All Forum Posts by: Christopher DeFronzo

Hi everyone, I have been contacted in the past when advertising units by agencies or insurance companies who are looking to place tenants or homeowners displaced by fire, flood etc.  In the past I have shrugged these calls off because they are usually not a good fit for the unit/property I'm advertising.

I currently have a condo in Fitchburg MA that is in a state of flux with multiple updates going on (siding, windows, front stairs) and a recent increase in condo fees by 33% to pay for the work.  I think this would be a good fit for a temporary tenant covered by insurance so I can list the place for sale in a year or so once the work is done. 

Does anyone have any point of contact for one of these agencies that tries to place tenants for insurance companies?  even the name of a few agencies that do this type of work or a good keyword to google to find some additional info.

Also if anyone has any recommendation on what to ask for when negotiating terms that would be especially helpful. I am thinking 150-200% of normal monthly rent with non refundable security = 1months rent and right to screen tenant prior to renting to them.  I would like to also set a minimum lease term of at least 8months as well.

If anyone has any info to point me in the right direction I would greatly appreciate it. Thanks BP community!

Investment Info:

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

Purchase price: $200,000
Cash invested: $50,000

2 family investment property. 3bd per unit.

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

Cash flow.

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

MLS. Estate sale. Made reasonable offer and accepted counter offer. $4k back at closing for new oil tanks.

How did you finance this deal?

Conventional financing, 25% Down. Refinanced a year and a half later and pulled out entire down payment.

How did you add value to the deal?

Renovated each unit. 2nd floor requires extensive renovation. Added $80k of sweat equity then refinanced.

Used mass saves program to fully insulate house. And for $17k 0% financing of 2 new heating systems.

What was the outcome?

Buy and hold. Great tenants. Pulled all of my down payment out after refi! Cash flow!

Lessons learned? Challenges?

It was my first deal learned so many. Had no heat on day 1 due to delayed closing and no oil delivery by previous owner. Pipe let go in laundry area a few weeks later but luckily I had a new tenant moving in that caught the problem. Trial by fire! Learned the time commitment and toll a 1500 sq ft unit renovation would take on my life. My next purchase was a fully renovated 4 unit because of this lesson!

Nick Montville Thanks for the info. I will put the legwork in upfront before getting an accepted offer. I'm wondering what kind of terms to expect with a portfolio loan if I can find one. What would be typical as far as the term of the loan & interest rate?

So I found a condo that looks quite intriguing in central Massachusetts, it's bank owned & needs some work due to the previous owner damaging the unit prior to being foreclosed on. I was planning on making a cash offer, renovating & then financing to get my $ out & then hold/rent the unit. BUT...After speaking with my mortgage broker the place cannot be financed due to it only being 36% owner occupied. This is a problem since I don't want to tie my $ up in unleveraged in this place for a 15% ROI. I called a few smaller regional banks to inquire about portfolio lending but was told that the owner occupancy % is an issue for them as well. The condo is in a great area & the financial health of the complex is very good according to their budget paperwork & it's well managed. Is there any type of financing that I can get to get my money out after renovation? I would consider portfolio lending & what about a secured personal loan? Any ideas on types of financing available & an idea of typical terms/rates that I could expect would be a great help to me.

Made my first offer today on a multifamily investment property in central massachusetts.  I don't want to get into too many specifics yet but its a 3 family, 3 bedroom/unit with the first floor needing some rehab after a somewhat destructive tenant w/dogs.  I calculated my cash on cash to be approx 27% once its fixed up & fully rented with 25% down as an investor.  After reading extensively & listening to the podcasts its exciting to finally start putting some of this knowledge base to use.  I'll post more details if/when anything happens with this deal.

Mike Garland Hi Mike, I wish you the best of luck. I am currently reading J.Scott's book on estimating rehab costs and it is a pretty good resource. It offers a lot of knowledge in small digestible chunks and can be used almost as a reference book to give you ballpark numbers and a base of knowledge on various rehab items. I find it pretty valuable as a new investor looking for a property that may need some work. Good luck, & post your progress along the way.

Tim Slatt yeah this community is great, and I'm learning a lot through the podcast, discussion boards & books. I guess when I say western MA it's really more of central MA that I'm referring to (Worcester county). As someone who grew up on the north shore & went to school in Boston I guess I fall into the group who considers anything out past I495 as western MA. Good luck to you on your investment journey!

Lusi Capriles can you provide any more details on your property? I'm genuinely interested since I would much rather invest closer to home but my experience has been quite different on what is available. What kind of price range do you invest in & what kind of rents you are getting? For example right now I see only one multifamily property available in Lynn under $300k ( 2-family $230k) on MLS. This would mean over $50k if I were to put 25% down which is over 3/4 of the $ I have to invest currently. After PITI, water etc ballpark expenses will be $1600-1700, rents maybe $1100/month per unit? So maybe cash flow $500/month in this example but I'd be cash poor and unable to do another property in the immediate future. That's if I were able to get a deal done on the only property in town (on the mls). As a new investor I don't have any kind of system in place to dig too far below the surface other than what's available on mls & Craigslist. I don't have any flyers or bandit signs or a book full of connections (yet). I'm just trying to get some skin in the game with a property that works for my first investment and leaves me with some cash reserve to renovate & cash out refi or $ to do another deal immediately.

@Luis Capriles I'm not saying there aren't investors cash flowing in Lynn & surrounding areas, I'm sure if you purchased during the down market you would be benefitting from positive cash flow & appreciation. Likewise I'm sure there are opportunities for extensive rehab projects that would cash flow positive when completed even in the current market. I can only comment on what I see and my focus in the current market & for that matter I can only comment on properties I see on MLS since that is where I am finding the majority of the deals that I am analyzing. I'm assuming that once you sell your property the next owner will not enjoy the same $1100/month cash flow that you do.

@Justin Repp thanks for the input definitely something to think about.  I see a lot of retailers moving to these areas & infrastructure being put in place to handle the increase in population/commuters like rt. 2 construction projects for example.  I feel like these towns also are not so far away that some portion of the population works in Boston & surrounding areas.  Your point is not lost though that's why I think a property with off street parking is extremely important in these areas to attract a certain caliber of tenant with a car that would value this amenity.