All Forum Posts by: Brian L Dowler

I am a relatively new investor, just started my second investment property. To kick things into high gear, I am setting up a self-managed IRA with and LLC, giving me checkbook control. As I am well down the W-2 path, I am fortunate to have a decent amount in here, enough to do at least one and possibly two deals at once, both purchase and rehab, in my market. I am aware of the restrictions enforced by the IRS on what I can and cannot do in terms of ineligible partners, etc.

If would then want to BRRRR and restore my cash after refinancing. I have found a hard money lender willing to do this 90 days after closing, current rates around 6%. I would prefer to find a portfolio lender, small bank etc. willing to do this, perhaps at lower rates. I have called some small S&L's etc. near me, but many do not write loans to an LLC or to a self-managed IRA. Or they want 30-50% down and points on a non-recourse loan.

Are there any "self-managed IRA investors" out there willing to give me a few tips? If you have experience and have some refinanceing ideas, I would love to hear from you.

Jerry, I am not sure of the after value repair.  But incorporating the rehab costs into the loan then getting a refinance at 70% would possibly be attractive.  My current bank is telling me 5.5% to finance the purchase, but they do not finance the rehab.

What kind of rates/points would I be looking at for a ~ $200k loan to finance the purchase and rehab?  Credit scores above 800...

I would like some advice on an out-of-town investment opportunity (my home town).  This is for a 4-door 1975-built quad, 2 level, brick.  Each unit has 2 Bedrooms, 1 Bathroom, Living Room and Kitchen, and comes with a washer/dryer combo. There are separate meters for all 4 units, each over 800 sq. ft.  It is priced at $175,000, (I would hope to buy at $160 as it needs a lot of work) and owner is currently renting at $450 - my realtor and property managers say these should be in the $600 range, possible $650.  The owner was local, did his own PM and maintenance, and struggled to keep up.  

Location is in the "Ohio Valley" section of Ohio/West Virginia.  Not super great price escalations.  I already own a small 1 BR rental house in this market so have a relationship with a property manager.

Needs a fair amount of work - bathroom remodels, new carpet and paint (some current residents are smoking in the apartments) , ideally I would invest in expanding the parking situation.  Roof needs some work around flashing to prevent leaks, a few windows need panes replaced, etc.  No way I can BRRRR this as I would have to put too much into the rehab - at least $30-40k as a round guess.  I have a contractor who can redo each bathroom in one day for $5,000 with all new everything from floor up, I might be able to improve this with additional estimates.

If I got rents up to $550 per month, after fire and police fees, taxes, PM, insurance and setting $300 per month in reserve, I would cash flow $350 per month (assuming 90% occupancy).  If I got rents to $600 the cash flow is about $525 per month.  I would have to use this cash flow to pay back the rehab costs (I have not put rehab costs into the cash flow equation).

If I put $30k in the rehab (and this about all I have to put in after paying 20% down) the cash-on-cash return is 8.6% at $600 per rental, 5.5% at $550 per rental.  At $2,400 per month income, rent is 1.25% of the purchase price + $30k rehab.

My Question: Is this worth pursuing further - i.e. getting an inspection, contractor in for estimates, etc.  This is a pure cash flow play, as property prices will not increase at a high pace here.  

Appreciate any insight.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $55,000
Cash invested: $5,000

My first starter buy and hold property. One bedroom rental. Had no idea what I was doing but jumped in, and now looking to expand into other opportunities with more knowledge and money.

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

I needed to diversify - too much of my retirement was in 401K assets.

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

I have a good friend who is a real estate agent in the area. Negotiated through her agency.

How did you finance this deal?

Cash on hand and HELOC.

How did you add value to the deal?

Did some light sprucing up - landscaping, new stove, cleaning, etc. Did not take much - house has a new 5-0 year roof, new water heater, new heat, new floors. Did not buy as a BRRRR or flip but a pure buy and hold where the renter pays it off for me.

What was the outcome?

Just getting into it.

Lessons learned? Challenges?

Would now look for properties where I can add value through refurbishing above the costs of the refurb.

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

Colleen Cooper, Berkshire Hathaway.