All Forum Posts by: Eddie Gonnella

@Matt Carozza To answer your specific questions: 

• You should be able to pull out 75% of the equity if you own it in your personal names
• It's nearly impossible to predict rehab costs by the square foot, but based on what I'm doing in the area, if you do need a full gut like mentioned, I'd count on at least $125,000 for a house that large that is that old
• Find a mortgage calculator and plug in your numbers. Look up what the interest rates are these days or better yet talk to a banker somewhere. I look for rents to be 2x the mortgage principal + mortgage interest + insurance + taxes as a rule of thumb. This is called the 50% rule

Hi @Matt Carozza! One thing I would recommend is digging into some of the BRRRR resources that are available here on BP. The most recent 2 podcast episodes are great and all about BRRRR. There's also a few BRRRR specific episodes a little further back on the BP Real Estate Podcast. Here's a good blog post too: https://www.biggerpockets.com/blog/brrrr-strategy-real-estate-investing

As for this particular deal, it is definitely more complex due to your family relationships, but I completed a fairly similar transaction last year as my first deal and it did help me to get started. Mine was not as extensive as an 1800s Church Hill revival though. 

My recommendation would be to get on the same page with your family member and find someone else to get involved here that has more experience and cash to complete the deal. If you/they really do have that much equity in the property, you should be able to find someone who is experienced and would be willing to partner with you on this. You and your family member can make some money, see how this all works and not really have to do much at all besides watch. That's what I would try to find, unless you have a lot of cash sitting around and really want to get a master class in rehab. 

Eddie

@Jonathan Scheeler Hey Jonathan! What makes you think you are doing something wrong? Seems like you're off to a good start and just need to put in more offers on more properties. Let me know if you want to chat Richmond! 

Anyone doing these cashout refi's with rentals owned by an LLC? (So not fannie/freddy - need commercial). We have been turned away from many banks local area and national banks alhough we still have a couple leads that are promising but nothing locked in. We work with Lindy but FoA's rental loan for LLC owned properties is still closed.

@Joe Van

Congrats Joe! Cool and seemingly simple flip project. Was this your first deal? Where abouts in the state are you? What’s next? Would you say that this is the budget it takes to rehab most mobile homes or could costs increase if it wasn’t newish already?

@Fan Bi

“Back of the envelope” numbers don’t play well in Central Maine in my experience. Three reasons:

1. Houses are very old. Need to increase both maintenance and CapEx budgets to be accurate

2. Utilities are often covered by the landlord other than electric. This is a significant expense if the property is not separately metered, which is rare for heat costs which is the biggest expense

3. Taxes are high relative to other areas especially south and west if you are used to analyzing deals in those areas of the US

These factors, especially the utilities set up really mean you have to dig into every property to see how it’s set up.

I’d be happy to share some example numbers if you are interested, reach out!

Eddie

Here are the photos!

Fun:

Before and after:

Professional photos:

Our property is finally on the rental market! Here's an updated review of our current financial results: 

• Purchase price: $95,000
• Closing purchase costs: $8,000
• Rehab costs: $41,000
• Holding costs (interest, utilities, taxes, etc): $5,000
• TOTAL COSTS: $149,000
• Target After Repair Value (ARV): $215,000

For rehab, while we will do some of the work ourselves, ideally we are outsourcing all of this to contractors so that we can focus on the business side of the project.

But we have to have some fun ourselves! 

So now that rehab has been completed, what's next?

1. 1. Buy
2. 2. Rehab
3. 3. Rent: Currently have the property posted on Zillow and some other rental software.
4. 4. Refinance: We are actively searching for a lender to complete our refinance out of the short term line of credit. We would like to find a long-term loan at a lower interest rate to help us keep the property as a buy and hold.
5. 5. Repeat: If we can hit our target ARV of $215,000 then we should be able to refinance out all of our initial costs and get all of our cashback to do another deal. We still think Richmond is in an excellent position to keep growing so we will continue to buy in this market right now as long as our BRRRR numbers check out!

Here are some before and after photos:

And finally, here are some of the professional listing photos that we had done. Well worth the $300 investment in a good photographer.

@Charles Frankenhoff

Hi Charles,

There are 3bd and 1ba!

Appreciation has been great and there are 6 flips within .25 miles so I’m excited to see how those go and if they bring up values again.

Right now I rent two of the rooms and collect around $850 in rent plus utilities, I live in one bedroom.

I think both of these tenants are getting a steal right now and I had a lot of interest when I posted it.

There’s a very similar property at 5208 Rockland that is trying to rent around $1400 and it hasn’t yet gone off the market so maybe $1400 is a stretch a bit right now?

Not sure, my place is almost brand new and I think once Veil is finished rents will go up.

Worst case I think I could rent by the room for at least $1300.

Where are your properties? Are they in this street cluster? Things do change quick if you go south or east of me pretty fast for the worse.

Eddie

@David Marshall Congrats! This is awesome looks like a great BRRRR deal and I couldn't agree more with the philosophy vs a flip.

Is this your first flip? What were some of the others numbers such as Bd/Ba, sqft and rent? 

If you have it, would love to see how the rehab budget vs actual came out for the various line items! I'm currently set to close on a auction property that we were not allowed to see inside either. So had to do the same estimate of rehab from exterior photos only. Tough!!