All Forum Posts by: Alexander Flores

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $72,000
Cash invested: $26,000

My first rental property was a total rehab. The property was purchased using a hard money lender in the spring of 2016. Read the full details here, https://financiallyfreemillennial.com/rental-property-1-pensacola/
Within a year we had all of our initial investment and own money out of the property.

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

I just wanted to get my feet wet in REI!

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

I found it myself on Redfin and gave a low ball offer, the bank countered a little higher and we accepted. The numbers made sense.

How did you finance this deal?

A hard money lender.

How did you add value to the deal?

We gutted the entire property to the studs and redid all of the electrical, plumbing and the entire home.

What was the outcome?

We have had a tenant in the property for 2.5 years and her lease is still good for another 2.5 years. She hopes to buy the property after her lease is up.
Currently, there is $50,000 in equity on the property and it cash flows $500 a month.

Lessons learned? Challenges?

Sometimes the best thing to do in life is to just jump in feet first. You will never know unless you try. People will continuously give their opinion but at the end of the day only your actions matter.

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

Nope.

Currently getting ready to sell my primary residence and the furnace and hot water heater need replaced.

The guy doing the job won't touch the pipe that takes the exhaust from the basement out the attic since it is an asbestos wrapped cement pipe.

Anyone have any expertise with these? I am in Ocean County NJ but most information I can find online deals with the UK.

Anyone know of any companies in my area that do removals and or costs associated?

I know I can do the work myself, so anyone have any experience in that method?

Thanks! 

Alex

@Jason Timmerman

I currently have one in Ocean county that profits more than $500 a month and I could sell it for a quick profit of $20k. My sister and I could have had at least three more in the last year and a half if we decided to put our offer in a few days earlier. I tend to do all of the work myself that I am capable and legally allowed to do so our rehab costs are very low.

The home I currently live in I bought for 130k, put about 6k into it and it appraised in the 250k. I could rent it out right now and make over $500 a month or sell it and make a nice chunk of change.

The market in our two counties is plentiful, you just have to know where to look!

Best of luck Jason!

Send me a pm if you have any questions and we can talk more.

Also my electrician manages over 50 properties for a lady who only has rentals in Ocean/Monmouth Counties.

@HardikPatel

You can refinance at the purchase price at any time but this would not help since I owe the HML $88,000. I bought the home at $72,000. You must wait 6 months from the day of closing to let the property season. Big lenders like Bank of America make you wait 12 months.

Since I wanted to refinance at the highest amount possible, I needed to wait 6 months. I was in the process of buying another home when the six month mark passed I ended up waiting 8 months. 

Thanks for the great words. Looking to do at least one flip and one rental this calendar year!

I have been wanting to write a post about my first property for a while but have been waiting until I refinanced on the property. The home is a 900 sqft bungalow that has two bedrooms and one full bath. When I bought the home it was abandoned for over five years and mainly just a skeleton of it's old self.

Here is a brief summary: 

• Closed on April 29th 2016 at a purchase price of $72,500.
• Repairs took me until July 6th due to a plumber who showed up whenever he wanted.
• Tenant moved in July 7th and has been awesome up until now.
• Cash Out Refinance should close next week.

Here are the brief numbers: 

• Purchase Price $72,500
• Cash at Close: $18,000
• HML: $88,000
• Estimated Repairs $21,000
• Actual Repairs: $25,000
• Rent Payment: $1450
• HML Payment + Taxes and Insurance: $1350
• Mortgage + Taxes and Insurance after Refi: $1010
• Refi Amount: $105,000

So after the refinance I should get all of my money back that I put into the property. The $88,000 loan plus my $18,000 due at closing. I know some will be lost to closing costs on the new loan but almost perfect if you ask me. The appraised value of the home as of a month ago was $150,000! Everything has been great. During the process I also bought my second investment property which I have rehabbed and moved into with roommates for the time being. 

I also created a website that has more detailed posts about the entire process, real estate investing and some DIY projects.

Without everything I have read on here over the past two years none of this would have been possible. I thank everyone on here for giving me the knowledge and desire to pursue REI. Onto the next deal! Any questions just let me know!

@Christopher Blanco With it being your first property I would pay all cash. Then after six months of seasoning I would do a cash out refinance and get all of your money out to do another property. My lender said they would allow 75% LTV on the refinance but when it came back they would only allow 70%. This was three weeks ago. My credit is above 700 and it was on my first rental property as well.

During the six month seasoning process get a feel for being a landlord. Today you want to do more deals immediately but maybe a week into the process you may change your mind. With it being your first deal you will learn a lot fast, both about yourself and REI.

If after the cash out refinance you want to do more deals then dive in head first and get as many properties as you can afford/desire!

@Account Closed I sent an email to my accountant but he is out of the office for a few days. I was just curious if anyone on here would have an answer sooner. I am and have not been to a meeting since this scenario has come up, I plan on getting input from someone there at the next meeting!

So I currently own one rental property I own and manage through an LLC where I am the sole proprietor. My question is if my sister and I form a new LLC where we are co owners and each own 50% of the LLC, how would we be taxed in New Jersey or federally.

She has access to the capital required to start investing into more real estate and I am the one who has done it before and knows more of the rehabbing side of the business. I have tried looking up this through the internet but could not find anything that was very clear in the way it described the situation, any insight would be helpful thanks!!

I was wondering what I would consider a construction draw in quick books. I have a loan for 88k through a hard money lender and about 25k is built into the loan for construction draws. I got a draw for 8k a few weeks ago and am going to be getting the remainder of the money within the next week or so. I was wondering how I would put this into quick books because it won't be considered income since it is built into the loan and I know a cash-out refinance isn't considered income. If I am wrong about any of this the input would be helpful, thanks!