All Forum Posts by: Mike Conner

I own a duplex that was built in 1989 and has had 2 stable long term tenants with no interest in selling. An investor who is buying the duplex next to mine wants to trade a duplex he owns in a neighborhood nearby so he can have 2 duplexes next to each other (long story no need for those details). 

My duplex - built 1989, 2,060 sf, 2 bed/bath, 1 year old roof, value if I subdivide (county already approved) and sell each separately $150k each ($300k total)

Investor duplex - built 1995, 2,300 sf, 2 bed/bath, 5 year old roof, value around $310k

The investors initial request was for an equal trade and they would pay realtor fees, which I replied wouldn't be equal due to buying/selling costs (recording fees, title insurance, closing fee, survey, inspections, loan fees, 1031 fees, accountant fees, repairs), taxes would increase due to new sale price, I'd trade a 3.75% mortgage for a higher one, and I'm on the 10th year of a 30 year loan so resetting that to a new loan would restart amortization and pay more towards interest. I've calculated the lump sum costs to be $9,500 for buy and sell combined and a monthly reduction in cashflow of $347 due to the new loan and taxes. I don't know what his properties rent for yet but lets assume equal rent to my property. No reason for me to go the through the hassle of the sale process unless there is some type of gain which the investor is open to and this is where I need the advice. If I was to trade a $300k house for a $310k house that will cost me $10k and $347/month what amount should I ask for to make up for these losses? I'm thinking along the lines of $30k of equity, so sell me the house at $280k. I'm not sure how to quantify what the $347 per month should be worth in a lump sum amount. Thanks in advance for any advice. 

Contact Extreme Clean they do cleaning and mold remediation or diy since it's a small area. Use MMR available at home depot. 1 product will kill the mold, but the stain remains, the other will remove the stain (super concentrated bleach w surfactant) so, you will need ventilation as it's strong. 

Haha, no worries on the gators... Thanks for the recommendation. It wasn't the attorney, it was me, I was reading through the IRS code and found that as I want to make sure the 1031 doesn't become taxable. 

Looking for a CPA and 1031 QI in Tallahassee for an upcoming 1031. If I can't find a good local real estate CPA, I'd work with someone remote. I have a good QI but they recently acted as my attorney so I'm barred from using them on this 1031. Thanks in advance

Hey Angela, Best local lenders for investors in Tallahassee imo.

Prime Meridian Bank, University Lending - Lauren Thurman (mortgage broker), TC Federal, CampusUSA (portfolio lender), Bank of Camilla in GA

It sounds like your issue is in the piping prior to the septic, but you may also have a septic issue w frequent backups (usually biomat in your drainfield). Under state law, if a septic tank malfunctions within the City limits and sewer service is available, the homeowner must connect to the central sewer system. The plumber should be able to tell where the septic tank is b/c he will have a measurement from where the camera was put in the pipe to where the tank is. Once you know the distance, just use a tape measure and measure that distance following the direction of the pipe. Here you can probe and most likely find the lid of the septic which are normally only a 1 or 2 foot deep. Cheat code is call a septic company for a pump out costs about $300 and they will find the septic lid and pop it for you to pump the system. Let them do the shoveling.  

If the septic tank is functioning, I would just repair the piping to it if the cost and have the septic pumped. I find it odd for a septic to be 5' or deeper, they are normally 4' or less. If the piping is bad and the septic has failed your only option is to connect to city sewer, but try pumping it first. Make sure you get a firm quote from the city for connection fee, which it sounds like you have for $8,600. The quote from the plumber sounds high to me, as they have the easy job of laying a few joints of pipe/fittings and connecting to the sewer service stub the city installs for $8,600. 

@Gina Stern I really like propertyonion and have considered using your title reports, which are priced better than most. I typically check to see if the foreclosure is worth considering and if it is then I do my own title research on it, which is normally doesn't take long. Sometimes the official records contain some confusing documents and I will pay for a title report if there is any doubt. Most foreclosures are pretty straight forward. I only bid in 3 counties in FL. The main issue is the qty of houses I review and the costs for title reports on each property that I'm not successful on would add up. 

@Marc Stevenson Thanks!

