All Forum Posts by: Chris Grenzig

 @Daniel Sam just did a quick search on Zillow in those areas roughly (just put the map over those general zip codes) and there are about 152 homes currently listed for sale that are 3+ bedrooms, less than $150k, and single-family houses. A couple of them look renovated or in decent shape from photos. 

However, I will warn you that these zip codes are not B & C areas, I have been investing in Jax since 2017 and lived there 2020-2023, and these are C and mainly D areas. I would not buy in these areas and I would not manage for other owners in these areas. I would check crimemapping.com because I would not consider any of these zip codes as low crime. 

@Patrick Schwebke Yellowbird (local JAX company) has a facebook group that's very active and I think has monthly meetups, or at least they used to. The FB group is great though. I've been to some local events when I used to live there (2020-2023) but I tend to like networking 1 on 1 more than at events. 

 @Cindy Joseph we look at their debt and outstanding collections but don't calculate a debt-to-income ratio the way lenders do. If we see too much or see anything that looks suspicious we'll ask about it and maybe disqualify someone as long as we're adhering to fair housing and HUD guidelines, but that's not usually something that comes up.

We are not qualified or set up to calculate a financial picture in the same way a lender does, but we are also not evaluating the same level of risk. A lease is a contract for $8k-$60k on the high and low end for 6-18 months (usually). Mortgages tend to be $100k-$1m+ once you factor in the initial loan plus interest and also they are much longer commitments. So they charge a higher price for their services and run through a much more rigorous process. 

So I believe mortgages will look at DTI and want to make sure your income covers your current and future debt obligations at a percentage of 40-49% I believe, so their multiple would be more like 2-2.25x, but it's not a real apples to apples comparison.

@Cindy Joseph if you had hired us and this person contacted us for your property we would not approve them. We require a 3x rent in verifiable income regardless of money in the bank.

They could have a loan that needs to be paid off in 60 days and then the $100k is $1k, and now they can't afford rent. 

Some companies will do 2.5x in rent, but I personally do not find that is enough, because we are not doing debt to income, we're just looking at their income. So it's not the same as bank which might do 2-2.5x once debt payments are factored in. 

Also, we require a 620+ minimum credit score for all applicants, and anyone 18+ must apply. Then we also look at background checks, and criminal history, and request a prior rental reference.

You should not charge for a pet that is considered a support or service animal. There is a company called petscreening.com you can use that is free for you. The applicant with esa/support animals pays nothing to sign up and petscreening will verify that they are properly registered as such and that they are not trying to claim that they are and save money on potential extra pet fees/rent. 

Yes the market is slower right now, we manage a portfolio of single-family homes in palm coast and palm bay, but we're seeing homes lease up in 2-5 weeks when priced for the market depending upon the market and condition and such. 

Trust me, an extra couple of weeks of vacancy to find the right person is much cheaper in the long run than missed rent and eviction costs; and that doesn't even include the extra stress and anxiety from it. 

@Priscilla Chin I am from Long Island, lived in Jacksonville for 3 years and now live in Orlando. We have bought 150+ units in Jacksonville and manage for other owners in Orlando and Jacksonville.

I wouldn't do NYC because of landlord tenant laws, but I've never invested or bought there so I am not your best resource there. I personally never would, but I would talk to people that have that can give you an idea of what it's actually like instead of getting opinions from everyone who never have and say it's the worst.

Jacksonville, FL has been great from 2010-2022, but there has been a huge surge in building residential from 2020-2023, which severely impacted the supply and demand balance and rents have flattened or dropped from 2022-today. On top of that insurance has gone up 1.5-3x since 2022 and I'm not sure how it's going to go after these most recent storms. Right now finding deals that cash flow well is definitely difficult and we haven't purchased a property in 2.5 years despite our best efforts. However, since interest rates jumped up in 2022, new construction starts have dropped a ton in the area, so within the next 1-3 years the amount of new supply coming into the market will drop a ton, and we should see demand outpace supply again and start seeing organic rent growth come back. 2015-2022 you would see 3-10% organic rent growth per year depending on the property and submarket. 

I think there is still opportunity in Jacksonville, but you have to be very particular about what you go after, it's definitely not easy to find good properties even for seasoned pros right now. 

@Emmanuel Okelola getting started is always the trickiest part. I would definitely encourage looking for local meetups. Check meetup.com for some options, and local REIA's. I know Shawn mentioned CFRI which is one REIA and another is GOREIA. Turn on keyword alerts on Biggerpockets for Orlando, find people located here, connect with them and ask if they know any events/meetups in the area.

After that, I always encourage people to work backwards. Figure out what your financial and personal goals are in the future, maybe 5 or 10 years or something. Figuring out what path to take today will be very different if you're looking to start a real estate investing career, or you're just looking to diversify some of your investing. Once you have an idea of where you want to be, search and find 5-10 different real estate investing strategies (BRRR, turnkey investing, flipping, wholesaling, STR, padsplit, etc.) and list out 3 pros and 3 cons for each. By doing this you'll start to see which strategies might better align with your resources (time, money, energy, connections, etc) and your future goals. Then combine that with talking to other people in these meetups and I think you'll start to gravitate to one idea over some others and then just start figuring out what you need to do to make that happen.

 @Paul Passafiume we also don't allow owners the right of first refusal, partially for fair housing reasons, but also partially for logistical reasons. Any approval for something by an owner is a bottleneck in the process. Often residents want to move in within a couple of weeks and it takes time to get all the information together to get everything accomplished in a timely manner. This is without adding in an outside approval process. In our opinion, you are hiring us as the professional to find someone to rent to, if you can't trust our judgment than it's not a good fit.

