All Forum Posts by: Ben Bagnall

If you are renovating all 3 units, I would leave them all open.  It won't be hard for the buyer to estimate what they can get for rents.  If the buyer is going to live there, they will appreciate having the option to choose the tenants that will live beside them.  Having the units open, accessible and clean during the sales process will present better and should work to your advantage in getting the highest price.  

Cash-out refinances are set at lower LTVs than purchase loans. I don't think BRRRR properties will be the first to go under water.

1. An established network I can tap for deal referrals.

2. Brand and reputation for quality and delivering on my commitments.

3. Contractors and team members who understand my expectations and are in synch with my way of operating.

4. Systems for tracking performance (e.g. rent collections, loss to lease, vacancy, expenses and repairs, etc.), identifying trends and making timely responses.

5. An established and documented due diligence process to make sure I don't miss anything on the front end that will prove costly.

6. Detailed project management with timelines, responsible party assignments, and identified task-to-task dependencies.

7. Consolidated business forecasting (i.e. roll-up) and cash flow management.

8. Financing optimization and versatility (traditional, hard money, line of credit, private capital).

9. Tax planning.

Agree on going with hard money. Keep your HELOC funds available as a margin of safety against unforeseen expenses.

My last 3 fix and flips located in the suburbs of Boston, MA had renovation budgets of approximately $400k for two of them and $300k for the other.  These are full scale renovations.

The cost per square foot above grade (i.e. excluding basement finishes) works out to be between $125-$166/sq ft across the three of them.

I would recommend that you first take a look at the town's zoning maps and bylaws to determine the zoning district in which your lot is located and the minimum lot size requirements for that zoning district as it relates to square footage, frontage, setbacks, etc.  That should give you a general sense of whether your lot can be split in such a way that the two new lots will meet the minimum conforming standards.  If they don't, you could still pursue the split through a variance but you'll want some informed opinions on the probability for success from the town and from local attorneys that have presented zoning variances before the town's board of appeals.

After you do this initial research, I would call the town and speak with the zoning board or planning board and run through what you want to do, what your take is on how it applies to the zoning requirements and get their initial reaction on how achievable it is and any considerations you might not have taken into account.  Seek their input on whether this request would require a variance or if the lots can be split by right.  Whichever path they direct you down, ask them for guidance on the process - i.e. how to submit your request, the required paperwork and field work (e.g. survey and plot plan), how often and when the committee meets to hear such requests, etc.  Finally, ask them for references on attorneys that the zoning board is familiar with - each town is different and consulting an attorney who is familiar with your town's process is critical.

If you still think your plan to divide the lots is viable, I'd give a call to a few of the attorneys.  Get their take on it and ask about any similar proposals they have presented.  Also find out what their fee structure is and what information and actions you are responsible for providing vs. what they will handle themselves.

Civic Financial Services is a hard money lender that will lend to SDIRAs. The investment must be made through an LLC in which the sole member is the SDIRA. Their website has a brief overview of the other requirements in the FAQ.

Over the last couple years, my flips mostly have been properties at the high end of the price range for my market. For the near-term, I've changed my strategy to focus on the mid-level price range as that segment of the market is what remains most active from my observation. With that said, I will be extremely selective on any flips as I think the current environment lends itself better to buy and hold - taking market risk for a resale off the table. Specifically, I'm looking for BRRRR targets to leverage renovation know-how and efficiently recycle capital.

As others have mentioned, price negotiation has shifted in the buyer's favor - so I'll be running my estimates conservatively on ARV and offering the price that makes the numbers work, not what the asking price is.

For members in this community who are not yet actively investing in real estate, what is your biggest frustration in getting started?

Do you have options for small multifamily in your area?  That will likely get you a better rent yield.  

To your question on market outlook, I look at many of the fundamentals that led to appreciation over the last few years - lower than average construction starts, millennial family formation, the overall supply/demand imbalance - and they have not materially changed.  These factors should continue to support the housing market.  The primary shift has come from higher interest rates and what that means for affordability.  That suggests to me that once the data is clear that inflation is easing, and therefore the tightening cycle can end, we should start to see the real estate market turn around as well.

I have had two properties listed for sale over the last couple months and I can tell you that, at least in my market, the shift from a seller's to buyer's market is noticeable.  Properties drawing heavy open house traffic and strong buyer interest are coming away with no offers.  Houses that would have sold in a few days are now staying on market for several weeks.  While this makes me cautious to take on any fix and flip projects, for buy and hold it presents a nice opportunity.  For the first time in a long time, you may find you have leverage as a buyer in negotiating price and terms.  In other words, you may be able to "make" a deal that fits your criteria even if it wouldn't assuming the list price.