All Forum Posts by: Brooks Gagnon

Sounds like you may be having issues getting a loan as an entrepreneur because you don't have 2 years experience/income? In that case, if the seller is motivated enough, which it sounds like they are, you could go back to them and propose that they hold the note for a year or two (maybe with interest only payments), giving you time to rehab and rent, and after that time you should have the equity and tax returns to be able to refinance into a conventional loan. A motivated seller will often be happy to earn (almost) risk-free interest on their money. I've used this method in the past and it worked great. 

That is what I did with my current home. We bought it as a foreclosure and used our own funds for the purchase as well as the rehab, then did a cash-out refi for 80% of the appraised value. Went smoothly, no issues at all. A great way to go if you won't need the funds for anything else in the meantime.

I agree with most of the comments here. Septics are very common in my area, and nothing to fear, especially when you are able to get it inspected prior to purchase. 

 Unfortunately, I never got the chance. He passed away a couple of years after the purchase, which ultimately played a part in being able to renegotiate the note. He was a great guy, but like most property owners he thought the property was worth far more than it was, and I was too trusting to even think to question it. But in the end it worked out great as an investment, not to mention the lessons gained.

 Absolutely. The lessons learned on that property were irreplaceable and made me a way better investor, ready to knock it out of the park on all the others!

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $117,000
Cash invested: $50,000
Sale price: $245,000

Single Family Fix and Flip, 3 bed .51 bath. Decent entry level neighborhood, structurally in good condition.

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

This was our second fix and flip, and we were excited to get going on it after doing really well on the first one.

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

This was a foreclosed home, listed on the MLS by the bank. There were multiple bids and we paid well over asking price, but we knew the repair costs and the ARV so we were ready to go.

How did you finance this deal?

We utilized the same private funding that we had used on a previous deal, also raising some funds from a family member that wanted to participate a bit.

How did you add value to the deal?

The upstairs, all we had to do was paint, refinish the hardwoods, and reno the half bath. Downstairs was a bit more extensive. We removed a large wall to open up the kitchen to the dining area, and extended the size of the bathroom, and added a pantry in the kitchen. All new cabinets, marble countertops, tile floor and backsplash. Came out great in the end.

What was the outcome?

We were able to turn a great profit on this one as well, although the market was a bit soft at the time and it did require a price cut to get it sold, but the $80k profit was still great.

Lessons learned? Challenges?

I let the reno run a bit longer than I should have. We could've been done much quicker if I was little more hands on, and it could have afforded us to sell a few months earlier when the market was a bit stronger.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $120,000
Cash invested: $10,000
Sale price: $320,000

A large 3-unit property that was in need of some work. After some mid-level renovations, including a roof and a new chimney, the property cash flowed very well and eventually allowed us to cash out, thanks to my wife's incredible skills as a realtor.

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

This was a pure investment for both cash flow and equity build.

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

It was on the MLS listed at $150,000 and getting very little activity. It was owned by someone in GA who had inherited it from his uncle, and he had absolutely no interest in owning it. After determining the ARV myself, and having an inspection done, I made an offer of $120k which he accepted.

How did you finance this deal?

Part of the negotiations included the owner holding the note for 1 year with interest only payments, which allowed me time to do some renovations, get it rented, and build enough equity to refinance into a conventional loan.

How did you add value to the deal?

I started one unit at a time, as only one was occupied at the time of purchase. New floors, some kitchen and bath work, and some deep cleaning. I also installed a new roof and tore down and rebuilt the large center chimney.

What was the outcome?

It turned out to be a great cash flow investment that paid well for the 6 or 7 years that we owned it, and when the market really took off post covid, we decided that we should take some money off the table and chose this property to cash out on, and we were able to sell it for far more than I had ever hoped.

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

My wife Skyla is an incredible realtor who was able to convince me that she could sell it for far more than I ever thought, making it a no-brainer to sell.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $279,000

4 family in a rougher neighborhood, purchased from a family member, way over paid

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

This was my first property I ever purchased. It was owned by a distant uncle who had taken me under his wing as a mentor, really teaching me the ins and outs of being a landlord at 20 years old, and employing me as his property manager for his 4 different properties.

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

Unfortunately, I put full faith in the person I was purchasing this from and paid far too much for this property (see lessons learned)

How did you finance this deal?

The owner was willing to hold the note, and my father put up his interest in a different property as a 10% down payment.

What was the outcome?

In the end, it was a struggle for years to just break even, especially when there were empties, but I was able to renegotiate eventually and lowered the note to a much more realistic amount, at which point I was able to refinance into a bank loan, and now it cash flowing great and has decent equity.

Lessons learned? Challenges?

Lessons learned. Always do your due diligence, and don't just put full faith in anyone, especially the owner of the property, no matter who they are. I should have had an appraisal and inspection done. It also taught me that I want to stay in better neighborhoods, where the rents are higher and the tenants are better. This building still requires a disproportionate amount of attention, but at least it cash flows well now.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Roswell.

Purchase price: $12,000
Cash invested: $84,000

Up and down duplex. Small yard with some off street parking. Full renovation was done at time of purchase. Great cashflow and equity.

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

Cashflow and equity build

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

This property I saw a "lease to own" sign in town. Tracked down the property and the owner. Contacted them directly, at which point they gave the access code, as it was unoccupied and in very rough condition. Turned out they only wanted $30k, but they were not local and had no idea of the condition. After explaining to them how bad it was, I offered $10k and they countered at $12k. Extremely rare deal, even in 2016.

How did you finance this deal?

Despite the low purchase price, it was in need of a complete gut reno, so I was able to source some private funding from a local couple who loaned the funds through a self directed IRA. 6 months later, the property was 100% rehabbed and rented, at which point I refinanced into a conventional loan thanks to having plenty of equity right away.

How did you add value to the deal?

This property was in extremely bad shape. Hole in the roof, in disgusting condition, and nothing functioning. So we gutted the whole building to the studs and rebuilt everything. Electric, heat, insulation, windows, drywall, flooring, you name it. We also took advantage and vaulted the ceilings in the upstairs unit, really increasing the desirability.

What was the outcome?

In the end, I have a great cash flowing building with no headaches since everything is brand new, as well as great equity, which is currently around 3x the original investment.

Lessons learned? Challenges?

Lesson learned was to always be on the lookout for the next deal. You never know where it may come from.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $133,000
Cash invested: $4,655

Up and down duplex in a quiet neighborhood. Was owner occupied for the first 5 years. Current market value around $280,000

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

The ability to live essentially mortgage free while still owning my home, plus the ability to later rent both units, which now pay for the mortgage on my single family home.

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

This one was found off market. A friends sister owned it and mentioned she was thinking of selling. So I contacted her, went to see the property, and found out that she was hoping for around $150k. We got a home inspection done, and came back to her with what we would be comfortable paying considering the needed repairs ($133k). She agreed and we moved to finding financing.

How did you finance this deal?

This is actually the only property I ever purchased with a traditional FHA mortgage.

How did you add value to the deal?

While living in the unit, I did a full renovation starting with the kitchen.

What was the outcome?

This has turned into a great cashflowing property that is paying for the mortgage on my current home. Also, we have seen a great equity build, currently around $170k.