All Forum Posts by: David Hildebrandt

Thanks so much, @Neil Henderson

I agree with @Kevin Sobilo. But, no reason to get all fancy, just flip it! Can you take out a heloc on your private residence and use that as downpayment for flip financing?

$250K ARV - $140 Purchase - $25K Rehab = $85k - $15k Commissions = $70K

Carrying costs, utilities, taxes etc will lessen your profit, but it fits the (70% of ARV - Repairs) formula in terms of purchase price.

Can you get it for less that $140k? @Vandale Gentry

No, that's not how hard money works, that's where the traditional banks play.

You are looking for a bridge loan essentially, something that will bridge your project to traditional financing.

Bridge Plus from Lima One Capital as a for instance

The spirit of the BRRRR is two loans:

Take your hard money to do your rehab, they will finance a portion of your repairs as well. Do your rehab, and put your tenant in place. Rent it for 6 months (time frame may vary) then go to your bank that has your current investment property loan and tell them you want to take out new debt on this new property. That will pay off your hard money loan and you will start your 30 year loan like you are used to doing. Only this time with a boatload of equity and little to nothing out of pocket.

If the numbers you propose can be substantiated, go get a hard money loan. Tons of places out there that will loan on fix and flip, some up to 85%. You might pay more in interest, but for that kind of return it will be worth it.

https://www.biggerpockets.com/hardmoneylenders

Others exist like Lima One Capital, Corevest etc.

Normally I would say to get a blanket loan at your current mortgage provider. They can wrap both properties up in one mortgage and spread the equity across two deals. However most lenders of that ilk will not go for houses straight out of probate.

I just want to clarify my input. I have 10K buffer on 9 unit, 7600 sq ft building. I don't think you need that much for what you are talking about.

Cash is literally the worst investment ever, as inflation is GUARANTEED. So what your 20k will buy today, it will not buy 10 years from now. Therefore, putting your money to work is definitely a good idea. Could you use some of that money to buy a note, or a portion of a note that finances a flip for a fellow investor. Something short term, with a 12 month payback that is secured by real estate should you need to foreclose. Then if you had an emergency repair you needed to finance, at least you know that capital would be returned to you in the short term, and is earning a nice return, usually 8 to 12 percent.

Just went through this scenario on a 10 unit deal I did. Assuming they are all on expired leases aka month to month I would just have a human conversation with them about the scenario. Let them know you are going to occupy the unit and bring in an old tenant. If you are going to up the rent, I would certainly give them the chance to stay if they agree to pay that number. Work something out person to person that allows them enough time to find a new place, and you to get settled. If they refuse to move, then the 30 day notice can come into play.

I would not sign a new month to month, assuming your state defaults to month to month an expired lease agreement. I would not sign anything new, other than an agreement with a date for them to move out.

I have not conducted new background checks in the past, although that is probably a good policy for month to month tenants. In our state, if they are on a current lease, I couldn't remove them until expiration even if they didn't meet my standards.

Different people have different goals, Adam. A lot of people do take the approach you have, as single family is the most tangible way to start out, most people are comfortable in that arena. If your goal is a retirement asset I think you are well on your way, especially if there is any chance for appreciation in the property your purchased.

Congrats on your first deal, a lot of people never actually pull the trigger. I think there will be a lot more out there for you if you keep in touch with these forums.

Now for my bad news, I would never do a deal that costs me money each month. There are too many good deals out there to take a lesser one, just need a bit of patience or a bit more marketing to find it. Just remember the money you are paying each month to make up the difference has to be considered a cost input in your ROI calculations. So assuming you lose $100 per month, the bulding cost you $47,000 down...plus and additional $36,000 over a 360 month term

What is the house worth...whats the ARV?

If you factor in 15% for vacancy/maintenance/cap ex you are clearing $130/mo. Which on $7K upfront isn't bad, but if something goes wrong so does your profit.

Post your job on Thumbtack.com get some guys out to measure and compare quotes, negotiate with whomever you like best

I own a few multifamilies and certainly understand valuing an existing building, or in this case business on NOI. My questions revolve around converting an existing building to Self Storage.

How do you assess the market viability of adding self storage to an area?

How many self storage units needed to satisfy a certain population?

Traffic count a must, or online presence somewhat negates that need?

What ball park of income can you generate/sq ft of conditioned storage space?

$1.8M Building we are considering is 100,000 sq ft, but really divided up into two distinct portions, the original single story 50k sq ft footprint, and a new two story addition at 27k sq ft per floor. The reason the deal interested me is the seller wants to stay on as a tenant in the two story section for 24 months, which, in theory would allow us the time to retrofit the other 50,000 sq ft to conditioned self storage and hopefully our mortgage is covered.

I understand the situation will vary based on rents, occupancy levels etc. I am just trying to learn how to do the big round estimates on a project like this to know whether I am crazy to pursue it.