All Forum Posts by: BJ Everson

If you're looking for cash flow at a higher rate per invested funds than lower income areas the better in Ohio. I would select Columbus over other cities not just b/c Im here but bc there are a lot of jobs here, colleges here, federal/state/local govt jobs here. Almost recession proof with the govt and higher education jobs. Not to mention the the number of corporations here. but again, if you're looking for cash flow I would be in the areas inside the outter belt but not in the hot markets. Or do value add projects close to dtown that can appreicate and cash flow heavy after rehab. Ppl are not running to the suburbs for apartments so please keep that in mind. If ppl want to go to the suburbs here they will buy a house as it's cheaper than renting. Couldn't tell you cap rates, but there are multiple areas to buy value add and raise rents as there are a few neighborhoods transitioning for the better.

@Erik Baker You can make the argument (not sure which side you are on) to add the leverage to the deal and get the next one sooner by calculating and showing your partners the ROI of the two scenarios (all cash v. leverage). Your return on your money is always going to be higher with using debt bc your cash was used less.

Another point in this favor as well is that your 2nd investment is purchased years sooner, making time value of money made on the 2nd investment all the more meaningful. 

Finally, and like Joe was also getting at, you can use the same call it $100k, buy/rehab/refi property after property after property. Recycled dollars is an advantage to real estate a lot of other industries can't use. 

There is the one argument I know of to hold in all cash rentals is that you make more cash flow per month than a leveraged rental, meaning you need less of all cash rentals in order to make X dollars in cash flow a month AND with less tenants to manage. 

@Rigo V. @Sam Shueh Sam is right, some HML's require some skin in the game. I missed that part b/c my HML actually doesnt require any down as they put a second position lien on your personal home as "skin in the game" vs your cash. Sounds risky, but if you know what you're doing and believe in yourself it is a non-issue.

@Rigo V. As long as the project clears whatever benchmark the HML operates off of they will provide all the funds you need. So if your HML requires 70% LTV for what the property will appraise for after all repairs are made:

Purchase = $50k

Rehab = $50k

Total = $100k 

ARV needs to equal $143k or more ($143k *70% = $100k)

So if the HML thinks the property will only be worth $100k after your rehab then they will only provide you with $70k ($50k purchase and $20k rehab).

@Rigo V. This info might change based on you being in a different state than I, but...

I've worked with a HML on all my deals and I would say get pre-approved first so you know they will lend to you and you can include a pre-approval letter when you submit offers, which is a big deal with the market so hot.

#2 what really matters to the HML is that the project will hit their requirements on LTV vs. what they loaned you. In your example of $50k purchase $50k rehab; if the ARV is only $100k then they will only provide you with $20k for the rehab assuming their LTV requirement is 70% (most are right around 70-75% LTV of ARV). So with your two cost numbers your project would need to appraise for $143k or higher for the HML to provide you with $50k purchase and $50k rehab budget.

Terms can be all over the place. Recently, I've seen interest rates between 9.5-11% interest only for 9 months is what my HML offers. with roughly 5 points rolled into the loan on top of the normal closing costs. This makes them expensive as that just ate up some of your future equity in the deal. So be sure to do all of the math before submitting an offer.

Hope this helps! Let me know if you have any other questions

Hi Matthew,

My first thought will only be helpful (potentially) in the future for you, but my lease agreements have the tenants responsible for minor items like clogged sinks/toilets, broken light bulbs etc. But this may only be possible based on the state you operate in (I'm in Ohio and dont know NY codes). 

Second, I would look for trends in the requests and do full inspections of your units. Doing this, you will identify potentially multiple repairs that are needed that the tenants haven't pointed out yet. What this does is turn too small of a job for your maintenance guys into a large enough one. 

Hope that helps! 

To directly answer your question of "next Short North" I think it is either Parsons or Town or Broad in EAST Franklinton. Parsons has the benefit of Childrens Hospital anchoring one end as well as Schumacher Place/German Village bordering the west. If you drive through the side streets east of Parsons (but stay close to Parsons and Livingston) you will see a lot of properties fully re-developed and there's more to come. In fact, if you are a flipper that can handle a full rehab this is the area for you.  Parsons itself as a "corridor" still has a ways to go and is moving slower than EF.

East Franklinton is going through the largest change for a neighborhood and it's happening all at once. And it is all made up of the big boys in town with little room for us small investors. Thus, this is most likely going to be the next SN as residential, restaurants and retail are all going in at the same time. 

Welcome to Ohio! I've been a single family investor in both rentals and flips in the Columbus market for the last 9 years. Columbus is a great market due to being a protected jobs market with a lot of universities, corp headquarters and govt offices at all levels. The market is pretty hot right now, got into contract on 3 of 4 sales within 48 hours above asking in 2017. Some areas are overpriced, but there are a number of transitional neighorhoods turning for the better and always a handful of older homes needing some attention. 

Let me know if you have any more questions about Columbus!

I've made the switch from a long buy and hold investor to flipping, which of course adds on the pressures of the overall market. I am buying my properties with the ability to still make $$ as a rental if I get caught with my pants down with a turn in the market, though I do not forsee that to happen in the roughly 3-month rehab/sell period after acquisition. 

Therefore, I am wanting to know what the rest of the investors on BP are forecasting the next dip in real estate. And I know, I know, "it depends on where you're located" but I talking on the larger scale we all saw in 2008. And doesnt have to be that big, but a contraction/recession level 10-20% pullback. Market has been strong for too long in my opinion and am forecasting a noticeable pullback in 2019/2020.

Thoughts?!

Is there an active Columbus group that meets regularly? If so, when?