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All Forum Posts by: Ben Layman

Ben Layman has started 11 posts and replied 38 times.

Post: Cash out refi in growing neighborhood in Richmond VA

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15
Originally posted by @Brandon Spurlock:

Great job Ben! That's a very satisfying result - we have also personally benefitted from the fantastic growth in Richmond. What's next with your cash in hand?

 Thanks Brandon! I'm currently searching for my next BURRR - but coming up empty handed in Richmond city. Seems like a severe housing shortage here!  I saw the one you did in Hopewell and I've been looking there as well, not coming up with much lately there either that can cash flow. I have about $230k in cash i'm dying to find the perfect place where I can put some forced equity into, similar to what you did in your Hopewell house by adding sq footage. 

Post: Cash out refi in growing neighborhood in Richmond VA

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $187,000
Cash invested: $16,000

This is a 3br/2bth attached row house I bought in 2014 for $187,000. Since then, the neighborhood where it's located in Richmond VA has really increased in value significantly.

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

I saw the potential of a growing neighborhood that had a huge influx of young people and viable renters. I decided to try and extract some of the equity in January 2021. I did some work on updating the bathrooms, paint and refinished the floors. Then had it appraised for $325,000 and took out about $95,000 in a cash-out refi and did the typical 75% loan to 25% equity left in the deal, and moved it from a 5/20yr commercial loan paying 4.95% into a 30yr conventional loan paying 3.5% - so my total

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

Originally in 2014, I was living right next door and I knew that the original contractor (also owner) wasn't able to get what he wanted. It was being rented out (since 2007) and was not listed for sale at the time. I sent the owner a blind offer email, saying I wanted to buy it as-is with no inspection or appraisal and without a relator. That's how I was able to purchase it for a discount.

How did you finance this deal?

I did not qualify for a 30 yr conventional loan at the time because of my DTI. So i had to seek out a 5/20yr commercial loan with a rate of 4.95% at a loan of $140,000 It was not ideal but it allowed me to secure the house at the time. Every 5 years i had to refi with the same lender but they always gave me the option to take cash out, which I did.

How did you add value to the deal?

I did not add any value for the first 7 years other that just renting it out and managing it myself to save money. Sometimes I added value sine i lived next door i was able to capitalize on that fact and get a discount on doing two HVACs at the same time or building a fence. Sometimes this was fine, other times it was a total nightmare situation and I was fixing toilets and taking orders from renters. The value I added only came later in 2021 when I did some larger cosmetic renovations.

What was the outcome?

Still going strong because the area is now a highly sought after and desirable place to live among young professionals.

Lessons learned? Challenges?

I learned that I absolutely HATE landholding and managing tenants. I've learned that no matter what, the landlord/tenant relationship will never be amicable. Each side will always feel like they are getting taken for a ride and people want what they want. I have some good tenants in there now that are fine and are able to fix easy things themselves, but the day they move out I am hiring a PM to manage.

Post: Cash out refi in growing neighborhood in Richmond VA

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $187,000
Cash invested: $16,000

This is a 3br/2bth attached row house I bought in 2014 for $187,000. Since then, the neighborhood where it's located in Richmond VA has really increased in value significantly. I decided to try and extract some of the equity in January 2021. I did some work on updating the bathrooms, paint and refinished the floors. Then had it appraised for $325,000 and took out about $95,000 in a cash-out refi and did the typical 75% loan to 25% equity left in the deal, and moved it from a 5/20yr commercial loan paying 4.95% into a 30yr conventional loan paying 3.5% - so my total monthly payment which includes PITI is $1329 and it currently rent's for $1750.

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

I saw the potential of a growing neighborhood that had a huge influx of young people and viable renters.

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

Originally in 2014, I was living right next door and I knew that the original contractor (also owner) wasn't able to get what he wanted. It was being rented out (since 2007) and was not listed for sale at the time. I sent the owner a blind offer email, saying I wanted to buy it as-is with no inspection or appraisal and without a relator. That's how I was able to purchase it for a discount.

How did you finance this deal?

I did not qualify for a 30 yr conventional loan at the time because of my DTI. So i had to seek out a 5/20yr commercial loan with a rate of 4.95% at a loan of $140,000 It was not ideal but it allowed me to secure the house at the time. Every 5 years i had to refi with the same lender but they always gave me the option to take cash out, which I did.

How did you add value to the deal?

I did not add any value for the first 7 years other that just renting it out and managing it myself to save money. Sometimes I added value sine i lived next door i was able to capitalize on that fact and get a discount on doing two HVACs at the same time or building a fence. Sometimes this was fine, other times it was a total nightmare situation and I was fixing toilets and taking orders from renters. The value I added only came later in 2021 when I did some larger cosmetic renovations.

