All Forum Posts by: Dan Milinazzo

@Rebecca Duyon it's definitely a market that has grown significantly since my post.  I'm actually supporting one of the larger investors in Gardner, MA right now bring 30 new units to market. Demand is growing a bit and I think there is still a little room to go, but as I mentioned before there are a handful of big players in the market and they have a good handle on the deal flow.  Still a great market for owner occ/house hack, but again it's not a high income area so rental rate is going to top out a bit in my opinion.  Entry point for multis is still on the lower side compared to other markets that have easier access or proximity to strong employment markets.  

Investment Info:

Small multi-family (2-4 units) fix & flip investment.

Purchase price: $109,900
Cash invested: $104,100
Sale price: $250,000

Small 2 family property that was in the same family for over 140yrs (with the personal belongings left behind to prove it). The property maintenance became too much for the seller that inherited it. The original play was to BRRRR the property, but due to some delays with the city that pushed holding costs a bit and with the heat of the market the better play quickly became a disposition and reinvestment of capital into marketing for the next opportunity. It was a great little rehab project.

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

I was interested in this type of deal because the velocity of money in a good BRRRR model was appealing. Being able to recycle the same money numerous times to generate more capital seemed like a slam dunk plan. I was actively looking for good BRRRR opportunities and this fit the criteria in a market that was turning a corner and starting to appreciate quickly.

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

I found this deal through networking with great Investor focused Real Estate Agents! An agent that I had a great relationship with brought it to my attention after seeing it hit MLS and we put an offer in right away sight unseen. We didn't have to "negotiate" it really. Based on my agents knowledge of that market we knew it was a good deal so the strategy was to lock it up quickly with a strong all "cash" offer no contingencies.

How did you finance this deal?

I financed this deal using an Equity Line from another investment property.

How did you add value to the deal?

I added value by clearing the house out of decades (maybe even a centuries worth) of personal property left behind by the seller.
Once I could see the entire floor plan and where the issues truly were we replaced all of the outdated/hazardous knob & tube electrical wiring, updated all lighting to LED, performed some heavy cosmetic repairs to walls and ceilings, added a new soft paver roof top deck off the top floor unit, and modified the use of space within the units.

What was the outcome?

The outcome was that I decided NOT to refinance and hold it even though the numbers would have worked for a BRRRR. Instead it became a great FHA first time homebuyer/househack deal at a time where the market was flooded with that buyer and new investor. Market values continued to climb and while I did not squeeze every dollar possible out of the rehab/upgrade bucket there was still some room on the property for the new owner to force a little more appreciation if they chose.

Lessons learned? Challenges?

Lessons learned and challenges were plentiful. Even though I am a handy guy and a DIY type of person, that is NOT the best use of my time or my families time. I lost precious time with my kids trying to get this across the finish line because of another lesson learned. That lesson is, for a project of this size, its best to have a really good team LOCAL to the deal and not local to you personally handling the rehab. Travel time like that over a few months can burn a crew out in winter.

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

I absolutely worked with numerous professionals on this deal and would hands down recommend any/all of them to anyone considering this type of project. They are not all on BP, but I know if you look up Jon Bombaci you will find one of the most important professionals involved in this deal coming to life along with the rockstar agent that brought it to my attention, Matt Perimian! All other professionals involved basically stemmed off that central/core team with Candor Realty out of Lowell!

Investment Info:

Small multi-family (2-4 units) fix & flip investment.

Purchase price: $109,900
Cash invested: $104,100
Sale price: $250,000

Small 2 family property that was in the same family for over 140yrs (with the personal belongings left behind to prove it). The property maintenance became too much for the seller that inherited it. The original play was to BRRRR the property, but due to some delays with the city that pushed holding costs a bit and with the heat of the market the better play quickly became a disposition and reinvestment of capital into marketing for the next opportunity. It was mostly a clean up job with some heavy cosmetics and a full rewire of old knob & tube wiring. It was a great little renovation project.

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

I was interested in this type of deal because the velocity of money in a good BRRRR model was appealing. Being able to recycle the same money numerous times to generate more capital seemed like a slam dunk plan. I was actively looking for good BRRRR opportunities and this fit the criteria in a market that was turning a corner and starting to appreciate quickly.

