All Forum Posts by: Bryan Williamson

Obviously it's tough to get anything done even if you know what you're doing on your own. Living in the mayhem only compounds the problem. However I have to disagree with  those who say you should be focusing on other things. It sounds like you are in "bootstrap mode". Until you have the ability to maximize your time on other areas of the business you are getting both an education in construction/ construction and project management. You won't need to do it forever and you shouldn't or something is wrong but it's good to learn and do when you are first starting out.  

If I knew nothing I wouldn't attempt to do any of it on my own.  If you know enough to be dangerous youtube whatever you are going to do.  If you are demoing something take it apart carefully. Don't do the wrecking ball style that you see on TV. It's a good way mess up something you might want to keep, bust a pipe or  hurt yourself. You are your biggest investment and the greatest ability is availability.  Also square and plumb are your friend. 

So I listened to a podcast today and one if the nuggets I got from it was post what you're doing even while it's going on. Hence I'm putting it out there. Even though this is in the success stories for him it does not mean I'm not open to suggestions. Also I'll warn you that you got to read the whole thing to let the story reveal itself. We we are in the middle of renovating a duplex, but that's not stopping us from looking at other deals. We found a four Plex on the MLS that was in need of a full renovation. The property is been listed for over a year and a half . The seller attempted to list it then draw the place then upped the price then drop the price again then up the price over the course of 2013/14. Which turned out to be invaluable information to my wife and I. We contacted a friend who is an agent to represent us in the transaction. After seeing it and meeting with a few contractors on 2 separate occasions. We decided to put in an offer! I before I had met with the contractors I was doing some estimating of the repairs on my own listening to podcasts doing form searches and going off the knowledge that I already had. J Scott wrote an article on how to estimate rehab cost and how to determine the max purchase price that I found helpful. I also read a forum discussion on how to value a four Plex that I thought was very helpful in determining what I would offer on the place. Ultimately I use the method suggested in the forum of valuing it similar to a commercial property because there are many fourplexes that have sold recently in the neighborhood. The formula is : property value = NOI/cap rate Because The building is completely vacant and needs a rehab I don't know what the expenses are or will be except the taxes and I can estimate insurance but I just use the 50% rule to come away with my NOI . Area rentals for a two bedroom one bathroom range anywhere from 600 to 1200. It's one of those neighborhoods with diverse housing and a really nice neighborhood on one side and a transitioning neighborhood on the other. This house is right on the edge of the really nice neighborhood. The downside is if it were going to be a four Plex there's really no room for parking above of four small cars. So my wife and I agreed that we couldn't go off of an expected rental income of $900 per unit. Also I use loopnet to see if what I could expect for cap rate. It seems 7% is average. $900 x 4 units = $3600 (monthly gross income ) $3600/ 2 (50% rule) = $1800 (net monthly) $1800 x 12 (months) = $21,600 $21,600 / .07 (7% cap rate) =$ 308,571 So after I was comfortable with the valuation of 308 I estimated the repairs to be at least $20 a square foot plus all the mechanical and electrical etc. the building is 3800 sq.ft. So I thought the the repairs would be in the hundred thousand dollar range. The seller was asking $160,000. So I thought with repairs at 100,000 being all in at 260,000 I might still be good with a down payment. Then I thought but this should not treat this like a flip and use the 70% rule just in case I want to refinance and be below the 70% LTV even with the down payment. 308 x .7 = 215 So that lead me to lowering my purchase price accordingly $115,000 is the if I'm max being conservative. A couple days later I met with a couple contractors to solidify the estimated repair numbers. I got it all in around $30-$35 a square foot or $25-30,000 per unit. So that's about $120,000 . I already knew I wouldn't build to get a conventional mortgage on it because of the condition it was in. My options are cash or seller finance. So we made him two offers : 1.$85,000 in cash or 2. $115,000 seller financing over 30 yrs at 7% int. balloon payment at 10yrs. No payments until construction was completed or in 6 months which ever came first. 10% dwn pyt He countered our offer at $125,000 at 4% $65,000 dwn with the same terms. Or $115,000 cash. We then countered back with $125,000 pp same terms $50,000 dwn. We are waiting to hear from the seller.

meetup.com is a good place to find events

we started out by renting it on the vacation rental sites. Great way to generate some cash flow but it's work unless you hire out the cleaning and someone to respond to your inquiries. We made a little over 40k last year. 

Someone tipped me off to B2R. They are a portfolio lender. But they have minimum loan amounts so if you want something less than 300 k or something that needs a Reno they won't do it. The units have to be 80% rented. Not sure if that would suit your needs but a possible option. 

Are you debt free? If not I would consider paying off debt first.

Hello all We are looking at a 4 unit in a good area close to downtown it needs almost everything. The owner has gutted it but I think he should have gutted everything but that's beside the point. The problem I think is not having enough parking. The building would be 4 2brd 1ba. Units with only four parking spaces. The owner has done some framing and started some plumbing but is in a holding pattern right now. I think that's a negative and could hurt the rental potential is that a fair assessment? Rents in the area are anywhere from 600-1200 so I thought to be safe 900 is a good bet. We will have one of the nicest rentals in the area though. He's asking 160 in it's current condition so at 900 assuming 7% cap-rate I'm getting $308,000

I'm no expert but depending on where you live and the current state of codes, building permits issued, how much construction is going on so on and so forth it's usually 99.9% of the time cheaper to renovate than build new. But you said there is a developer who does duplexes so in that case it really might be the better bet. He'll be able to use his team to keep cost down which you wouldn't have in renovations. Some things consider though, do you need to buy the lot first? Does he have already approved plans or do you need to hire an architect/ engineer or both? Maybe he has that in house too? Obviously thAt will make a big difference in price. I know here in Columbus to build new you're looking at minimum $100/sq. ft.

Welcome My cousin is selling her rental she said it appraised for 184 or something I have to get more info. From her but that could be a nice start for you. Even if it's just to start analyzing deals .

How do you know what factor to use? Is it like cap rate which is derived from the local market or something you shoot for .