All Forum Posts by: Chris Heinmiller

Hey BP!

I think I've built out a pretty sound investment strategy but I wanted to get everyone's input. This deal is based off a real tax deed auction property in FL:

1912 Sq ft 3/2 SFH in Bay County

- ARV: $415,101

- Estimated Monthly Rent $2,984- based off 6 comps within a 1 Mi radius.

- Adjusted Purchase Price/ Max Bid: $210,840.80- I start with the 1% rule (thus why I start the analysis by looking at rent) and then adjust the price based on the potential pay-out from a cash-out refi and equity position on the property- more on this in a second. 

- Potential Investor payout (15%): $242,466 

- Rehab total: $76,480.00- I just used $40/ sqft for an estimate. Obviously there would be a more in-depth analysis if I were actually buying the property. Rehab will be paid for with a HELOC on the property.

- Cash Out Refi: $318,946- This covers the $242,466 payout to the investor and repayment of the HELOC used for Rehab on the property. I could technically get $332K out, so this leaves a little meat on the bone to cover closing costs, potential unexpected rehab issues, etc. Renter would be in place prior to this.

Now I have an investor who's been paid, and a renovated rental property with a tenant that I haven't really put any of my own money into. 

Monthly Expenses and Cashflow:

- Principal, Property Taxes, Home Insurance: $1,446.38

- Property Management (12% of Rent Price): $358.08/ mo.

- Monthly cashflow: $1,179.54

Obviously these are rough estimates, but I feel that I've given myself enough buffer throughout the calculation/ analysis that if there are any unexpected expenses, I'll still be able to cover them and have a property that Cashflows a decent amt each month. 

What do y'all think? What am I missing

Thanks,
Chris

Everyone-

Thanks so much for the great replies- tons of info here! I'd like to say I'm somewhat well-versed in determining the value of homes that wind up at auction, but the raw land side is always something that has piqued my interest. It seems that this is a great way to get started in real estate (Jay, I know that's one of the ways you got started), but it doesn't seem as easy to find info on comps and data for raw land as it does for houses, multifamily, townhomes, etc. I'm probably not looking in the right places for this info, but this has certainly made it challenging to develop an understanding around raw land valuation.

Hello BP!

My apologies for going dark on this post- my 9-5 got very busy so I had to step away for a bit. 

Anyway, I bit the bullet and got a PropertyOnion subscription and I really like it. 

The platform is far from perfect (there are a handful of minor tweaks that could be made to make it better), but all in all I think it's great. If you're looking to analyze properties in multiple zip codes and counties in either FL or OH, this is the way to do it. You'll save a ton of time having the majority of the information you need in one place and you can sort and build property lists based on hundreds of factors. If anyone has questions I'd love to answer them!

Thanks,
Chris

Morning BP!

Does anyone have experience selling raw land to charities and/or non-profits like Habitat for Humanity? I'm exploring tax deed auctions and there is a ton of raw land that pops up at these auctions. Seems to me that selling to an organization like Habitat for Humanity might help you ensure you have a relatively consistent buyer, assuming the parcels you purchase are in desirable areas for them and meet their acquisition criteria. I'm assuming these organizations would pay far below market value for land, but there are obviously also some significant tax benefits that may potentially offset the "lower-than-market" valuation you may receive when selling to them. 

Thanks,
Chris

Evening BP!

I'd like to begin investing in foreclosure auctions and want to make sure I'm following all the right steps. Although I plan on having a title company run a title search and run and O&E report on any property I plan to bid on, I've still spent a lot of time understanding the typical foreclosure property due diligence- looking up the owner and property details on the PA site, looking up the various public records, liens, etc. and trying to understand the chain of title as much as possible.

I'm going to start out with first position mortgage foreclosures (probably not the best idea to jump into a second position or HOA foreclosure until I fully understand the process), but even with the first position foreclosures, some of these deals seem too good to be true. Even after a $40/50K (generous estimate) rehab you can cash out re-fi, pay yourself back and your investors back and still hit the 1% rule. What am I missing here?

Thanks,
Chris

Hey BP!

Earlier this year I started a bit of a side hustle to place ice vending machines in the parking lots of shopping centers and other open lots in Florida (Jacksonville area, specifically). It seems like I have a great deal for a property owner- I want to lease a 15' X 15' space for the machine, for which I will pay $600/ month or so. I handle all setup costs (mostly running utilities, but in some cases laying a small concrete pad) , pay all utilities (incremental to the money for the lease), insurance, etc., so the only commitment from the the property owner is really in the space they're providing me for the machine. 

I've been searching for parking lots on high-traffic streets and thoroughfares and although I have found many and contacted the owners and/ or property managers of these properties, I've had a ton of trouble getting any property managers or owners to show any interest whatsoever. Is there something I'm missing? Most of these parking lots/ shopping centers have extra spots or areas which never seem to be filled with cars, so it seems like a lay up for them to generate extra revenue with little-to-no effort on their end.

Finally, short of looking on the DOT and county sites, is there a way to build a large list of these "ideal properties" with contact info without having to spend hrs driving around or looking on Google Earth and researching contact info on the county site? I'm starting to think it is going to take a "quantity over quality" approach just to find a couple of interested owners/ property managers...

Thanks for any advice!

Chris

Hello BP,

I'm currently trying to find/ set up my first BRRRR deal and need a bit of guidance. Although I will be putting some of my own money down on the deal, the majority of the deal will be funded by investors. I have a decent number of potential private investment options (I believe), but I'd like to get past the "Hey do you want to do a real estate deal with me" stage and into the details to determine who's actually serious and on board. This is further complicated by the fact that generally speaking, there's little available inventory, making it necessary to find motivated sellers by direct mail and other means. It's tough to get an investor fully on board when you don't have a specific deal to walk them through, but the market is so hot that if you find a deal first, you could lose it if you don't get investors on board soon enough. So my first question is, "what comes first? The investor or the deal?"

My second question is more specific to structuring the deal: When working with investors, what are the terms of your agreement, generally speaking? Do you offer a specific return (i.e. 11% or so) on their money? When/ how do you pay them out? To me, it seems like the best way, should your investor allow it and if the numbers make sense, is that you determine a specific ROI percentage for the investor's investment and try to pay the majority of that (if not all of it) when you do the refinance, then you keep the property for yourself and make your money from cash flow, appreciation, etc.

I understand the actual BRRRR process, just trying to understand the steps leading up to the process.

Thanks,
Chris

@Joel Bongco I won’t be able to make the Tampa trip, but I’d love to catch up via Zoom after. I’ll DM you! Really appreciate all the help!

@Mariel David-DeVito I thought the tenants/ owners were removed by the county prior to auction?

I completely agree with you regarding the appraised value. That said, I’ve seen one or two properties, that actually go to auction that would make decent BRRRRs based on the comps and a VERY generous potential rehab budget.

I don’t know enough about buying land on its own to even worry about the open land for auction, but I’m not completely against it.

Thanks for the great input, really appreciate the help!!

@Joel Bongco Thanks for the help! Any recommendations on alternate products? I'm ready to progress my researching past Zillow and the Tax Assessor's website...

I am definitely open to distressed properties, tax liens, probate, divorce, etc. I was just using Tax deed as an example. The market in Florida is crazy and the probability that you find a deal on the MLS is almost non-existent where I am. I won't be ready to buy an investment property for another year or so, so in the meantime, I'm practicing my researching skills as much as possible.

Thanks,
Chris