps), then adjust the purchase price until I hit my desired return level. 

Good luck!

The house was listed as a 2 bed 1 bath with 1150 square feet. The square footage was low, with potential to increase square footage, beds and bath on 2nd floor. The house had way more potential in person than the mls photos showed.

I know the market well here. The house was listed at $190k on the MLS. ARV is $330K-$350k. I took a contractor in for rough estimate on a full gut rehab before making the offer. He gave me a very rough $60-$80K. I added $20k to that to be safe and estimated $100k.

I started at $330k and took off the $100k rehab and $10k carrying costs (interest only LOC and taxes, insurance, etc.) So 70% of $220k was my max allowable offer. That's $154k.

I offered $145k cash, no contingencies, 2 week closing. Seller was an estate sale, and after a couple counter offers came down to $154k and I kept my $3200 commission. So I'm in at $151k.

I think this was a case of right place at right time with a seller that just wanted to unload, and the cash clean deal worked.

To top it off, the property is on 2 quarter acre lots and the second lot is buildable. So we are looking at potential to build a second house as part of the whole package down the road.

Not a bad one. The area is hit or miss so curious on that street. It is in the Historic NE which the farther East you go along the Independence Ave it starts to decline. There has been a ton of activity though in the last 5 years. The prices in that pocket have jumped. BUT you just need to have a great PM as you can attract a poor tenant in that tenant pool(for the area)

@Adam Eckhoff

do you have a team on the ground in KS that will manage this for you?  have you validated the expenses?  will you have the property inspected and conduct due diligence?  

if you just found this on Realtor.com, and don't know anything about the market, you will end up like this guy.

https://www.biggerpockets.com/forums/48/topics/1193623-rent-...