All Forum Posts by: Derek DeVerna

@Christopher B. This is my house hack. We are about a 2 minute walk from each other. I mail your entire street for multi family deals. I would buy all of Torrance if I could. 

@Anthony Liguori If you look at the Lewis house on my profile page you will see the next BRRRR in the queue. We are in the Refinancing stage of this project, which is always my favorite part. Check out my profile and shoot me a personal message/colleague request if you would like to connect. Have a nice Tuesday.

@Michael P. Hahaha won't that be the day! Can't believe I made it out myself. Lets hope for an influx of inventory as we move into the warmer months. 

Thank you @Zeke Liston. Great name by the way, especially with your being from Columbus. Zeke Elliot may be my favorite RB of all time and I absolutely have his jersey.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Toledo.

Purchase price: $35,000

Buy - July 15th, 2019 for $35K with $7,784.45 down
Rehab - Costs total $25,938.56
Rent - Was fully stabilized to begin with, but we lost one tenant. We therefore rehabbed the unit and raised the rent. Duplex is now renting for $1,150 total with a coined laundry system and one of the tenants paying 1/2 the water bill.
Refinance - January 24th, 2020 pulling $36,581.60 out of the deal (yes, this is more than I had into the place).
Repeat - I have already purchased my next building.

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

I am always looking to invest in BRRRR deals, as I believe that they are the most efficient way to put one's capital to good use.

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

I found this deal on the MLS and represented myself as the selling agent.

How did you finance this deal?

I financed the initial purchase through a small/local bank and the rehab with cash. I refinanced this deal with my normal lender out of Cincinnati into a 30 year conventional loan.

How did you add value to the deal?

New roof, gutters, appliances, flooring, paint, exterior work, detached garage work, and a ton of landscaping.

What was the outcome?

I was able to pull all of my cash out and then some during the refinance portion of this project. I currently cashflow over $600 before any maintenance (which is low given all of the repairs that were made). $600 per month after re-harvesting all of my initial capital out of the deal. I believe this would classify as infinite return on investment?

Lessons learned? Challenges?

It is possible to harvest more capital from the refinance than you have into the project. This can also be done when financing the initial purchase, thus paying two sets of lender/closing costs.

Purchasing a building with tenants already in place allows for one to cover his or her holding costs on the deal, as well as some rehab costs.

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

I represented myself as the selling agent, worked with my normal lender on the refinance, and used mostly my own crew of contractors to complete the necessary rehab work.

I have a theory on this subject. Those landlords or PMs, whom have solid relationships with their tenants will be paid on time, while the landlords or PMs, whom take 3 weeks to return a call or fix a hot water heater are less likely to be paid. I manage a total of 25 units here in Toledo, OH for mostly out of state investors. I am proud to report that all 25 of these groups/individuals paid their rent on time. I also own 17 units myself. In this case I have been paid in full by everyone, but 3 people. Two of these are newly inherited tenants that likely weren’t treated with the best service from the old owner. With this being said, two of these three people have paid half rent, while one has not paid any rent.

The tenants that still owe have until the 15th to pay and I am waiving the late fee. If I do not receive the rent by the 15th, then I will begin the eviction process. At the end of the day everyone has bills, including landlords. To simply let people utilize our buildings to self isolate for free during these times is absolutely ludicrous. We can try to help where possible, such as letting them have until the 15th to pay. However, there must be a hard line drawn to prevent tenants from taking advantage of the situation.

@Sharad M. I have no interest in using this forum to vent my frustrations. I simply wish to make the Bigger Pockets Community aware of my experience. Hopefully after reading this post someone will avoid making the same mistake that I did. 

@Brad B. Lets presume that all of Sharad's points (1-5) in his above post are true. I would dispute this, but lets presume he is telling the truth nonetheless. Please notice that he does not dispute owing me commissions earned on acquiring deals that his company profited on. I would not choose to do business with someone who treats his or her employees/contractors this way. 

I have been an avid fan/listener of the BP podcast ever since I decided to jump into real estate directly out of college nearly five years ago. I look forward to podcast releases on Thursdays and have listened to most episodes multiple times. For this reason, I was extremely excited to take a job opportunity presented to me by Sharad Mehta, guest on the Bigger Pockets Podcast Episode #155. I had listened to this episode before and it sounded like he had an awesome business that any real estate investor could learn lessons from.  

I excitingly accepted this job opportunity in late 2018 and relocated to Northwest Indiana from Cincinnati, Ohio on January 1st, 2019. It is important to note that this was an all commission opportunity and I did not know a single person, much less the market in NW Indiana. 

I quickly noticed that the opportunity that I was presented during my job interview was not consistent with what the actual work entailed. Nonetheless, my prior wholesaling experience allowed me to land a $36,000 profit deal for the company within my first month of employment. The commission associated with this deal took Sharad Mehta three full weeks to pay out after the property closed. This was obviously unacceptable, as I had relocated my entire life and was hustling every day to find deals for this company. 

Despite this major read flag, I pushed on and was able to aid the company in acquiring a few more investment deals. Eventually I felt as though my time was better serviced working on my own business and decided to part ways with the company. This was a mutual decision made between Sharad and myself in the beginning of March 2019. We agreed that it was fair for me to be paid on any property that I helped the firm acquire when they resold the asset. This was also the commission opportunity from the start - Paid X% profit once any property I acquired was sold.

To this day, the only full commission that I have received was from the first wholesale deal. This is despite an agreement and multiple attempted calls, voicemails, texts, and emails. I also learned that Sharad's right hand women, whom was the most crucial person in his business (Sharad does not live in NW Indiana) left around the same time that I did and for very similar reasons. 

This entire experience has left me wondering how many other people were taken advantage of by Sharad Mehta throughout his entire story, as presented on the BP Podcast. I was once inspired by his incredible/underdog story. Now I am disgusted in knowing that there were many good folks ripped off in its formation. 

@Calvin Lin I typically post new rental listings on Zillow, Cozy, and Facebook Marketplace. I can tell you that the highest response rate, with the most qualified prospective tenants comes from Facebook Marketplace. This platform is free and I will continue to post my rental listings here. Hope this helps anyone looking to avoid being taxed by the man, or Zillow in this case.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Toledo.

Purchase price: $135,000
Cash invested: $4,000

Four family building located in the Five Points neighborhood in West Toledo. This property was purchased through the utilization of a FHA loan. After seller closing credits and the real estate commission (I represented myself as the buyer's agent), I ended up brining less than $1,000 to the closing table. Before rents are raised I should be cash-flowng a little more than $200 per month to live in the property.

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

Utilizing the FHA loan option to purchase as many units as possible.

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

I located this deal on the MLS and represented myself as the buyer's agent.

How did you finance this deal?

FHA Loan

How did you add value to the deal?

Will increase NOI through a combination of raising rents and splitting water/utilities amongst existing tenants.

What was the outcome?

Being paid to live in a 4 family building in a neighborhood that I actively invest in.

Lessons learned? Challenges?

FHA loan's can be a pain to close. We ended up extending the close date two seperate times in order to close the deal. I would allow more time to close (45 instead of 30 days) when writing any future FHA offers.

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

I represented myself and will do this as many times as possible moving forward.