All Forum Posts by: Dolores Waldron

@Kevin Siedlecki, yes and thank you !! I couldn't see clearly and was getting confused.

This one just doesn't make sense, the rentals are on the conservative side but even so.

Appreciate your input.

Hi BP Members,

Here is BRRR analysis report and I'd appreciate any feedback on it.

2 family property.

Asking price was 175K cash but owner has come down to 125K cash

ARV is 220,000

Repairs $60,000

2 x 2 bed units will rent at $650 conservatively

I have done an analysis using Hard Money to do a cash purchase at 125K and 3 month rehab and then refinancing after a year at 70% of the ARV of $200,000.

I need to get a better grip on my purchase and closing costs so they maybe off - if anyone would like to advise if I can use a % on that?

Anyway, at this price the deal still doesn't seem to make sense.  What purchase price would make this a good deal and why? I appreciate any advice, still getting a handle on understanding these reports and what would makes a good deal.

https://www.biggerpockets.com/calculators/shared/7136/cf8f7ae6-5a6e-438d-8e0c-a135b10f27a2  

Thank you for any advice.

Dolores

@Tom Knapp, A, B or C is referring to the class of the property, each property classification reflects a different risk and return because the properties are graded according to a combination of location and physical characteristics. These letter grades are assigned to properties after considering a combination of factors such as age of the property, location of the property, tenant income levels, growth prospects, appreciation, amenities, and rental income. There is no precise formula by which properties are placed into classes, but here is a breakdown of the most common classes, A, B and C. 

Class A: These properties represent the highest quality buildings in their market and area, generally higher income earning tenants and low vacancy rates.  Class A properties are well located in the market and typically demand the highest rent with little or no deferred maintenance issues.

Class B: One step down from Class A, these properties are generally older than Class A, tend ot have a lower income tenant and rental income is lower than Class A along with some deferred maintenance issues.

Class C: Typically located in less desirable locations.  The property is generally in need of renovation, including updating and the building infrastructure to bring it up to date.  As a result, Class C buildings tend to have the lowest rental rates in a market with other Class A or Class B properties.

I also meant to ask @Tom Knapp, are the properties you are looking at considered A, B or C class properties?

@Tom Knapp, thank you for sharing, I know you should probably add in a few more fixed expenses: vacancy, property management, repairs and maintenance, cap ex but even with those the spreads look very favorable especially going with the traditional 25% down for investment property.  Did the realtor discuss projected growth in the area or is it just strictly cash flow you are looking at?

@Stephen Renehan, would you be so kind to share your experience as a landlord in this area, what do the rentals look like for 1, 2 or 3 bed units,  how much do they differ between streets?  Is it mainly renting to students in this neighborhood and if so what has your experience been with maintenance of these units upon turnover? Do you self manage or use a property management company and what has your experience been with them.

As I am learning about these different neighborhoods that seem to have very favorable cash flow spreads there are many that do not offer appreciation and am curious what are people's thoughts on that. 

Hi Tom, 

Welcome to BP, you will find so much information in this BP Community!! We are also looking at cashflow multifamily but in our neighborhood it's not possible around Boston, MA. Would love to hear what you have explored in Providence, RI that's turnkey? Are you looking on MLS, what are the prices and rentals on the turnkeys you have researched? Thanks for sharing !!

Dolores

Congratulations @Willow T. this is a great story !! I too am blown away at how cheap the rehab is, in MA where I live it is very difficult to get rehab pricing like this.  You are very gifted with interior design, any tips on learning this? would love to have this eye for detail.  Thanks for sharing !!

@Nick Newsome, I am Interested in 3 family plus would love to meet on this. Did you buy your triplex using owner financing or something creative? I am not familiar with pricing in Springfield, can anyone share some info on FMV's for multi's , rents, cash in cash return?

Thanks !!

Thanks @Scott Hollister - really appreciate your advice !!

@Scott Hollister, thank you - you pose some great questions that I hadn't thought about ...

 The triplex is rented and bank is selling as-is without no showings of inside of building and have asked not to disturb tenants that's why I was thinking they may entertain a lot less as it's very risky to take on, my estimation on rehab is purely cosmetic and I used it for calculation purposes as I do not know the inside of the property which I think is very risky ...

When looking to do the refi on a BRR - particularly a triplex is it best to go with a commercial lender? 

Thanks @Brent Coombs - yes, I have no doubt they know how to crunch their no's ... and thank you .. yes, getting all money back would be the idea...

Thank you for your valuable input !!