All Forum Posts by: Andrew Feil

@Cody Evans I've done quite a bit of rehabbing on my rental properties, so I was able to estimate most of it from prior knowledge.

@Brian Pulaski Holding costs were included in the rehab budget.

Just wanted to share the details on my first SUCCESSFUL Flip. 

I purchased the house in January 2017 for $58,000. This was a foreclosure on a very desirable street in town. The bank originally had it listed at $120,000, then dropped it to $109,000, then down to $99,000 which is when it came up on my radar. I walked the property with my realtor and he pointed out a lot of areas of concern that others had pointed out that walked it. This was a great indication that I might be able to get this property at a discount. Most of the things he was pointing out were either easy fixes, or completely invalid concerns. For example: the previous tenants in the house had set up a movie theater in the living room and had run 2x4's across the ceiling to hold up curtains to block out all the light. They also built a wall in front of a wall to stuff insulation in to dampen the sound transfer to the neighbors. All of this made the place look like it was falling apart, when in reality it was just poor construction of a temporary structure inside the house. 

So I started my offer at $50,000 which the bank countered with $68,000 as their lowest they could go. My realtor said I should take the deal because they would most likely not take anything less. I decided to try an offer of $58,000 despite his concern and two days before Christmas I heard that they accepted my offer! So lesson learned, never be afraid to stick to your guns, and your numbers!

I ended up financing this property with a local bank who funded the purchase and rehab at 90%. I estimated $67,000 in rehab so the total loan was for $125,000 of which I put $12,500 down. 

The house needed a new roof, total rehab in the kitchen and two bathrooms, new furnace and A/C unit and landscaping. As well as some updates to the plumbing and electrical systems. So essentially it was a new house in an old frame. My wife also decided we needed to paint the exterior brick which was not in the original plan, but I think she got it right on with that, the exterior ended up looking great when it was done.

Needless to say, the house was on the market for 12 days before we had it under contract for $212,000

The final numbers on the flip were:

Purchase 58,000

Rehab 75,000

Commissions and closing costs 26,680

Sale price 212,000

Net Profit 52,320

Here are a few pics of the final product!

Hey Carl M. Good to see you on BP! I don't think it is ever too late to start investing in Real Estate! One thing I have heard continuously on the podcasts and on the posts here, is to do what you feel comfortable with. So if it is buying a single family with cash for now to see how it goes that's what you should do. You can always refinance that single and get your cash back to go into another one and another one. I think they refer to that on here as the B.R.R.R.R strategy. There's plenty of singles in the area that you can do this with a relatively small amount of cash, even when buying outright. And the demand for single family rentals is high in our area, so you should have no problem renting it out. Let me know if you want to get together sometime and we can discuss further!

Lynaire McGovern the market in Tobyhanna is definitely a weird one. Some friends of mine just bought a home there as their residence for under 100k. And the house was built less than 10 years ago. I'm pretty sure the reason the area has gone down in value, is because they built so many home during the 2005-2008 time frame and then so many people got foreclosed on. It's also a somewhat rural area with only one main shopping area. But from what I have heard the rents go upward of 1000-1200. So if you get the properties at a good price I think it is a good rental market. Just don't expect much appreciation in the near future.

@Geoffrey Rittenhouse definitely lower in most parts of WB. I also have single family's going for 1,100-1,400 in the Forty Fort - Kingston area.

Hey Gregory, I'm a buy and hold investor in the NEPA area - Kingston/Forty Fort/Wyoming. I just filled my 2 bedroom apt within a month of listing for $675 plus utilities. I know if you get into the Wilkes Barre or Scranton areas the prices will be different and the quality of tenant will be different. Andrew

@Russell Brazil I'm not sure if there is a maximum, but I know there is a minimum of 1% increase. But my banker always tells me to call him when the adjustment is coming up to see if there is anything he can do. My first thought is always to have the option to make the lower payment as well. And you are right, the adjustment on this size loan isn't going to be a killer. Thanks for the advice!

Hey BP,

I just got a 2 unit property under contract which I am purchasing for $39k cash under my LLC. My current estimates on rehab are $40k. My plan is to get a loan from my local bank for $80k to repay my investors and fund the rehab. This property will be a long term indefinite hold.

I just got off the phone with my banker and he gave me an option for what terms I would like for this property which is something new this bank is offering. The first is the normal 5/20 at 4.25%. Which is the loan amortized over 20 years, adjusting interest rate every 5 years (typical commercial financing.) But then he told me about a new option of 10/15 at 4.75%. Which is the loan amortized over 15 years but it only adjusts interest rate once at 10 years. 

I will still cashflow with both terms, but I'm struggling to decide which option would be the best long term. I like the idea of locking in my interest rate for 10 years, but I also like the lower payment of the 20 year. I know the saying goes "you can always pay more, but you can never pay less". Should that apply here?

Thanks for your input!

Hey Everyone!

I am looking into a deal which is a total of 7 potential units. Right now there are two buildings, 1 a duplex and 1 a 2 story building with a 1 bedroom apartment finished and the rest of the building completely gutted to the studs. The duplex and the one bedroom apartment are all rented. Right now the current owner has plans drawn up from an architect for 4 two bedroom apartments in the remaining space, approximately 600 sq ft each. The 4 new apartments are going to need all of the interior framing, windows, electric, plumbing, heating and also new siding for the building. The list price for both buildings is $169,000 which I think is reasonable since finished duplexes sell for $100-120k in my area.

So my question to you guys is, has anyone had any experience doing apartments like this? I am trying to figure out a number per unit so I can go to my bank with a good estimate of how much I will need to get these 4 units finished completely. Obviously this is going to vary a little bit per area and I will also be doing some of the more high dollar work like a new service drop and a lot of the heating/cooling install myself. My initial number which my contractor and I came up with was $40,000 per unit. (I am going to get a second contractors opinion this week.) Some people have thought this was too high, and then others thought it was too low. What are your thoughts???

Thanks for your help!

Andrew

Welcome to BP Kyle! I am in the Scranton/Wilkes Barre area so shoot me a message as well if you have any good deals in the area!