All Forum Posts by: Brian Gallagher

Hey Vic,

I have had 2 Lakewood duplexes and have never been able to make the numbers work for finishing the attic and adding a 3rd bath. While this will definitely increase your equity because it will make a nice owner's suite, I find that most renters looking for a 3/2 are small families that would rather put that $1400 towards a SFH rental which would run just a little higher than that. I would suggest putting that money towards some other upgrades (walk in shower, stainless appliances, granite tops, nicer light fixtures) if you are shooting for that price range on rent. I just did a higher end renno on a 4/2 2200 sf duplex, and ended up getting $1200 for the down unit and $1100 on the upstairs. Because the kitchens and baths needed a complete overhaul spending a little extra on nicer finishes was definitely worth the increased rent. If you really want to finish the upstairs you should be able to add some knee walls, board it up and put an electric baseboard heater on either end without breaking the bank.

Thanks for the suggestions!

Thanks Robert. I actually got my rehab loan from James but he is unable to offer a cash out refi.

That's correct, because my current loan is a 1 year term and conventional lenders all seem to require 1 year of seasoning before they will offer a refi. Additionally they will not lend directly to an LLC.

I am almost finished with the renovation of a Lakewood duplex and need to get out of the rehab loan I used to purchase the property. I had to buy the house under an LLC to get the loan. I purchased the property at $120k and am estimating it to appraise around $185k. The original lender no longer offers cash out refi options, and I would like to see if anyone has recommendations for commercial lenders in the Cleveland area for cash out refinancing. Any suggestions would be greatly appreciated. Thanks!

Thanks John, I have thought about a conventional refinance, but the broker I usually use said he could not do the deal because I bought it through an llc (he can only do loans with individuals). I needed to buy it with an llc in order to get the rehab loan.

Lesley Ray What type of property/renter are you looking for? I am a Cleveland West Sider and know most of those spots pretty well. I agree with what most of the other posters have said regarding Ohio City/Detroit Shoreway. I spent a few months recently trying for both flips and fix&holds and anything worthwhile turned into a bidding war. You will definitely not find anything turnkey for a reasonable price there, because these are very trendy areas and people will overpay to live in them. I have had success with two duplexes in Lakewood (just west of these areas). There are still some pockets on the SE part of the city where you can find good deals. Similar type of renter market, decent cap rates, and appreciation has been very good. Only drawback is city POS and higher taxes. If you are looking for a pure cash flow play it’s hard to lose money on a rental in Old Brooklyn/Parma/Euclid.

Thanks Josh! Yea the cash flow should be around 900/month, so my preference is definitely to hold it for a little while. I might have to shop around a little for the refi because 20-yr at 5% sounds like a better deal than 30-yr at 7.1%.

Recently purchased a duplex in Lakewood, OH and am about halfway through renovating both units. Went with higher end finishes to target highest rents. Duplex has new roof, vinyl siding, newer furnaces and central ac. Here are the numbers: Purchase price: $120,000 Renovation and financing/holding costs: $35,000 ARV: $185,000 - $195,000 Potential rent: up unit $1,050, down unit $1,150 I used a 1-year fix and flip mortgage to finance the deal and need to make a decision on what to do once work is completed. The broker I got the loan from has suggested that I create a second llc and sell the home to myself for $185,000, then use the proceeds to get all of my cash back out to use for future deals. The mortgage he offered is a commercial mortgage, 30-year fixed at 7.1%. Could also do 3-yr ARM mortgage at 6.1% Obviously, I can sell also choose to sell the property and collect $30k+ or refinance. He offered up to 65% ARV for the refinance. This is my first commercial deal and I am not as familiar with typical rates and terms. Does anyone have any advice or experience with doing this kind of deal(selling from one llc to another). Are these rates in line with what’s typical for a commercial loan? Thank you!

I live in west park and am in the process of acquiring a rental here as well. It’s a good stable neighborhood, next to nice private schools and Fairview hospital. Mostly middle class and blue collar renters. Not a trendy area by any means, but the rental market is pretty strong overall in the area.