I can understand why you would want to have the final approval, trust me I do. But from the property management side the application, lease signing, and move-in process is arduous enough as it is. 

Essentially it sounds like Ziprent has just been a manager you've found that's willing to do so. There might be other more local options who will, but you'd have to call around. The other option would be to negotiate and pay more for the right of first refusal for any applications and maybe someone local would take you up on that. 

@Chris Snow

$11520 for 9 months loan and taxes/ins (also did you get updated taxes and ins or are you using the sellers info)

$9,750 2nd loan

$90k rehab

$160k purchase

Total cost: $271,270

Sale $315,000

Sale costs: 2% for closing costs = $6300

Sale: $308,700

Cost = 88% of sale assuming you sell it yourself

if you have to pay an agent 5% that's $292,950 net sale which is 92% of cost.

Have you asked an agent how many months they think it will take to sell or are you factoring that into your 9 months? Do a cost analysis of how many months extra you can have until you break even. Your 2 loans and taxes and ins are $2,363 per month at your numbers, so 1 month equals almost another 1% added to your cost, at 12 months your cost is now $278,360.

What happens with your 2nd loan if it takes longer than 12 months, do you have to pay any extra points to extend? Are you paying any points for the initial loan as well because that will add to the cost?

Without knowing more than this post, I probably would not do it. We have done millions of dollars in renovations on our apartment buildings, and it almost always has taken longer and been more expensive than we thought. I feel like $315k might even be a high ARV (but I'm no expert here), and the market in Jax is decently soft right now. We've had a tough time selling our stuff and has taken 3-6 months to do so. I think the average inventory size is like 4 months right now. To me, the margins seem really thin, and unless you've done a similar project like this before with this contractor, this is a risky project where things you expect will inevitably go wrong.

I agree with @Dustin Tucker I think being all-in for $220k is a good place to be, which means you need to be offering around $100k or maybe even less. Let's say ARV is $300k, and sale costs are combined 8% so $276k net sale, that puts you at 80% of the total cost, it gives you a ton of margin for errors and mistakes that I would almost promise you will happen in a project like this.

That being said, I'm not a flipper, I don't know any of the specific info or anything about you and your team so I could be wrong. For reference, we've bought 150+ units and probably overseen $2-3m in renovations, and we still own 51 units. We also manage for other owners in the Jacksonville and Orlando areas so we've overseen other work as well not counted in that. 

@Lilach Holtzer hope your well after our chat a couple of weeks ago!

Maybe lenders do see some BRRR's but I think the amount that are happening in Jax are the rare case right now, and not probably deals you're finding on the MLS, probably direct to the seller. And if that's the case, I would be surprised if the cost to reach the sellers and the time as well is being factored into the deal costs so does that even really count?

I do think you would have to be very close to the 1% rule with your all-in cost to rent in order to refi out a bunch of money and even then you may not get it all. 

$1,500 rent

40% expenses

$900 NOI per month

$10,800 NOI per year

at a 7% cap rate that's $154,285 cost per unit

$154,285 loan at 6% and a 30 amortization is $925 which is a 0.97 DSCR

For $900 a month NOI per unit, to get to a 1.25 DSCR you would need a monthly mortgage payment of $720 per unit. To get that you could only borrow $120,000 at 6% with a 30-year amortization.

So even if you could find a property or MF property where your all-in cost is $154k/unit you could only borrow $120k per unit which is a 78% loan-to-cost ratio so this isn't a BRRR.

And good luck finding multifamily in Riverside and Avondale for less than $120k a unit and if you do, your all-in cost isn't $120k per unit once you're done. 

Want to do a single family house?

$2,000 rent for a 3x2 1500 SF house is pretty fair

$2,000 at a 30% expense ratio which is way too low is

$1,400 NOI per month

$16,800 NOI per year

a 7% cap rate is $240,000

$240,000 at a 6% interest rate and 30-year amortization is $1,428.92 per month or a 0.97 DSCR

To get to a 1.25 DSCR at these numbers you could only borrow $187,000 at a 6% interest rate with a 30-year amortization.

Find me a deal you can be all into for $187k that rents for $2,000 in Jacksonville and I'll find one of two things. The deal of a lifetime or a deal with incorrect numbers or problems that aren't being addressed. 

If someone is actually doing a BRRR in Jacksonville I would actually love to see it because I just don't see how it can be done without spending a ton on direct marketing costs and then those costs should be added and I'd be curious if it's still an actual BRRR. I genuinely welcome someone to give me a real example with actual numbers showing how I'm wrong and I will fully admit it, but I just don't see how.

@Vin Gupta it's definitely not easy, I don't think a 1 bedroom apartment is going to do it. I think if you can find a $300k house that's a 3x2 that needs a little bit of work and you can have some small equity built up day 1 that might work.

I would look in the Apopka, Forest City, Longwood, Casselberry, and Winter Springs areas and try to find a house for around $300k, the rent should be $1700-$2,200 and that might cash flow you a little bit. I'm not saying there are hundreds of these houses available, but that might be a better chance than a 1 bedroom apartment near the theme parks. 

You could also try to connect with wholesalers and buy a rehab property with the intent to refinance and rent out. It'll be a bit riskier than buying something already renovated, but if you have the right team and numbers in place you could pick up some more equity on day 1, have less money out of pocket, and have something that produces some cash flow. 

Cash-flowing rentals in Florida right now are tough overall, so you won't pull up places for sale in the greater Orlando area, throw a dart at the metaphorical board, and find a property that easily cash flows. I think we're in a lull or low point for FL rental properties and there are some potential tailwinds in place for the next few years, so if you can find something decent today, I think there's a good shot it performs well in the coming years. The key is finding something that works today, and the potential tailwinds in the future are icing on the cake.