All Forum Posts by: Brandon Ropp

Hello everyone, I am getting ready pay a retainer for a Securities Attorney and want to make sure that I am not wasting money. My partner and I are looking to raise small sums of capital ($20k - $40k) for individual short term projects using unsecured promissory notes until we can raise enough money to set up private placement.

The attorney that I found was a reference of a reference that I have very little information about but based on a short conversation over the phone, depending on how a note is structured, it may or may not be considered a security and therefore may be a legal solution around SEC guidelines until we are ready for big fund raising. 

The retainer would be for a few hours of this attorneys time to do research and try to find out if there are any "bright-line" approaches to using notes legally. Does anyone have experience with this already? Is raising private capital for any business subject to securities law no matter structure/ length / investor?  Are there any great securities attorneys out there that someone could recommend?  

Thank you in advance

-B. Ropp

@Cameron Fee - I agree, all of Newark is extremely competitive right now. We do not invest in the city of Newark area because of the difficulties with the rental permits, but also because of the new requirements of fire suppression systems in all renos or new construction which can be very expensive. Instead we try to buy houses that are right on the boundary line of the city of Newark to try to get the higher student rent without the other issues.

Hey Mike, Thank you. We tied our fees into the rehab budget, but it was 8% interest only. Currently at $4,500 but continues to increase until we can find a renter and refinance. 

 Hey Vincent, you are correct we are outside of walking distance from main campus but we are across the street from the UD stadiums and our neighbor has been renting out rooms in her house to college students for $700 a room which is where the idea originally came from. $2900 may be wishful thinking, I guess we will see. Thank you for the feedback.

Hey Rumen, yes it does sound like a home run, but still waiting to cash out. Originally the numbers were PP- $155k, R- $45k, ARV $250k which would leave us with our ideal 20% equity in the deal but midway we decided to add the 4th bedroom and 2nd full bath in basement which increased our ARV to $280... we hoped. Then 2 weeks ago, a very similar 4/2 directly across the street went up for sale and sold for $279k within 4 days on market.

The property sits right outside of University of Delaware so we were shooting for the $700 -$800 per room figure that the college housing is going for, Unfortunately UD is not reopening until next fall so we may have to rent to single families around $2000 for the time being.

Investment Info:

Single-family residence other investment in Newark.

Purchase price: $155,000
Cash invested: $220,000

Purchased this distressed home right outside of University of Delaware and renovated the entire property: new roof, new windows, new siding, filled in an in ground pool, demoed flooded basement and added 4th bedroom, converted half bath to full, refinished kitchen, refinished hardwood flooring, installed LVF throughout home, new plumbing, new electrical, etc. Purchase price : $155k, Rehab : $65k, Comps: $280k.

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

My business partner and I researched all aspects of realestate investing and based on our funding and lack of experience it seemed like the safest option to go after a basic single family in need of a renovation in a neighborhood with great comps, then turn it into a rental and refinance it.

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

We found this deal on the MLS for $170k; previous investor purchased it at sheriffs sale and decided that it was too big of a project to take on so they tried to sell it as is. The property sat on market for a few weeks before we made an offer, the first 2 offers were rejected and we settled at $155k.

How did you finance this deal?

Private lender.

How did you add value to the deal?

We added a 4th bedroom in the basement along with converting the half bath to a full bath.

What was the outcome?

Screening tenants to rent out property at this time, moving slowly due to Pandemic. Planning on financing out of the property using the signed lease into a 30 year fixed.

Lessons learned? Challenges?

We learned that cheap contractors are not worth saving a few hundred dollars if it means they take 10x as long as they expect to finish the work. Similarly, we learned that just because a contractor has a higher price and a big business does not mean they will be professional or reliable in unexpected situations such as our local permitting process and sending in the proper forms to pass inspections.

Only higher contractors that are references from trusted sources.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Nope

@Charlie MacPherson   That was a very in depth answer, Thanks for the advice. I asked this question because I am struggling to find a realtor with this in depth knowledge of the areas I am looking at so far. It is very uncomfortable when I ask a realtor about comps and I get uncertain responses which appear to be guesses. I will keep a mind everything you noted for myself and I will also have to dedicate more time to finding Knowledgeable realtors.  Thanks.

@Steve Eagland  It seems way too simple to google homes sold on the street I am looking at but you correct, and it seems to work for a few of the properties I am evaluating; Great advice, thanks Steve. 

I am new to real estate investing, looking for my first project and wondering what the most accurate way is to run comps on properties. I have been evaluating properties in the areas of Wilmington, Newark, Elsmere and Hockessin in Delaware and Delaware County in Pennsylvania; it appears that each area has significantly different types of markets and investment opportunities. I am wondering what the best ways are to find accurate comps for different markets, do you have any preferred methods besides relying on a realtor? 

Thank you