@Tyler Solomon on the buy side of course there is no agent, just the County. On the sell side I used Jason Picht (Who is a realtor/broker and Investor)

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $157,000
Cash invested: $35,000
Sale price: $255,000

This was a purchase at the foreclosure auctions. Winning bid was $157,100 with all the fees total was $160k. Took a little longer to rehab than expected replacing cabinet doors is more difficult and expensive than original anticipated. Never knew someone could put so many nails/tacks in walls, there were probably 400+ removed. Performed a mostly cosmetic rehab with minor structural.

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

I've been pursuing bidding at the foreclosure auctions as they are not as much work as finding other off market properties. This was my first successful bid after many. I believe people have been overpaying for auction properties sometimes close to market value. I like these b/c it's in my wheel house of skills.

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

County auction foreclosure. Researched title myself, viewed property from the windows and bid based on what I thought it was worth with repairs.

How did you finance this deal?

Cash

How did you add value to the deal?

Replaced roof/french doors, all plumbing fixtures, vanities, mirrors, electrical outlets/switches/fixtures, fixed garage door, painted, replaced all door hardware, provided new cabinet doors as cabinets were solid wood, new appliances, new front columns.

What was the outcome?

Currently under contract after 6 days at $255k

Lessons learned? Challenges?

Refinishing cabinet doors is very time consuming, there is nuance to how you measure replacement doors, and it's better to just replace the whole cabinet as opposed to the doors only. Also I couldn't find anyone that sells already finished replacement doors at reasonable prices. Getting the smell out of a house can be difficult, needed to pressure wash garage concrete, professionally clean interior tile twice, paint walls, clean AC ducts, and finally run an Ozone maker about 4 times.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, but choosing to get my own license to reduce commissions next go round.

Hey Kelly, I invest here in Tallahassee and just finished what was supposed to be a BRRRR but the mortgage companies have little interest in providing loans for BRRRRs (cash out refinance with the house purchased in cash) if you have no skin left in the game. The way they worded it to me is they went through the 2006-8 bust and many investors that had zero cash (getting all of your initial investment back) in the loan handed over keys. For example on my property: I'm all in at $195k cash, it would appraise for $255-$265. at 75% LTV that's 191k. They wanted me to leave an extra $20k in so 191k - 20k = 171k. B/c apparently the 50k in equity is not enough, they wanted more cash. In addition, these were all 5/1 ARMs on a 20 year amortization (ie commercial loans). Some of them also would only give a loan on the purchase + repairs amount, not the appraised ARV amount.

This is a 180 shift from the beginning of the year. For the the most investor friendly mortgages call - CampusUSA, TC Federal CU (Jaime), University Lending (Lauren Thruman) or Bank of Camilla (Mitch). But all of them were quoting me really high rates on cash out refi's 8.5-9.5% on 30 year notes and 5/1 ARMs. I personally decided to sell mine off when I would typically keep the property. There is a pretty good demand for houses under $250k but most of these first time home buyers will need some closing cost assistance. My house was on the market 5 days listed on 11/19 and now I'm under contract at $255k (over Tday break) w $8k as seller concessions for the buyers closing costs, so you should be able to sell easily considering it's in good shape in reasonable area. If you ever want to meet up I'd be happy to talk with you. 

Currently I have 5 rentals that cashflow very strong since I've owned them for long time with low interest rates and they have high equity. Recently I purchased a house at a foreclosure auction for $160k, reno was $35k, and 2 identical houses at 1,127sf sold for $260k. Mine is 1,334sf. I should be able to sell for $270k. Question is A) sell and take short term capital gains hit due to fears of a slowing market and higher interest rates or B) BRRRR get a short term mortgage, best rates I've found (after talking to 15+ credit unions) is a local credit union that will give me a commercial 5/1ARM 5.75%, no pts, 20 year amortization, and $1,000 origination. PITI would be about $1,620 and rent is $1,800. I replaced the roof, hot water heater is 5 years old, AC 8 years old, new appliances, new plumbing/elec, and reno'd everything else so I shouldn't have much maintenance. The plus of the BRRRR would be taking depreciation against other rentals income and selling in a few years for long term capital gains. Curious what opinions are out there, thanks in advance