All Forum Posts by: Chris Ravettine

Where are the $33k for repairs going? The property seems to be in move in ready condition from the pictures.

Question, is there a seasoning period on a cash out refi even if the property was originally purchased in cash?

Great to know. I am just beginning my journey in real estate and often the properties I have been looking at have old Oil heating systems. Propane has slipped my mind as a viable option until I read this post. It is good to know that there is a "middle ground" between the often expensive route of converting to natural gas and the less buyer friendly route of keeping the Oil system. 

Was the house on Propane before or did you convert from Oil? If you converted what did you do with the old oil tank? I've seen some properties where they are in the basement or buried somewhere in the yard. I could imagine the latter could turn into a real nightmare to remove. Any advice for dealing with homes with old oil tanks buried somewhere on the property?

@Michael Noto Why did you decide to replace the septic tank if the inspection showed it to be in fine working order? Just for added peace of mind for the buyer? Also, I am guessing the home was not connected for natural gas and that is why you decided to go with propane heat. Do you think propane heat / hot water could cause hesitation for some buyers in the area as opposed to natural gas? Any experiences with converting a home to natural gas and what kind of ROI you could expect from that, if any?

Love the way you outlined everything in this thread btw. It was an extremely fun read and very educational! I am going to search the forums for more threads like this.

@Kerry Mertz I agree, a lot of the multi families in Meriden in my price range seem to be more of a headache then they're worth. I am currently "house hacking" my condo as I have a roommate that covers most of my monthly costs. I am looking to build up a passive income primarily through buy and hold or BRRRR. Originally I was looking to go in by myself with a property sub 200K that I would most likely do a combination of live-in-flip and BRRRR, i.e. finance with FHA or a conventional owner occupy then do some upgrades and bring the property into a updated space that could be rented for a positive cash flow. After this was established I would hope to cash out refinance to be able to go and do it again. Although this all sounds great it seems difficult to find these type of deals on the MLS (although I still find it hard to analyze these deals). That's why this recent deal has caught my eye. It is a MFH that is cash flowing well and in pretty decent shape for the area. The downsides are that it is probably at the top of the market so their would be no way to force equity through upgrading the units, it is in a rougher part of Hamden, and a few of the units are on the larger side so I'm concerned with how difficult it would be to find reliable tenants for these larger units.

I have been looking around and keeping an eye on the market for a few months now so I don't feel as though I am rushing into this but of course since this is my first real investment I am hesitant. There is still a lot for me to learn and it is quite intimidating. 

@Cameron Norfleet Are you experienced with the market in Hamden? Do you know if it would be difficult to fill 4-5 bedroom units with quality tenants that will pay on time in a reliable manner? Also could you explain how the refi would be able to pull out some of the original capital if there is no increase in the value of the property? 

Drove by the property for the first time today. It is not in the greatest area. Does anyone have any advice when it comes to investing in lower income, rough and run down areas?

Hello All,

I am looking to submit an offer on a property that just came on the MLS a day or two ago. Its a 4 Family that is currently fully rented generating $5650 a month. I believe rent could be increased to $6000 a month eventually without much backlash to meet the current market rates. My original plan was to go FHA and move into one of the units, however my realtor (who is also the listing agent for the property) is suggesting that I go conventional as he believes the property will receive multiple offers by the end of the weekend. My offer would be at asking price. I can secure traditional financing at 25% down which puts me just north of $100k into the deal. This money would come from a family member that is out of state but willing to go into the deal with me. At the current monthly rent and my offer price cap rate would be around 12% with a COC ROI around 20-23% generating an annual cash flow of around $25k after expenses. Ideally I would have liked to find a property that was a candidate for a BRRRR but I believe this property is towards the top of the market for its area. Some of the units are bit more dated than others but none are in bad shape. A few kitchen/bathroom renovations down the line may be necessary but I am unsure if I would gain any worthwhile equity by doing so. Regardless of that, this seems like a good deal to me but I have a few questions.

1. What would be the best way to structure this deal so that my private money can get their cash back out of the deal in a reasonable amount of time.

2. Is it a bad idea to wrap up this much cash into one deal when I could potentially find some smaller properties for a BRRRR play? Or should I just take some time to let the cash flow build up enough for a downpayment on another property down the line?

3. Most of the big ticket items seem to be in good shape (of course an inspection will be done prior to closing) except for the 4 furnaces which are dated but in working order. I believe they are the original units from when most of the units were built in the 1980's. What would be a reasonable capex number to budget for this ? 

Would love to hear all of your suggestions on if you think this is a good deal, bad deal, or if you have any other advice on how to structure the deal to better benefit both me and my partner.

@Cameron Norfleet

Great advice. I am currently working on putting in an offer on a property. The cashflow is pretty high as it is a MFH. Current cap rate at the offered price is 12% with the possibility of getting it up around 13-14% by raising rents slightly (only about $100-$200) to market value. My only hesitation is the large amount of upfront capital. I was looking into the potential of going FHA but my realtor is suggesting to go conventional if I really want to be sure I am to get the property. This means putting down 25% which would bring my down payment north of $100k . Although I believe my COC ROI would be something like 20-23% it seems like a hefty amount of money to be out of pocket. This money would come from a family member that is willing to go into the deal with me, they are based out of state so I am the one that found the deal and ultimately would be responsible for managing the property and securing financing. In your opinion is it better to have more equity in an investment or am I potentially missing out on other deals by putting all the available capital into this one deal? Would there be any way to get that capital back out without waiting on the cashflow to recoup it in about 5 years? The cashflow should be around $2k per month after mortgage (PITI), Utilities for the common areas, lawn/snow care, 5% vacancy, $100 for repairs, and $200 for capex. (Most of the big ticket items are in good shape with the exception of the heating systems which are dated but still operational.)

@Joe Prillaman As a newbie to the real estate investing scene, seeing someone with such growth over such a short period of time is really motivating and eye opening! Thank you for sharing your methods and hopefully I will be posting a similar thread in the next year or two. Keep it up!

 Warren,

I looked at a few properties this weekend. Nothing to get too excited about. One 2-family that had me excited was way worse off in person than the pictures made it seem. Another concern I have is buying a house that still has oil heat and an oil tank in the basement or yard. Do you have any experience with this? Is it something that I should stay away from? My realtor doesn't like oil heat and has advised me to stay away but of course I would like to hear others opinions.

I viewed a nice sized SFH that needed a good amount of work, mostly interior cosmetic work, but it had a old oil tank buried in the side yard. Otherwise, the bones seemed good, the house had a great layout, and the seller was motivated. I'm tempted to see what their bottom dollar would be but I don't want my first deal to go downhill because of the oil tank.