All Forum Posts by: Chris Wheelus

The real estate market has been all over the place in the last few years, and it forces us to adapt our strategies in how we invest. I invest in long term buy and holds, and with current interest rates tightening our cash flow, I'm curious to how everyone is adapting. Lately, I have been acquiring properties that need moderate rehab, fixing them up with my own funds, and renting them out. Instead of refinancing right away and pulling cash out, I am waiting for rates to come back down in order for the cash flow to make sense. I'm pretty much just sitting on the built in equity and cash flowing decently until I choose to refinance. The only downsides are needing more capital up front and keeping it in the deal for longer, but it works if I don't need it immediately and have it available. How are you guys doing it?

@Aj Parikh I'm in a similar situation. The tenant owes over $10k in rent, and the lease is about to expire. Did you find it easier to evict due to them overstaying the lease vs. nonpayment of rent? The property is in Virginia. 

Hey Sean,

Man you landed an incredible interest rate! That alone brought up your cash flow significantly. Looks like a great deal to me, solid CoC return. I plan to house hack as well with my VA loan when my wife and I move back to the Hampton Roads area. Being stationed in the beautiful Hawaii is great, but positive cash flow is hard to come by.

Congrats on your investment!

@Kevin Stier

Thanks Kevin!

I'm in the Navy and was stationed in Norfolk for 4 years and I got to know the area pretty well, which gave me confidence to continue investing in that area from out of state. 

The core three people I depend on when I can't see the property myself are my real estate agent, inspector, and property manager. My agent gives me a great initial viewing of the property through videos/pictures. The inspection report will give me a lot more detailed information on the property and what needs to be fixed. I can then coordinate with my property manager to get contractors in to get things rent ready.

@Justin Dao 

That was my biggest worry going into a long distance deal. I use a rockstar property management company that has its own maintenance department. I coordinated with the maintenance manager to get repairs done through the vendors that the company uses; they made it super easy. Finding this PM company as well as an investment savvy real estate agent was the best thing I've done. 

@Matthew Bryant 

Yeah man, no problem. After the first appraisal was done, which came back at asking price, we had a contractor come in during the contingency period and give us a quote to make the necessary repairs to get it back into good shape. Mainly just cosmetic repairs, nothing huge. We sent that quote to the appraiser (all by the bank's suggestion), letting them know that these repairs would be done after closing, and they gave us the after repair appraisal. It was a little weird that the 'as is' came back at $120k, and the after repair appraisal came back at $172k for a $6,400 repair quote, but I'm not complaining. It seems like these local credit unions are just much more flexible on how they do these deals. 

@Daniel Ferster Thanks man, over in West Haven

@Kyle Keller Thanks Kyle!

@Collin Bryston Adams As far as I know, any loan purchased in the name of an LLC is going to be a commercial loan. Could be a SFH, small multi, large multi or commercial property. The only difference in the loan process was that the lender looked more at the cash flow potential of the property to make the decision to give me the loan, rather that looking at my own credit worthiness. I did have to give the credit union a personal financial statement, and write a short narrative of my past deals and future plans for my real estate investments (new to me).

Investment Info:

Single-family residence buy & hold investment in Portsmouth, VA. First BRRRR, first out of state purchase, first purchase in my LLC.

Purchase price: $120,000

Appraised: $172,000

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

I had been on the lookout for a long-distance purchase of a SFH, being stationed in Hawaii and investing in Virginia. This one had a juicy BRRRR potential.

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

Zillow gives me alerts when new properties come up in my search area and this one popped up. Ran some quick comps and it was worth $50k more than asking price. It was listed as for sale by owner, so I gave him call. It was an owner/agent who had bought the property at a low price from previous clients who couldn't sell it and managed it himself, renting to section 8 tenants. He was moving out of the country and wanted to get the property off his hands. He said he got it for a good deal and wanted to let it go for a good deal. I got my agent to send him a contract 20 min later at asking price.

How did you finance this deal?

25yr/5yr balloon commercial loan at 3.75% apr through my LLC from a local credit union, with a 20% down payment from savings.

How did you add value to the deal?

The property required about $6k in rehab, which was given by the seller in credit at closing.

What was the outcome?

The property already had Section 8 tenants in place, so my property manager took over. The section 8 tenants are in until May 2021 at $1300/mo. Current cash flow is $250/mo after PITI/reserves/PM/vacancy. Market rent for the property is $1500/mo, so I will be increasing the rent in May, as well as refinancing in 6 months to pull all of my initial investment out, and some.

Lessons learned? Challenges?

I learned that the credit union I used will do an ‘as is' appraisal, and an after-repair value appraisal before any repairs are done. That second one gave me further assurance of an awesome BRRRR opportunity.

Chris Wheelus