All Forum Posts by: Don Petrash

@Aaron Montague

Still working on it! The wholesaler has been very reasonable, and agreed to sign a new purchase contract with the seller giving both an extended period to close (mid Nov), and a few more weeks to provide financing details. I have been very honest about the fact that this will be my first multifamily property, and so far things seem on track. Right now I'm finalizing financing options, planning for inspection and appraisal, creating a new LLC for the property, and sorting out my process in Buildium so I can quickly adjust to a larger rent roll when the time comes.

Always open to advice, thanks for checking in! 

@Jill F. Good questions!

Property taxes are minimal, $1313 last year. Alabama is inexpensive!

The only owner provided utilities are a set of washers and dryers, everything else is individually metered

The property is not in a flood zone.

Hello, BP! 

This 8-plex in Alabama looks like a great deal to me, and I'm interested in feedback from the gurus out there on the details.  Link posted below.

Each unit is 2 bed / 1 bath, renting for $450/mo.  The owner has not raised the rents in a long time - I could probably increase rents by $50 with no work, and $100-$150 more after some updating and repairs.  My agent did a walkthrough last week, and the units we saw were in good shape.  Looks like a single metal roof for the whole property.  2-4 of the A/C units are new; at least 4 are decades old.  The property was built in the 70s.  

The seller is asking $310k.  I'm planning to offer $300k.  Anticipating value add after 5 years to $400k.  (Valuing the property is where I could use some sage advice.  I'm not sure of the area cap rate). 

All tenants are on month-to-month lease extensions.  All units are occupied, and all tenants are currently paying (even during COVID). 

https://www.biggerpockets.com/...

Let me know if the link doesn't work, and thanks for your time! 

-Don

Portfolio question:

How can I acquire a portfolio (5+ SFHs) and then refi into individual, conventional loans? The commercial loan (5.5%, 20 yrs) will be significantly less cash flow than conventional. Are lenders open to a commercial loan with a 6-12 month balloon, for quick refi?

Details:

Portfolio includes 5 SFHs and both sides of a duplex

All numbers are monthly

$4495 total rents

$449.5 mgmt fee

$193 tax (monthly)

$235 insurance (monthly)

Properties are in Alabama. All units occupied for long term; the mgmt company will remain for the duration of each lease.

Asking price is $499k. I haven’t decided on an initial offer yet. I have a partner in town who can have their name on several of the properties, so we can have up to 8 conventional mortgages.

A drive-by of all the homes show they are in reasonable shape for the exterior; no obvious roof damage, reasonable curb appeal. Probably paint and carpet on the inside of most units, planning for significant capex on 1-2 (HVAC, plumbing, misc)

Open to all thoughts and comments.

Hello BP!

I am investing in the DFW area, and still searching for the right property to BRRRR.

One older SFH could also be a duplex, but the square footage would need to be increased to make a reasonable deal. This would probably include foundation and/or architect work for a top-to-bottom rehab, ballpark $110-$150k.

To make a good deal, I’m assuming you look for good “bones,” where the remodel can be limited to kitchen, drywall, paint, floors, etc. Has anyone had luck with more significant jobs?

This is great feedback, @Tim Herman!  Thanks so much! 

Also interested!  

View report

*This link comes directly from our calculators, based on information input by the member who posted.

Questions

1) Does the calculator allow me to roll the costs of the rehab into the initial loan?  

2) I think a high appraisal is desirable in BRRRR because it allows investors to pull more capital out from the gained equity.  But assuming a strong appraisal and 75% LTV for the refi loan is actually hurting my cash flow, because the expenses become too high.  Am I missing something? 

@Michael Kaufman

I know this is an older post, but I’m looking for contractors and referrals in Dallas. Would you mind sending me some info?

Thanks-

I'm evaluating a portfolio as well, with the same question. I understand cash flow versus debt service, but with a portfolio, I think it goes a little deeper than that. Things I'm thinking about:

• Are all of these homes in the same neighborhood, with similar comps? If not, make sure you check the different comps to correctly price before you buy.
• If the homes are being sold “as-is,” how will you plan to utilize them? Normally I would consider an immediate flip for better cash flow, but that becomes prohibitively expensive and complicated for several homes at once. Furthermore, even if you have the best contractors in the world, they can only work one house at a time.
• With several homes in the same neighborhood, external factors can disproportionately affect your rental income and/or ability to get renters in the homes. Is there new construction in the area, especially industrial, which might adversely affect the value of the homes? Is there a farm or a plant nearby known to blanket the area with undesirable odors? (e.g. my hometown, with a margarine factory).

For me, I am hoping to convince the seller to carryback a note for 3 years, so I can build up some equity, but otherwise will have to go through the process for a commercial loan.