All Forum Posts by: Dave Lawrence

Hi Caleb,

Good for you! Nice job being conservative on your maint and CAPEX numbers. Hopefully you won't have anything pop up after your $8K freshening.

One question: how confident are you in getting that kind of rent? I know nothing about the area, but when I did a hotpads search, it seems like your rent projections are towards the outer limits. I saw on hotpads where a 4/2 at 260 Churchill Way Mcdonough, GA 30252 leased last sept for $1200/mo? May be inaccurate, but... I searched your zip code, filtered 3/2s, price range $1250-1600, then sorted by most popular. Most of the top homes that came up were sub-$1400, except this one: 4115 Springvale Way Mcdonough, GA 30252. No garage, but has pool, clubhouse, tennis courts, etc. It has a 50%-plus contact rate, which I've (anecdotally) found often indicates it'll be rented in 2 weeks or less.

I think you're right to shoot high initially, but "Semper Gumby," especially with the start of the school year bearing down. If you get few/no nibbles after 10 days or so at $1450, I'd immediately drop to $1395 and see what happens. Good luck! 

Granted those pics aren't super-high res, but the place looks cute as a button. You mention cabinets needing replaced. But I also see stainless appliances, stacked w/d, subway tile backsplash... Why not just do a decent, cost-effective refresh of the cabinets and call it good? What are your reno plans with that $15K/

You're also pretty tough on yourself numbers-wise: I see you've included the $500 lease fee in your costs, and assumed an 8.3% annual vacancy rate. Will it turn over that frequently? And $1164/yr for insurance? What are your deductibles? That seems quite steep... Finally, you're factoring in almost 20% monthly for maint and CAPEX.

No one will ever accuse you of being delusional about your properties :) The trend in this thread has been for you to dump it, but just thought I'd throw these observations out there... I've never been to that area, but if, as you say, you're in the path of progress already, why not see how it goes? 

Fluid dynamics and The Divine Comedy... Phew! Bonus features in this thread....

My money's on the Marine :)

I have a couple of SF properties in HSV (I'd been stationed in Montgomery some years back, but made a trip to Huntsville last fall before investing). I suspect I know where you're looking, as I've reviewed several MF properties there. I couldn't get the numbers to work for me on those, but that's just me. And if (I have a hunch) you're working with Bert Klimer, you're in great hands. Very happy with that guy: conscientious, affable, available, knowledgable.... I use Rocket City as my PM; I'd winnowed it down to them and Golden Rule... Good luck!

I have 9 properties in Charleston SC and Huntsville AL, all SF. I've had family in Charleston for 20+ years and am quite familiar with its pros and cons, etc. I'd heard good things about Huntsville last year, and started looking into it (online research, talking to realtors, and eventually making a trip last fall), and pulled the trigger on two properties earlier this year. 

I'm looking at Lubbock TX and Lexington KY next. Wife and I rent in downtown SB, and REI is a side hustle only at present

Charleston, South Carolina that is...

Also would be interested in a flooring contractor.

Hey BP peeps,

I'm purchasing a property in the Charleston area (Goose Creek, specifically). Can anyone recommend a good painting contractor? Thanks!

Dave 

Thanks Ramel. You make a great point. Will sit on this one a bit, and pursue other opportunities as they arise in the interim. 

Thanks Charlie,

I should have been more clear. I didn't intend to make money right away, per se, with the refi strategy when I said "do it again." I was hoping that a cash deal would have enabled me to get the properties at a slight discount. The incentive for the seller (who's already had one deal go south b/c of buyer financing issues) is a quick close during a slow time of year and no bank headaches. You never know how eager a seller is until you ask. In this case, I'm learning he's not very eager.

I'm quite confident the properties will appraise between $130-140; if I was able to get it for $120k and they appraised for $140k, I would have had instant equity, and would be able to free up $105K or so (assuming 75% LTV), which I could then use to do another cash deal that I have my eye on.

OK so here's my situation. I did a cash-out refi on a property 2 mos ago, took out $100K, then went house shopping in another state.

I found a 3-property deal down south in a growing market. List is $145K for two duplexes and a SFH, which lease for $2125/mo total. All utils are in tenants names, and rent rolls indicate they're decent, blue collar tenants.

I offered $120K cash. They came back with $145K. I offered $130K cash. They came back with $145K, though they'd be willing to carry the extra $15K at 5-6% themselves "for a few years until it's paid off or until I refi."

I'm no quant, but I can run basic numbers. My gut reaction is that doesn't make sense, that I'd rather just do conventional financing at that point. I'm not 100% convinced the properties would appraise at $145K, in which case I'd be under water from the jump. 

My thoughts, in no particular order: 1) walk away; 2) conventional financing at their asking price, understanding that if the properties appraise under their asking price I either bite the bullet, they come down, or I walk away (and am out the cost of three appraisals). 

The third option I'm considering: agree to their asking price, but they'd have to carry the extra $15K for 3 years at 0%. I feel that moves a bit of the risk off me. My intent all along was to refi these and pull cash back out and do it again, but...  

Thoughts from the pros?

Good morning BP-ers. Long-time lurker, first time poster. I love the generosity and expertise of this site!

I own three OOS investment properties, all SFH. I purchased "Property 1" in 2013 for $135K w/o doing any meaningful analysis, and got kinda lucky. I financed with a 15-year note. It cash flows, but barely. On the plus side, it's been vacant for all of about 10 days in the 3 1/2 years I've owned it, and no CAPEX to date. Currently, comps in the complex are going for about $200K. I have $55K remaining on the note, so call it $140K in equity. Current lease expires June 30.

I’m thinking about 1031-ing this property to capture some of the appreciation it's seen, and to take better advantage of leverage (rent increases have not kept pace with home value increases in this area). I was inspired by Swanny’s post from a few weeks back. There are a couple of MFH possibilities I’m considering:

1) a quad, potentially with some deferred maintenance. Current tenants are under-paying, but 4th and final tenants rights expire June 1. With a pro forma cap rate of about 7.5% (using very conservative projections with the BP rent calculator and with an excel spreadsheet that I now use when vetting investment deals), it should cash-flow at about $430/mo. Downside—if this was the only property I’d be doing with the 1031, I wouldn’t be taking much advantage of leveraging. Assuming I sell Property 1 for $195K and buy this quad for $220K, I’d only be financing $80K.

2) an 8-plex, new roof w/i the last 7 years. Priced at approx $570K, listing indicates that it’s fully occupied at market rates. Pro forma cap of 6%, CoCR 7.7%, cash flows of $900/mo (assuming I put $140K down via 1031 and finance the rest)

Other details: I have not yet formed any LLCs or land trusts, etc. for any of my properties, though I do have an umbrella. I am thinking I should form an LLC, then prepare a grant deed for Property 1 and transfer the title from myself to my newly formed LLC before initiating and 1031 actions. Will I have to secure commercial loan for an 8-plex? Will the sizable equity from Property 1 enable me to get a commercial loan? Obvs, I know very little about commercial.

And what's the best way forward for the other two properties in my portfolio (which I've held for less than a year): land trust, then LLC? I want to avoid triggering due on sales, but also want to keep my powder dry.