All Forum Posts by: Brad Ball

I was going through some old files and came across lists I purchased about 10 years ago. Absentee owners and a probate list. I did some postcards and yellow letters with them at the time but ran out of marketing budget so hung it up. Back on the path now and curious to the BP community - would you mail to these lists?

Brad

Thanks for the replies @Anthony Dooley and @Odie Ayaga. Good information to collect so I can ask better questions. I recently got loan information from a HML and was astonished by just how much it cost to borrow from them and the money I still needed to have on hand to get the loan.

I just got back from meeting with a business lender at a local bank. Continuing to build my options so when the right time strikes I'm ready to go.

@Anthony Dooley Is the 12% interest for 6-8 months a flat fee? So $100,000 costs $12,000 (total repayment is $112,000)? Or does add up another way? Thanks.

@Cory Lucas Thanks very much for your reply and the thoughts. We got some more info from our real estate broker today. Still not sure this is the deal for us but I think I’m going to keep going talking to lenders and getting more input. Even if the property doesn’t work out it will help me to think about the process and solidify my ‘How can we do this’ mindset.

There are three 4-unit properties available in our market. Each unit is 2 BR/1.5 BA.

They are for sale individually but the buyer prefers to sell as a package because they are all on a cul-de-sac type arrangement. They have individual addresses, PINs and tax records, each with the same single individual owner. All three buildings are entirely vacant and have occupancy violation notices from the city. There is plenty of sign of exterior work and I don't have the list of violations from the city yet, but my conversation with the community development department says they are substantial. The property was again cited within this past month.

Asking price for each property is around $300,000. I estimate ARV around $450-500K with complete updates to each of the units. Rent should come in around $1,000 but maybe as high as $1,200 I think. They're in a good area with solid schools, SFRs, and nice local businesses/restaurants/shopping, etc. I don't have a handle on estimating the rehabs but I can't imagine it will be less than $100K for each property.

Question: Is a project like this - basically rehabbing 3 buildings and 12 units a viable project for a first timer. My wife and I have house hacked a duplex the last 10 years and have 'excellent' project/vendor management skills but don't know much about construction. (The city requires the work to be done by licensed professionals to get permits for the violation work so our lack of know-how may not be as big a deal; we're definitely ready to learn.)

The city contact told me there have been several request for the violation information about these properties in the last month so I don't know how much longer they'll be around. Our goal is to buy and hold rental property but this seems like a huge project, especially with no rehab experience.

Advice and thoughts on this situation welcome. Also any ideas about how to fund it are welcome. I was thinking about going conventional with three separate loans since they're all only 4-unit properties but don't know if that makes sense. Maybe looking for a portfolio loan would be good, too, because of the setup. Thanks in advance for your help here.

Has anyone ever owner occupied a multi-unit property while paying for a company to manage that same property? 

Swinging a hammer, unclogging toilets and knocking on doors for late rent isn't for everyone. And since all our properties should take property management into consideration financially while still producing cash flow (assuming that's a goal), the property should be able pay for it. Yes, you can save money by DIY but I'm interested in seeing if anyone's done it the other way.

Looking forward your thoughts or experience on this. Thanks!

Thanks, @Zack Karp! Good questions I need to determine the answers for.

Hi There. This is my first BP Forums Post.

We own a duplex and have lived in one side for 10 years. Only a few months the entire time without a tenant paying a full rent. We bought in 2010 in northern Illinois where the total bottom of the market had not yet arrived. While we definitely didn't purchase it "right" by true investing standards, we paid full price and put 20% down and have raised our family here ever since. Lessons learned, the 20% down ate all our cash and the market value continued to fall for the next several years. A pro forma puts cash flow at about $200/month for the building, but, since we house hacked, we just absorbed that into our regular spending with some regular savings for repairs and maintenance, etc.

Come around to 2020, we (with our tenants help) have paid down 10 years on our 30-year conventional loan, held by Chase. The market has come back up and, between our mortgage balance (about $115,000) and what it should be able to sell for at market price (estimated $190,000), I think we've got about $75,000 in equity in the property. I have an existing HELOC with PNC Bank we set up about 6 months after the property purchase with a $12,000 limit. HELOC rate is between 7-8%. There is no current balance on the HELOC which will reach it's pay down period in the next year or so. I have solid credit and non-mortgage debt (credit card or personal loans) is not an issue.

My question to the BP community: In this situation, to access equity for another investment property purchase, would you rather pursue a cash-out refinance on the first mortgage or a HELOC refinance? I think the HELOC refinance is the way to go but please feel free to convince me otherwise. Thanks in advance for your thoughts.

This is a great point, @Grant Cardone. I just finished the section about Cash on Cash @Brandon Turner's "The Audiobook on Real Estate Investing." One thing the cash on cash return concept makes me think about is the importance of great property management after acquisition. As you mention, most investors talk about price and cap rate when buying, which are important for sure, but if your property management is junk, your estimated returns will be likely be terrible. Bad property management companies and properties get a reputation and good renters will avoid them. On the flip side, great property management can ensure solid cash flow and increase cash on cash return, especially on a long enough timeline.

I've house hacked a duplex in northern Illinois for the last 10 years and its time to get back into the game and increase my door count. Strong cash on cash return, with plans and financial readiness for great property management, are all part of my strategy going forward.