All Forum Posts by: Chris Niemeyer

I'm primarily an out of state investor, this one was in Dayton Ohio.

(Posted this on my FB and got a lot of traction so figured this awesome community may like the deep dive elements of my recent BRRRR deal.)

A closer look at HOW I GET PAID to buy real estate. (Real numbers on a real deal...since you're asking.) Many friends recently have asked about this real estate journey and how I'm doing it. They want an actual deal scenario. So here you go!

I purchased this off-market duplex from a wholesaler. (I'm on public record as a cash investor so get hit up by wholesalers almost daily now. Good and yet sometimes annoying.)The property was in poor condition. Not finance-able by traditional lenders. I aim to buy the worst house on the block in a good neighborhood.

I like making TRASH turn into CASH. So I used a hard money lender I have a credit line with. They will finance deals for experienced real estate investors.

I put 10% down for purchase, they fund the rest plus 100% of the rehab budget (this is key on bigger rehabs).

Purchase price: $82,000

Closing costs: $2500

Holding costs and interest during rehab: ~$4500

Rehab budget: $35,000

ALL-IN: $125K

Next, toward end of completion I reached out to the local credit union I use to have them inspect, appraise and start a cash-out refi process. This was done and they came back with an appraisal ARV of $190,000.

So I accepted a cash out refi for 80% loan to value on a 3.75% 15yr fixed term - $152k cash out.

Meaning...

They wrote me a check, I paid off the hard money loan, past expenses to hold, etc - and put ~$25k in my pocket! Tax free. I'll use that money for the next deals.

It gets better.

That duplex will rent for $2100/mo and my mortgage PITI is ~$1350. More cash in my pocket each month to grow and do more deals.

Plus:

Tenants are paying down the mortgage each month

I get ongoing property appreciation

The great tax benefits of depreciating the asset over time

If any of this sounds good to you, doesn't make sense, want more answers or next steps just let me know! Hope this helps someone. 

It's action, not information, that wins. That's the key to building wealth. Go get 'em!

@chrisniemeyer

Yes, @Omni Casey - sounds great! I look forward to seeing you at the conference and connecting about all these mutual interests we share.  

Investment Info:

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

Purchase price: $82,000
Cash invested: $10,000

This ended up being a great BRRRR deal! Purchased this duplex from wholesaler. Worst house on the block in a great neighborhood. Used HML putting 10% down, then they covered full $40k rehab budget. All-in about $125k including acquisition, closing, holding costs.

Immediately rented for $2100 upon completion, then did a cash out refi. Appraised for $190k, so pulled out $152k at 3.75% for 15yr fixed, to pay off all owed and put $25k back in my pocket tax free. I love these deals!

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

I saw two great exit strategies on this one. Desirable neighborhood, horrible house with lots of value-add potential. We knew market rent was ~$2000/mo and that it should ARV around $180-200k. With a target of $125k all-in, it seemed this would be a great opportunity to BRRRR.

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

Wholesaler who found me through database records. Negotiated down about $5k from initial offer.

How did you finance this deal?

HML

How did you add value to the deal?

Took the project nearly down to the studs throughout. Improved every room, upgraded all, added downstairs bathroom and upstairs laundry. Beautiful kitchen and bathrooms.

What was the outcome?

The numbers speak for themselves - $125k in, cash-out refi for $190k to put a good chunk of change back in my pocket for the next deal.

Lessons learned? Challenges?

Only hiccup was the timeline with contractor. We were aiming for 10-12 week turnaround and it took nearly 16 instead. Fortunately, after this contractor had similar delays in past, I put in a provision for "carrot and stick" on completion. If he finished on time or early there was a sliding scale bonus structure. If he finished late, a deduction from final bill. So while he wasn't happy about that, we were very clear up front and it was on him for being so late. I'm doing this in future deals.

@Simmy Ahluwalia

Hi there, interested to hear more about this. I'm in a same position as I'm considering an off-market eight unit that cash flows well. I currently have a portfolio of 27 that are mostly single family and duplexes. I need an asset-based lender for this new property and could definitely come up with 20 to 25% down.

@Timothy Wolfgram

Hello, I'm interested to learn more. What are the requirements, rates, terms etc. I'm currently considering and should be taking action early next week on a 8 unit apartment complex with around an 8% cap but need to get asset-based financing on it.i own 27 other doors in Ohio. Think you can help?

You are so right @Omni Casey!  Let's connect - are you going to the conference this coming week? 

@Omni Casey I love everything about this post of yours! Kudos and congrats! As an entrepreneur and homeschool dad of four with 27 doors I want to do a lot more of this with my kids! Let's connect!

Yes! A great forum to connect pre-conference. This is my first BP conference and I'm excited to meet and connect with many people from all over the country! 

I'm an out of state real estate investor, flipper and holder. I live in Tampa, FL area and mostly invest in Ohio - Dayton and Cincinnati areas. Just started a couple years ago and have 27 doors currently. Most single family and duplexes along with a triplex and 5-unit. 

I mainly want to learn how to leverage up to the next level. Taking a recent podcast analogy - I'm in that Awkward Adolescent phase. :) I need to do bigger deals in the multi-family area.

I have my own cash and a good sized HML line that I'm using primarily. I have several friends/family/good acquaintances who are willing to invest $50-100k at a time on new projects. Some are fine with just private money loan terms, others may want some equity.

Would LOVE to connect with others who have navigated this jump into bigger mutli-family projects. If you're active in this space, a commercial asset-based lender or also do frequent flipping let's connect and talk more in NOLA!! 

This is great, I look forward to meeting all these sponsors at my first BP event! Let's connect.