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

I found this deal through networking with great Investor focused Real Estate Agents! An agent that I had a great relationship with brought it to my attention after seeing it hit MLS and we put an offer in right away sight unseen. We didn't have to "negotiate" it really. Based on my agents knowledge of that market we knew it was a good deal so the strategy was to lock it up quickly with a strong all "cash" offer no contingencies.

How did you finance this deal?

I financed this deal using an Equity Line from another investment property.

How did you add value to the deal?

I added value by clearing the house out of decades (maybe even a centuries worth) of personal property left behind by the seller.
Once I could see the entire floor plan and where the issues truly were we replaced all of the outdated/hazardous knob & tube electrical wiring, updated all lighting to LED, performed some heavy cosmetic repairs to walls and ceilings, added a new soft paver roof top deck off the top floor unit, and modified the use of space within the units.

What was the outcome?

The outcome was that I decided NOT to refinance and hold it even though the numbers would have worked for a BRRRR. Instead it became a great FHA first time homebuyer/househack deal at a time where the market was flooded with that buyer and new investor. Market values continued to climb and while I did not squeeze every dollar possible out of the rehab/upgrade bucket there was still some room on the property for the new owner to force a little more appreciation if they chose.

Lessons learned? Challenges?

Lessons learned and challenges were plentiful. Even though I am a handy guy and a DIY type of person, that is NOT the best use of my time or my families time. I lost precious time with my kids trying to get this across the finish line because of another lesson learned. That lesson is, for a project of this size, its best to have a really good team LOCAL to the deal and not local to you personally handling the rehab. Travel time like that over a few months can burn a crew out in winter.

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

I absolutely worked with numerous professionals on this deal and would hands down recommend any/all of them to anyone considering this type of project. They are not all on BP, but I know if you look up Jon Bombaci you will find one of the most important professionals involved in this deal coming to life along with the rockstar agent that brought it to my attention, Matt Perimian! All other professionals involved basically stemmed off that central/core team with Candor Realty out of Lowell!

@Reynaldo Rivera I second what @Kyle Curtin said.  I attend the meeting in Lowell regularly and its great.  I am also an investor in Pelham, and look for deals in Lowell all the time where I have a duplex there myself.  We should connect.  I see some duplexes through off-market leads every once and awhile, but they are not frequent these days.  So you have to go get the deals! Happy Investing and I hope to meet you in person at the next Lowell Pints & Properties meeting! 

I love this question. In my opinion it boils down to how fast you can deploy the funds and how much equity you have. As your primary residence if you have a little equity but don't have plans to deploy it right away a HELOC is the way to go and is very cheap to open and in most cases I have seen HELOCs on primary residences can be pretty favorable LTV (80-100%). For instance I did one at 100% LTV through a local credit union. If you have a ton of equity but you know you can put the money to work right away and earn MORE than the additional costs to your current mortgage payment then go with a Cash-out, but its more costly for the closing fees and will leave some more money locked up in equity because the refi is usually a lower LTV (like 70-75%). The alternative option, if you have a bunch of equity, is to do both. I did this on an investment property though not a primary. I was able to do a Cash out refi to the max level I was comfortable with while making sure the rents would cover the new payment and I would still cashflow what I needed to. For the balance of equity tied up in the property I utilized a HELOC to gain access to up to 80% LTV. So, while I still have some equity locked up in the property, I am tapping into as much as I can and I immediately deployed the cash out money for some debts and now I use the HELOC money for investing. Good luck!!

Nicely done!  

