All Forum Posts by: Derek B.

I'm with you. I guess my sarcasm didn't come through. I actually posted several pages ago on this topic that this is precisely why many TK operators advertise cash flow and CoC, rather than IRR. IRR is low or negative and no one would buy if they knew the true irr. The west coast $$ is trying to get in the game and they aren't stopping to think about how they will get out of the game.

And I agree with you. CF only looks good on paper. 

But why would I care about IRR? I am buying it for "cash flow". :-)

@Heather Ippolito I like it a lot better than the HOA situation you were considering.

What class property/neighborhood is it?

23 year old house....yes, you will probably need a new roof this decade.  When was HVAC replaced?  I assume it has original kitchen (likely not original appliances) and bathrooms - will you have to update them to stay competitive with the market?

Insurance does seem high.  I recommend you talk with an Erie agent.  Others here are using other companies...post a topic in the insurance forum and include the county and you will get some good leads.  My experience the captive agents (Nationwide, State Farm, etc) are not competitive).

I know others disagree, but I think PM will be higher than 10%.  You will pay 1 months leasing fee, then 10% rent.  You may pay 1/2 months renewal fee, etc.

So is it a good deal...depends?  What are the comps on the house?  What's your exit?  I

It's not a high return when you don't leverage, but I understand it's personal preference and that was unpacked in your other thread.  

 I'd vote for this post twice if I could.

@Chris Martin  They own 539 houses in Guilford Co assuming I have found all of their entities, both holding and borrower.  It looks to me like most of what they bought here is the circa 2000s tract housing that was thrown up (literally) by the national and regional builders, many of whom are no longer on the scene.  Not surprising I suppose - these developments brought in a lot of first time, no $ down buyers and now AH is buying them foreclosure.

From what I can tell, they have only executed one DoT in Guilford:

3/6/15 - $552,830,000 - 144 houses - average borrowed of $3.8MM / house!!  My guess is that these places are each worth 140k +/-

Interesting that the amount they borrowed in Wake Co on that final loan is the same as the one in Guilford.

For what it's worth, uncles, former neighbors, fraternity brothers and poker buddies of law/code enforcement also have access to the legal system from the back side.  

I think both Jay and K Marie alluded to this earlier and I am still trying to understand:

These were bought 5 years ago with no $ down but they were bought with an equity position.  That 25% equity should be at 28% or more by now. The OP, in theory, should be able to list on the mls and sell. If only investors and TK are offering, then these are C class or lower I presume.

Did the market there erode away the equity position?

Was the appraisal too liberal?

This story remains an excellent reminder to check and recheck your exit options, actual value based on a willing buyer who can perform (even if the only buyers are investors), and as I have said before, your expected IRR - not just cash flow or CoC. You have to factor consider IRR which factors your exit value.

And this is why so many TK operators focus on cash flow and not IRR in selling their product. If the OP buys turn key at retail and there is no exit other than investors at a discount, then the IRR is negative or paltry comparedd to other investments.

@Henry Sims  great job on the house. A few things to satisfy my curiosity?

1. What all did you personally do and how long did it take?  I gather from the thread that you gutted and redid bathrooms and kitchen, painted, popcorn ceiling (you are more of a man than me), brush and trees, subfloor and sister joist?  What did I miss?  How much time do you have into it?  200 hours?  More/less?

I am a big fan of sweat equity and the opportunity it provides and curious how much time all of this took.

2. You mentioned a/c problems. What happened?

3. Would the footprint of the 1/2 bath have supported conversion to full?  Curious on opportunity there?

4. If you chose to keep it, what kind of rent would this house in its location bring? 

Here's to a quick sale!

@Heather Ippolito  fair enough...i know a lot about this state but nothing compares to someone living in their local market and the perspective that affords. Glad to hear that you are not Out of state and considering an area that you don't know. Best to you.