All Forum Posts by: Daniel Soda

Thank you Jaysen for the thoughtful response. Unfortunately, we did not win the bid on this property, but I certainly learned a lot going through the process and we are looking forward to the next one.

FWIW, we agree that the numbers aren't as good as we'd like. Also, thanks for pointing out that it's not a true triple. We hadn't though of that angle, but thanks to you we will include that in our future deals.

Cheers,

Dan and Stephanie

Our background: Wife and I just had our first baby in December. She's an RN, I'm stay at home dad, handle the real-estate on the side. I'm handy, but we outsource work when it makes sense or is too big a job - think roofing/foundation/mold. We currently own 2 doubles, first one have held for 11 years and cash flows nicely. Second one we just finished the remodel and are waiting on the title company to finish our BRRRR refinance. Getting 60k cash back from the refinance.

The Property: It's a triple a 3/1, 3/1 double house with a 3/1 cottage in the back, separate structure. All utilities separate including water - 3 ways. New siding and roof. 3400 square feet total. The front house is in great shape, needs just carpet, paint and appliances for the kitchen. Rents would be $700-$800 currently for the front house. The cottage is a full gut job and has a massive mold issue throughout. I need to outsource the work on the mold and any possible foundation issues from that - water leaked in basement from an open fixture, possibly for years. 

The Plan: I need to get an estimate from a reputable mold remediation company to see what the cost would be, but even at $20,000 (a hopefully high estimate) the numbers look pretty good to us.  We have two options - both through the listing realtor, neither of which we have ever done or attempted. The first is having the bank selling the house to hold the paper for us knowing about the mold issue - this seems unlikely to me, they'd just go with a full cash offer instead from another source. The second is a private lender, the agent knows. We'd set up a deal for a year likely and then refinance through our bank to a 20 year loan with very good terms once the work is complete.

The Numbers: Asking Price $124,900, our potential offer $130,000-$135,000 Cash using Private Money Lender. We want to go over asking here because the Bank lowered the asking $30,000 after seeing the mold issue and we know many offers are in play. $30,000 down, estimated repairs $39,000. Total project cost ~$172,000 - ARV $180,000 - Monthly Cashflow: $588, Cash on Cash ROI 9.45%, Purchase Cap Rate: 10.45% - our area is ~8% typically.

The Questions: What kind of a deal should I look for with a Private lender/Hard money loan for 1 year. Any things I need to make sure are covered or can I just go to my RE lawyer and he'll have a pretty boilerplate contract for this situation. Does the deal even look good at this offer? Any tips on mold remediation? Any input at all is welcome and appreciated - we are just starting out and would love to get advice from people who have experience/knowledge.

Thanks in advance,

Dan and Stephanie

Welcome Jessica! Would love to hear more about you secured that 8 unit building in '11!

Syracuse would be more central for me. I like buffalo and Rochester included in wny though.

 Ty Dmitriy and thanks for the vote! It's my first one. Woohoo!

Haha Peter,

Yeah, the negotiation is definitely my favorite part. I'm really looking forward to learning more about being a good negotiator.

Thanks,

Dan

 Thanks Mark, good tip.

I'll definitely check that section out.

Dan

TY Lois - I look forward to telling great stories of my REI successes!

Hi Mark - sounds great, I sent you a PM, let's get together.

Great idea James - TY - I'll get in touch with Michael, I'm looking forward to meeting some local REI

Hi Andrew - yeah poker to REI does seem like a pretty natural transition, although I'm really not sure why.

Thanks for the responses everyone!

Dan

Hi Everyone! My name is Dan Soda. My wife and I are just getting started in REI and are very fortunate to have found Bigger Pockets. I'd just like to introduce myself.

I am a former professional poker poker, self taught through a forum (2+2) and I'm looking to do the same thing here on Bigger Pockets with REI. I bought a 2 unit in the suburbs of Buffalo as my first home ten years ago and we are currently closing on another double in the city. It's a big project that we paid too much for (in my opinion) and I'm looking to improve with each new property we purchase.

I think we did one thing correct in that the first house is solely owned by me and the second is solely owned by Stephanie.

Anyway, I'm looking forward to learning and growing as part of the Bigger Pockets community.

Thank you!

Dan