What was the outcome?

Still going strong because the area is now a highly sought after and desirable place to live among young professionals.

Lessons learned? Challenges?

I learned that I absolutely HATE landholding and managing tenants. I've learned that no matter what, the landlord/tenant relationship will never be amicable. Each side will always feel like they are getting taken for a ride and people want what they want. I have some good tenants in there now that are fine and are able to fix easy things themselves, but the day they move out I am hiring a PM to manage.

Post: Ending a tenants lease early (Virginia)

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

I understand @Patti Robertson and thank you so much for the guidance. I plan on offering them a free month's rent in exchange for signing an addendum to the lease stating that they'll move out early. 

Post: Ending a tenants lease early (Virginia)

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

Thank you @Stephen DeThample and @Patti Robertson for the super helpful advice. I was reading in the Virginia State law, and according to this I only need to give them 30 days notice, but I'm just not familiar with this stuff enough to know 100%. I think the best way to avoid paying a lawyer and going to court would be to just see if they take a free month of rent so I can get them out sooner.  See the section III - Tenant Protection Present in all Laws

Post: Ending a tenants lease early (Virginia)

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

Hello BP community! 

I have 3 tenants in a SFR that I manage myself. Their lease ends on June 30th, 2021 but I would like to end it two months early on April 30th. They have been paying under market and are very difficult "headache" renters. Leaving piles of garbage on porch, constant maintenance requests and paying rent on the 5th of every month. My plan is to renovate, raise rents and possibly sell the house this summer. But I'm unable to renovate with tenants in place so I'd like to end the lease two months early.

This is the language I have in my signed lease: "Tenant agrees that if property is sold and tenant is required to move out, Landlord will give Tenant a minimum of 30 days notice."

Does anyone know if i'm legally allowed to end their lease 2 months early in the state of Virginia? 

Post: Most Mentioned Books of ALL 312 BP Podcasts

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

Thank you so much for making this list... this is my "go-to" when I have those Amazon store credits! 

Post: Refinancing my old primary (now a rental) for cash-out

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

@Whitney Hutten - thank you for your insight. I'm going to follow the pros advice and sell the house. My goal is to accelerate and grow by investing in other markets, and although it seems like so much more cash immediately if I do a refinance- I'm going to follow your advice and sell. Thank you for your help!

Post: Refinancing my old primary (now a rental) for cash-out

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

@Randall Alan Thanks for your reply, Randy. Some helpful insights! 

Just curious, how are you able to buy $75,000 properties for under $30k? Do you mean that you put $30k down? Or that the price you're paying is $30k and you're putting $6k down? I think what you mean is that you're buying at $75k house, put $15,000 down, then put another $15k into renovations, then rent it out and make $300-$400/month cash flow? 

So, even though i'd been getting $233K, you don't think a re-fi to the 5/25yr would be worth it at all? I would think that earning an average of 14-15% cash-on-cash return from that $233k would more than make for the fact that i'm loosing $370/month by refinancing. Plus, it frees up one more spot (out of my 10) that i can do another conventional 30yr term for a lower rate on another property. It would suck to be getting $170/mo instead of $540/mo, but if i sold it, I would only be getting $140,000 at the most, as opposed to refinancing and getting $233,000. 

All that being said, i think the question is, should i sell it or refinance it? All that appreciation being tied up in equity that I could be using on other properties isn't really helping me if I just keep it and do nothing. I'd like to grow my business and expand into other markets. Very helpful to get other's perspectives.

Post: Refinancing my old primary (now a rental) for cash-out

Ben Layman
Pro Member
Posted
  • Rental Property Investor
  • Richmond, VA
  • Posts 38
  • Votes 15

Hey guys - I heard back from my portfolio lender on their terms if I wanted to go with refinancing route instead of selling my old primary residence that's been rented out for a few years. Would love to hear any advice you have @Whitney Hutten @Steve Vaughan @Matt Nico - you guys have been super helpful so far! This would be moving my 30yr conventional loan currently at 4.125% with Wells, and moving it over to my portfolio lender thus turning it into a 5/25yr commercial loan. 

These are their terms:

Terms for $233,000. (75% loan to value)

Rate 3.97%

60 month term/300 month amortization

Payment = $1,233

Org. Fee = 1%

With taxes and insurance added into the monthly payment, the total would be: $1,525 - making my monthly cashflow $170. 

I manage the property myself, so if I were to hire a company I would reduce my cashflow down to $5 whole dollars. 

Even though that $233,000 is tempting, i'm still leaning towards selling it and making around $140,000. Any money I did get, whether it was from selling or a re-fi, would all go towards buying out of state and trying to cashflow more. Any advice you have, please throw it my way!