All Forum Posts by: Brian Ellison

@Doniel Winter it’s just under one PIN - is that how the bank will look at it?

@Aaron Shoemaker that would be awesome! With your Hapeville property did you go through the bank? Interested to find out if they’d do a loan against the whole lot or each building individually.

Hi BiggerPockets!

I'm hoping to hear some of your takes on an interesting property I've stumbled upon. What would you do with this situation? 

List price: $950,000

3 buildings on property: (1) Old, Victorian style home - needs full gut job; (2) Duplex, fully-rented, (3) Quadplex, completely vacant

Lot size: 0.50 acres - the buildings are right next to each other and share a parking lot

(1) Victorian style home has windows purchased and plans drawn to be a single-family house. ARV ~$850k according to agent

(2) Fully renovated duplex has about $280k put into it, currently renting at $1,300 and $1,500.

(3) Vacant quadplex could be rented although likely needs full reno for each unit.

The property is half a mile from a rapidly growing downtown area in the suburbs of Atlanta, and the seller is looking to offload the property to work on building tiny homes in Asheville, NC. He purchased property for $400k 2 years ago. 

How would you value this property, and what would you do with the space? I have some thoughts as well and will jump in the comments once the discussion gets going. 

Thanks for playing! :D  

Thank you, JD! To boil it down, it's $73k in cash to create $54k in equity ($204k ARV - $150k purch). So to make this 'equal,' would be looking at either reducing purchase price or rehab costs by ~$20k, the difference between the money in and equity created. Am I thinking about that correctly, and/or is there a 'rule-of-thumb' you're using to figure that out? Again, thank you for your time!

Hi there! I'm following up with a potential BRRRR scenario, and admittedly working on building my deal analysis skills. In this situation, the seller is considering carrying 10% of the sales price, leaving about $15,000 out-of-pocket for me. Would ideally like to BRRRR the property using a hard-money loan, and then re-fi 6-months later to pay back hard-money. Where I'm hung-up is how I get back out of the seller financed portion.

What am I missing here?

• Purchase Price: $150,000 (2,200 sq ft, 3 bed, 2 bath)
• Financing: 10% down, 10% Seller-Carry @ 7% for 10 yrs
• Rehab: $33,000 (estimated at $15/sq ft), 100% funded through Hard Money; 10% interest-only payments
• ARV: $204,000
• Monthly interest payments: $1,659, estimated rehab & seasoning period of 6 months = ~$10,000
• Refinance $204,000, 20% down = $163,200 loan
• Refi price estimated at $3,000
• Repay back hard money = $153,000
• Payback 6 months' holding costs = $10,000

Would rent at $2,000/month, netting about $250 cash-flow after paying back seller carry each money and accounting for prop management, 7% capex, 7% vacancy, 7% R&M. 

Penciled all of this out so if some of the math looks off you, feel free to ask! Thank you for the read. :)

@George Edwards, any luck in connecting with Atlanta wholesalers? Would love to join the discussions! 

@Tyler Evans: PMing you, let's get something going!

@Tyler Evans aspiring investor down here in Suwanee, GA. I too just found the Atlanta REIA and will be on some upcoming events (thank you @Brenden Mitchum for posting this information). Hope to see you on some soon, and looking forward to hearing more about your journey!

I'm looking at a duplex in a small college-town (enrollment ~1,000) in a smaller town (~4,000) outside Atlanta. The duplex is a 3-minute walk from the campus, and several other properties on the street have been purchased and rehabbed by investment groups. 

• Purchase price: $160k (list: $190k, comps $160k on same street purchased <2 mos ago)
• Financing: Traditional, bank financing: 20% down, 4% interest on 30-year loan
• Rehab: $8,000 est - paint walls, counters in kitchen; ARV: $200k
• Rents: $1,000/unit after light rehab
• Expenses: $1,237/mo (inc taxes, ins, 5% R&M, 5% CapEx, 5% vacancy, 8% mgmt, and $611/mo mortgage)
• Cash Flow/CoC: $762/month, 20% CoC return

Numbers look good... here is the dilemma: Smaller population in the area and I'm really relying on the growth of the on-campus student population to drive the return here. Plus as a first-time investor, I'd be competing with larger investment companies on the same street for a limited college population (they have a similar, rehabbed duplex that's listed for rent online - so 2 units). Also, wouldn't the same investment group that purchased the other 3 properties want to buy this one as well - if they passed, do they know something I don't?

Am I overthinking this deal, or is there really a higher-risk than the numbers show? 

@Michael C. - WOW, great catch here! I had my financing numbers input incorrectly, which was making the mortgage payment way less than needed. Agreed even with seller financing, the deal is over-valued for what's inside. Went back and updated the numbers and got the same thing you did. 

@Jonathan R McLaughlin - Awesome advice here, and no hopes crushed! The Cushman & Wakefield report shows about $14/SF for the Atlanta area, which is a huge geography. Really valuable information here, though. I appreciate the insight!

@Steve Morris Interesting tidbit for you: I did some research into an adjacent building and wouldn't you know, the rent is slated at $11/SF, not the $14-15/SF quoted. Great call-out on double-checking the information.

As a newbie to this, I cannot thank you all enough for the insight! Some things I've learned today: 

• Double-check your numbers! Do some back-of-the-napkin math to see if your math makes sense.
• Cushman & Wakefield = invaluable for estimating inputs in your model.
• Don't take 'value-add' estimates without doing some homework.
• Parking lots can be expensive!

I don't think this deal will work out.... On to the next deal! Thanks again, all!