All Forum Posts by: Andrew White

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $265,000
Cash invested: $60,000

1930’s historic home with a converted garage. We are renovating it to be a 7+ bedroom luxury Airbnb.

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

I have been looking for properties that fit both the BRRRR model and work as a short term rental. This property is in a nice historic area of town and is close to the Medical Center and downtown. With 7+ bedrooms we should be able to sleep 20+, so the pool of comparable properties is pretty small, but mighty. Expected annual revenue if $140k.

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

My agent actually found this off market. Some other investors were planning to flip it but decided to sell instead. My agent knew one of the contractors involved in the project and got me connected with the sellers. We signed a simple contract (my typical wholesaling contract) and were off to the races!

How did you finance this deal?

Hard Money Loan

How did you add value to the deal?

It is a full gut job. We are reconfiguring the kitchen layout and some other spaces. It is a 5bed/2.5 bath main house right now and will become a 5bed/4 bath, with 2 of those bathrooms being en-suites. The garage conversion doesn’t have a kitchen right now and will be made it to a proper 2/1 with a living room and kitchenette.

What was the outcome?

We are just starting construction but plan to invest $210k in to the renovation with and ARV of $650k.

Lessons learned? Challenges?

Pick your lender wisely! More lessons TBD

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

Corridor Fundig rocks!

Hey folks,

I’m looking to purchase a property in Memphis, TN from out of state and am looking for recommendations for a mortgage broker and established property management team in the area.

Any input is greatly appreciated!

Thanks,

Andrew White

@Todd Rasmussen, No worries! Although we're on good solid ground, I've always been pretty passive about my retirement investing. So REI will be my first foray in to really making the picks myself. I'm working to educate myself here and build a portfolio before also taking a more active role in our retirement investing but....one skillset at a time! Thanks again for looking out; I'm new to this community but the support has been great so far!

@Todd Rasmussen, thanks for all of the advice. Our personal finances are in fantastic form as we are debt free except for our home, are putting away 15% for retirement between our 401k, IRA's and other investment accounts, and are still putting a good chunk in to savings every month. Although I'm excited and WANT to move quickly, I do still need to learn the ropes here, so I don't foresee throwing all of our money at real estate right away. My wife is also a more conservative person than me in these situations, so there is a strong balancing force within the relationship! Good advice on getting #1 under our belts and just sitting tight for a bit.

As far as Mashvisor goes, the tool provides analysis of both STR and LTR, although you definitely have to check their numbers on estimated LTR rent rates. But, most of the properties I've drilled in to, once rent-corrected, calculate returns in-line with what I get from the BP calculators. It's been quite convenient.

Good note on the trips.  The internet only provides so much!

@Jennifer Donley, thanks for the great perspective.  The cheap entry price and high-percentage of population renting make it attractive, especially for starting out, although the lack of growth in the region makes me worry from a long-term perspective.  Good to know about the property tax differences as I hadn't drilled in to that yet.

@Richard Worcester, I just ordered it, thanks!

@Jessica Lombardo I’d love to get a look at that data. I perform big data analysis for a living right now and have been working on building myself a nice powerbi dashboard fed by the Bigger Pockets dataset downloads to try and hone in on a market. I’ll take all of the info I can get!

@Alexandre Marques dos Santos, Thanks.  My plan was to utilize local banks, although I hadn't considered commercial loans.  I guess I thought I'd need to have first gotten a few homes under my belt.  I'll keep this in mind.

I also get the multiple comments about low cost = high headaches from both the tenant and the quality of the home.  I do have 10% baked in to my numbers to cover PM.  Also, the particular home that came up is NOT in a flood zone, but I have been remembering to check for that.

@Account Closed These are all great insights.  I can't say that I want to have a portfolio that is nothing but these homes, but the input from my friends did make it sound like they've had a rather good experience in this particular area.  I'm obviously trying to do my own research to make up my own mind.  They've got alot of eggs in this particular basket and I don't feel like that's my long term goal, but also don't want to discount the area; 75% of the population there is renters so SOMEBODY has to own them, right?  I am certainly after a pretty good level of passivity to the income, so I'll be wary of the strings that come attached to these sorts of things.

@Joe Edwards, It is not in a flood zone.

@Kelly Rastatter Fair enough.  I was looking at somewhat more expensive homes in the Chattanooga area ($70-100k), but I have been assuming that the lower price tags come with tenant headaches.  The long-distance strategy definitely doesn't make sense if I can't get a rock-solid property management team.  It's tough to really understand how much trouble that is when I've yet to purchase any rentals.  Based on everybody's feedback, I am definitely trying to put more weight on that "burden" so I don't get blinded by the numbers and miss something more qualitative.