2020 part 2: I did not commit to my Direct Mail campaign. I did send out a couple very select letters, but my process of analyzing a deal off the list is extremely time consuming. I thought if I really honed in on the 10 best opportunities that my hit ratio would beat the average of what I see Direct Mail investors posting. That was not the case. It's too bad, there is a great (really run down 3 family) right up the street from me, and my research tells me they are motivated. So why didn't they bite on my Direct Mail letter? I attended every virtual REI meetup I could find just to stay active and see what group(s) would be a good fit. Gotta tell everyone what you are doing, what you have to offer, and what you are looking for. Get the word out, or get lost in the shadows. Back to grinding away at MLS listings and a few off market leads from some wholesalers. Turns out the really good wholesalers can be counted on one hand, and you will still have some fingers left. My name is on more lists than I can count. In fact I am pretty sure I asked to be added to the same list at least 5 times in one situation. Throughout the balance of 2020 I keep analyzing and making offers. I think by year end I had narrowed down 52 leads, fully analyzed 32, toured 21, offered on 13, and I FINALLY CLOSED ON 1. I closed on a duplex in need of rehab that is located over an hour away from my house, and my contractors base of operations. This deal was actually on MLS, but brought directly to my attention from a realtor connection I made right here on BiggerPockets. Matt Perimian of Candor Realty texted me the MLS lead after we walked a couple properties the days/weeks prior. It's didn't initially appeal to me, but the numbers seemed to work as a BRRRR so I made an offer at asking price a few hours after it was live and we had it locked up in under 24 hours. I was able to close on the deal before Christmas, however the closing got pushed back about a week which hurt my original "hit the ground hard and fast before the holiday" plan. So, we had a VERY slow start, but it gave me a chance to pick through the property that had been in the same family since 1880 and there were enough belongings in the house to prove it. I found a few unique vintage/antique collectibles, shared some cool things with family, and brought the rest to an auction house locally. The year is winding down, but I have had my first taste of success. I want to really see this project through. However, it took me all year to get this one deal so I do not want to ease up on the leads/deals/offers so I can hopefully have something else lined up right after this deal is done. How would I fund it though if all my available credit is now tied up on this one property? That's a conundrum.

2020 part 1: What the Hell? You all know how much this sucked. MLS filters were turning up junk. A property WELL outside our parameters pops up for the sole reason that it interested me about 6 months ago as I drove by it and apparently saved it on my MLS search engines. It was pulled from the market and popped back up. I convinced my partner we needed to look at it to recalibrate what "rental" rehab really looked like vs "flip" rehab. Yes there is a difference, and while I would LOVE to do "flip" quality rehab, the market is competitive and we want to hold these, so we need to focus on durable and not flashy while still doing things right. This should help get rehab costs in line. We walked away itching for a big multi like that, so we cracked open the parameters a little, maybe a little too much at first. However we found a property we could both get behind and offered on it. Rejected again! I think our offer lasted maybe 4 hours? Oh well. We almost reacted emotionally and started self challenging our analysis. Thankfully, we compliment each other pretty well and we able to navigate back to chalking it up as another lesson learned. Back to the books. Here's hoping the balance of 2020 produces something we can close. After the last rejection my partner had to refocus on a personal ground up project. So, I am going solo. Find another vey unique REO. Jump to see it the day after its listed. Work up a cash offer (clearly the bank was not using my math, this may be insulting to them). I offer… and rejected. However, found a good realtor and a contact in that market which offered a lead on some financing. With COVID and a lot of summer vacations MLS listings are slowing a bit. So, I decided to buy a list from ListSource. First I map out my 15/30/45/60/90 minute radius target markets and start fine tuning my criteria. Time to try Direct Mail I suppose until MLS listings offer up more.

Not NH, but you did say New England!  I have a duplex in Lowell, MA that runs around 190/qtr or about 65/month. Two 3 Bed 1 bath units. 

In NH I am on well, and while I don't pay a monthy/quarterly water bill, it still costs money for maintenance/servicing/testing.  Not including install costs or well drilling/fracking costs I have put about $2500 into it over 4 years. So if you consider that, it would require setting aside about $50/month to afford the big service/repair bills that might hit you every couple years.  

It's all in how you negotiate the funds for purchase. Let's say you use a HELOC that requires P&I payments. You can either fund those with actual cash reserves, or factor that into the rehab cost portion and roll it into a request for funds with a private lender. If you get purchase funds from a private lender and have some relationship with them, they may allow you to do a balloon payment at the end of the period, but not sure a first time private lender would be comfortable doing that if you don't have a strong established history of success. That way you don't have any debt payments, but your holding costs for utilities, taxes, and insurance still need to be handled so again, you can ask for more in the private loan or use reserves/rehab funds for them.

Personally, I was using a HELOC for purchase and rehab and paying holding with cash reserves.