All Forum Posts by: Carl Hebert

@Kelly Bellini I would just ask her straight up, treat your business like a business. You are not the one who should be concerned about how they might feel when asked to verify information on their application. You could start by asking her to verify how many would be living in the home with her, adults and children. 

@Adam Martin could be correct and there is something that the "brother's" check would turn up. 

@Bryan Doan I used to do new leases every time renewal came around. Last year I started doing renewals instead and I really like that better. One page, make some changes if needed to rent or anything else and have them sign it. 

I did have a couple of leases that I did from scratch for tenants that I was managing for someone else, because their leases were really old and missing some key terms we like to include nowadays. 

In the future I will only draw up brand new leases if there is a major change in our new tenant leases compared to the old ones.

I am not sure if it matters, but it never hurts to make sure that you can do renewals in your particular state.

Carl

Investment Info:

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

Purchase price: $205,000
Cash invested: $42,000

4 unit with two 3 bedroom 1 bath and two 1 bedroom 1 bath and a one car garage.

Currently fully rented, collecting $4160 a month gross rent. Don’t have a full year of numbers yet, but expect cash flow to be between $2000-2500 a month. We might get a bit more depending on how the natural gas bill goes next winter.

Will look to rent out the garage for an additional $150-$200 a month.

There are some minor repairs that could total up to $10k. Hot water heater, heat issues, some foundation work needs fixing and a couple other minor items. Overall nothing that seems to scream giant expense yet.

Building was appraised for $225k when we bought it. Nice to start with $20k in equity.

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

Good price and good potential rental numbers.

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

This was an off market deal that was part of a package, but we ended up only buying this one. They wanted $220k we offered $200k settled on $205k

How did you finance this deal?

10 year commercial loan @ 20 year amortization at 4%

How did you add value to the deal?

Raised the rents on the three section 8 tenants to market rent. Also rented out the vacant apartment at market. Gross rents increased from $3600 to $4160.

What was the outcome?

Another solid cash flowing property to the portfolio.

Lessons learned? Challenges?

This one took a long time, but it was almost all on the seller's end. They took forever to get every bit of information needed. Worked in our favor, because they ended up paying two extra months of heat in a Maine winter :)

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

Mike Emmert was my real estate agent on this one.

Current cash flow on this is $1400 a month as of 2020.

The cash flow on this property is $1450 as of 2020, it will be $2150 at the end of 2021 due to family moving out of one of the units allowing me to bring that unit up to market.

New siding and porches, just a little painting left to do.

A before and after of the 2nd floor apartment

Investment Info:

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

Purchase price: $62,500
Cash invested: $54,000

3 unit, all two bedrooms, one bath.

This building had a fire and the 1st and 2nd floor were empty. Both units needed a full remodel and we did this over two years 2018-2019. We also worked with the state of Maine and the city of Auburn to get grants and loans to help with the building. We ended up getting money from the city for plumbing and money from the state for siding, porches and some interior work that was associated with lead removal.

The building has a couple of small projects left to do, but is basically a brand new building now. All new windows, siding, roof, porches, electric, plumbing, driveway and doors.

All the units have been remodeled and are fully rented.

Currently cash flows at $1100 a month on rents of $2550 monthly.

Last appraisal was $202K

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

Was looking to build my portfolio and this was a building I was already familiar with.

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

Friend of mine had this and three other properties with three partners and they were looking to sell. I offered 125k for two buildings and they accepted.

How did you finance this deal?

This was our first owners finance. 10 years at 4%. We ended up rolling this into a larger loan when we refinanced the portfolio.

How did you add value to the deal?

Tons of work, pretty much everything was redone new.

What was the outcome?

A great building that looks brand new. Appraised in 2020 for $202k

Lessons learned? Challenges?

Working with the city and state government to get grants and loans for work to be done was excruciatingly slow. Took over a year to get the outside work done after we started the process with the state. Worth it now, but some folks would not be able to wait that long. It took so long we lost our insurance and had to get a more expensive policy while we were waiting.

After we fixed the porches and had the trim tinned.

Investment Info:

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

Purchase price: $62,500
Cash invested: $29,000

4 unit - 1 - efficiency, 1 - 1 bedroom, 1 - 2 bedroom, and 1 - 3 bedroom all have 1 bath. There is also a 1 ½ car garage.

Refreshed the one bedroom in 2018. Added all new porches and replaced a few doors throughout the building. Did a full remodel on the three bedroom in 2020. We tinned all the wood trim outside as it was all peeling and contained lead.

We use the garage to store all our tools and items for the business. There is extra room in the back of the first floor that we are converting into an office space for the business.

Current rental income is $3385 a month, cash flow is an average of $1200 a month.

Last appraisal was for $205k

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

Was looking to build my portfolio and this was a building I was already familiar with.

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

Friend of mine had this and three other properties with three partners and they were looking to sell. I offered 125k for two buildings and they accepted.

How did you finance this deal?

Regular 30 year mortgage for 125k at 4.63%, used the extra money to pay off some debt we had in the business. This loan ended up being rolled into a larger loan in 2020.

How did you add value to the deal?

Fixed issues throughout the building, painted the garage, repaired all the porches, replaced bad doors, refreshed one apartment, completely remodeled another.
We also brought rents up to market on all the units since we purchased the building.

What was the outcome?

A building that was appraised at 129k when we purchased it was reappraised in 2020, for a refinance, at 205k.

Lessons learned? Challenges?

Insurance issues, the building had peeling paint on all the exposed wood trim outside. Insurance was going to cancel our policy if we did not take care of the issue. We were able to get an extension due to it being winter, but something to keep in mind when buying a building.

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

Fontaine Family, Clayton Larochelle was the agent.