All Forum Posts by: Mike Berkaw

@Peter Hassanzadeh I am still fairly new to RE investing and only moved out here last year. I searched for LTR but couldn't find anything that worked so I invested in a STR near downtown Prescott that I am currently rehabbing.

I see a lot of opportunity for "driving for dollars" around here. With all the retirees in the area it seems like they all own multiple properties. Almost everyone I have met is involved in RE.

Welcome aboard @Peter Hazzanzadeh The quad-cities are pretty hot right now so it will take some work on your end to find something in the area that cash flows properly. What areas are you looking to invest? Duplex's are all over the PV area, but the asking price vs. rent didnt work out for me.

The quad was in a decent nieghborhood but it was just really run down over the years. After meeting with the city inspector he pointed out a LOT of things that needed to be changed or added before it was up to code. Also because it's under the watchfull eye of the city I could not do most of the things I wanted to do myself. I had to back out of the deal.

On to the next one...

Thanks for the feedback. 

@Michinori Kaneko yes the realtor sent comps for other 4-plex units. The cheapest plex sold for $323k and most expensive was $400k.

@Lee Ripma I have a walk through tomorrow with the city's Senior Building Inspector where I can find out what the city expects to be done before they will allow it to be rented. I hope the siding can stay and maybe he will see additional items that I may have looked over that would inflate my costs

@Ray Newby I have a $250k HELOC that i will be using during the purchase and rehab period. I will just need to get the refinance after everything is complete. Is there a seasoning period or can I apply for the loan after the work is done.

Hello Everyone,

I have a verbal agreement to purchase a REO 4-plex that has been condemned for over a year. This will need a full rehab of all 4 units before it is habitable again. I have received the Asbestos and mold report. The mold was obvious in the walk through but I cant smell asbestos.

The city has a list of items that need to be completed before it will be considered habitable again. Asbestos has been found in the vinyl flooring, popcorn ceiling, windows and siding. I had planned on replacing everything but the siding anyways so it was not a major concern. Hopefully I will be allowed to repair and encapsulate the siding as it's in decent shape.

The selling price is 140k and I factored about 100k in rehab, which may be high since I will be doing a lot of the work myself. The ARV should be around 320k based on the current comps. I plan to use the BRRRR strategy and have little out of pocket in this place once its done and refinanced.

Purchase - 140k

Rehab - 100k

Refinance 240k

Rent $750 to $800 each

Based on the BRRRR calculator I would have infinite ROI and around $630 monthly cash-flow. Almost everything in the house will be new so i don't expect much cap-ex in the first 5 to 10 years.

The neighborhood is growing as there are more and more people coming in from near by states. In the past year duplex prices have gone from 200k and now selling around 260k, so I think i will also see appreciation over the years that I hold it. 

Does this seem like a decent deal?

How much should I expect regarding the asbestos assuming I have to hire it out to a specialist?

Let me know if there is any additional info that I can add to better explain the situation.

thanks!

I went Pro yesterday. 2018 is coming fast and that will be the year that I change real estate from a hobby to a business.

@Danielle Friberg The info regarding the long term rental market is from my realtor and some information I picked up off of City Data. You are in the same boat I am regarding the cost of housing in Southern California. For long term 3/2 I have been looking in Prescott Valley with the rental prices ranging from 1,100 to 1,400. if you buy right you could meet the 1% rule, but I think 2% will be hard to obtain.

Chino Valley also has a good potential for long term, but it appears to be a lower class neighborhood. Dewey is also nearby, but I cant find any rental comps. Prescott proper has so many area's that are completely different from each other. 

For a VRBO type investment you would want to be as close to the courthouse as possible. I have seen many 2/1 for reasonable prices, but I am only familiar with CA pricing, so anything looks reasonable to me. 

I'm still learning this business, but once I get out there I will be in the market for a fixer 3/2 in Prescott Valley for long term rental that I can BRRR. I'm going for the get rich slow method.

I am relocating to Prescott in January and have been reading up on vacation rentals. It looks like there is a state law that allows vacation rentals. Although Prescott city would like to ban them, currently they cannot. What the city did do is impose some restriction.

There are different rules if you are renting out the entire house vs. just a room(s) and are living in the other part of the house. You need a business license and will need to pay a fee to the city along with a registration fee. There is a good read in this link: Prescott's short-term vacation rental ordinance

I hope they don't try to outlaw them entirely as the house we purchased has an attached 2/1 apartment that I was going to use as a vacation rental. I don't know the peak vacation time, although I know a lot of people from Phoenix come up in the summer to escape the heat. There is a strong long term rental market though.

I guess I got spoiled by my PM in Florida. Everything they do is via email, direct deposit, and yearly inspection reports. If this is not a common practice I maybe I should just stick with who I have in TN.

Thanks for the warm welcomes. I look forward to being a part of the community and not just a window shopper.