All Forum Posts by: Cody Rohland

We have one on our home and it has been instrumental in helping with our 1st flip. It is also helpful because we are Realtors and real estate investors and it provides a cushion for months that are leaner than others. And you can definitely pay off your home faster if you focus on running all of your expenses through it and watch your expenses. 

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $402,800
Cash invested: $148,673
Sale price: $590,000

Our 1st rehab flip! A lot of work, but a lot of fun! We are very proud of this project. Single family home, 1250 sqft, 2 bedrooms, 1.5 bathrooms, plus a 2 car garage. On a main road, but a nice 1/3 acre lot.

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

It was a bank short sale that one of our buyer clients was under contract for. We waited 7 months for the bank to make a decision on the short sale, and once the bank came back with an acceptance counter-offer, our buyer bailed, even after multiple times of telling him this was a really good deal! Especially for an owner-occupant! He finally decided not to buy it, so we did.

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

See above. :-)

How did you finance this deal?

Hard money. 20% down, 2 points up-front, 12% interest. They loaned 80% of the purchase price and 100% of the rehab, however would only loan up to 70% of the ARV total which they estimated at $560,000. We were allowed $58,000 in rehab costs. So, we ended up putting quite a bit of our own money in the deal. Of the $148,673 total rehab costs, $85,900 was actual rehab. The rest was carrying costs: utilities, insurance, purchase and sale closing costs, and interest payments on the loan.

How did you add value to the deal?

We just fixed what needed to be fixed and made it a place people would want to live. There are not many "affordable" homes in our area, so we knew that the buyers would be there. There was a space in the basement we debated making into a legal 3rd bedroom (this was only 2 beds which did make us sweat some), but ultimately decided that the juice wasn't worth the squeeze. Maybe if we did it, we might have made a bit more money, but we were happy with the outcome on our first flip.

What was the outcome?

Listed the house for $549,000. Received 3 offers. The top offer was willing to pay us $20K above appraised value, if it was short, which it was. It appraised for $575,000, but with the guarantee, it sold for $590,000. We made a profit of $38,000.

Lessons learned? Challenges?

We will be looking for better lending terms and will move faster. We wanted to paint the exterior of the house vs putting siding on, but the weather did not cooperate for a few months adding carrying time which was expensive. We will not buy a property in January that needs exterior paint anymore. Lol.

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

We are agents, so just us. And we did sub out the workers on our own.

Zach! Thank you so much for your suggestions and input! Excellent advice! I’m not sure yet how this will pan out as some of the other family has gotten involved, but we shall see and I really appreciate the multiple options you laid out. Thank you! 

Thanks!

Hi all! We have the opportunity to purchase a 2 family in a very desirable area (due to it's proximity to public transportation) close to Boston. 2 bed/1 bath on each side. Rehabbed, this property would probably sell for $850,000-$900,000. The kicker is we have to give the owners, who live on one side, a life estate. They are both in their 70s and he is experiencing some dementia and will probably go to a home soon. His wife would stay. It is in need of updating on both sides (the rehab will probably be $50,000-$75,000 for each side), but we would only update the vacant side to put a tenant in it initially. Rent (depending on the upgrades) would be $2500-$3000/month. We would have to bring $250,000 cash to the deal to pay off their HELOC and a tax lien. After that the owners are willing to carry the note for the additional income. We have not negotiated the interest or the purchase price at this point, but figure that a 7% interest rate is what they would probably want. We are not really sure how to analyze this deal to figure out what to offer for a purchase price as the 2nd unit is valuable, but we don't know how long the owners will live. Properties do appreciate better than average in the area so this would be more of an equity investment, at least initially. Anyone out there know how to do this?

Investment Info:

Townhouse buy & hold investment.

Purchase price: $160,000
Cash invested: $32,000

Purchased this property because we have a lot of family in town, and might use it as a retirement property later.

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

We wanted a property close to family.

How did you finance this deal?

Conventional Financing

How did you add value to the deal?

Time.

What was the outcome?

It has been a solid investment that had appreciated nicely over time.

Investment Info:

Small multi-family (2-4 units) other investment.

Purchase price: $505,000
Cash invested: $101,000

We wanted a primary home with an accessory unit that we could rent to mitigate the mortgage payments, and keep as a space in case one of our parents needed to move in.

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

Future need for housing for parents plus income in the meantime.

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

It was in the town we loved and it was a conventional purchase.

How did you finance this deal?

Conventional financing

How did you add value to the deal?

TIme.

What was the outcome?

We still live here and now my mom has moved into the accessory apartment. It no longer cash flows, but our equity is huge. We refinanced into a first lien HELOC and now have a chunk of change to do some more investing.