All Forum Posts by: Elliot Saks

Hi folks,

Looking to close on my first commercial multi-family in Racine.  It's a hundred-year-old six-unit brick building in decent shape in a B neighborhood.  I've gotten several quotes ranging from $2k-6k a year.  Why the huge discrepancy?

In general this area seems really expensive to insure (every quote I get is around $1/sqft for the year, which is nearly 3x what I pay in California) so I wanted to check with some of you folks. The reason for the super high quote is because the "rebuild cost" is somewhere in the $600k-$1mm range even though the building's ARV is like $250k.

What are you paying for insurance?  I know every building will be different but surely $500/month for a 4500 sqft building is too much.  Can anyone recommend a local insurer who will get it right?

Probably 1.2 points for origination and maybe some misc fees.  Probably around $2k.

@John Leavelle Thanks for the input!!

1. HELOC. It's at 6.5% on a 20 year amortization. The house is almost a tear-down and won't qualify for financing til after the remodel.

2.  Holding costs are accounted for in my acquisition numbers.  I may have left out insurance, but the amount is so low it will impact the bottom line/decision very little.

3.  Can you elaborate?  Do you mean roll the fees into the loan?

Thank you Dylan,

I didn't base rehab estimates on $/sqft since I don't know what that costs in the midwest.  Here in CA it's alot more expensive.  Rather I went by line item and estimated on the big ticket items (floors, framing, doors, walls, kitchen, bathroom, electrical, plumbing).  I'm trying to see if this is still a buy in worst-case scenario.  Then if it turns out I don't need one or more of those things, it's a huge win.

I guess my question is, worst case (foundation issues aside), what should I expect to spend rehabbing a completely gutted 1000 sqft house?

I'm fairly confident that with modern upgrades the house will support that valuation and command high rents.

Here's a link to the rehab calculator.

Rehab calc

View report

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

Hey everyone. Looking to do my first BRRRR. I'm wondering what I'm missing. The property in question is near a major midwest city. I'm estimating rehab around $65k. It looks like it's an abandoned flip or "unfinished project" distress as David Greene likes to call it.

The property is in very rough shape.  It's a 2 bedroom in an A neighborhood with a "bonus room."

The good:  new electrical panel, new roof, new windows.

The bad: everything else.  Siding is ok but needs a little repair (probably < $1k).  Interior, half the walls and ceilings are missing (lots of drywall).  Bathroom needs totally gutted and redone.  The kitchen doesn't exist.  My number includes estimate for a total repipe, total rewire, drywall throughout, some framing, possibly adding a wall and closet to make the third bedroom instead of the "bonus room."  It looks like some concrete in the driveway needs re-poured, maybe one/two pads.  Will also have to buy a suite of appliances.  Needs complete floors.  Yard just needs mowed but otherwise looks great.

I do not have information on the state of the foundation other than hoping it's ok.  That sinks any deal for me (I hate foundation issues). So for this analysis assume the foundation is ok.

I've remodeled my own home and am used to California prices, but the Midwest may be cheaper.  Does $65k for an entire new inside (including some systems) seem reasonable?

I don't know what I don't know.  Help me out.  TIA!

Hello everyone!

I'm a 30% disabled vet.  After searching the internet thoroughly, I can't seem to find an answer to my question.  Does the property tax exemption in Texas for a disabled veteran apply to investment properties?  What if I live out of state?

As a new investor in Southern California, I'm on the hunt for a midwest city to invest in where RCR on multifamilies is a little better.  I've been looking in Milwaukee and I keep seeing all these properties that look amazing on paper.  Like an 8-unit in a B area for $250-350k and will cash flow $200/door even after estimating high on all expenses and paying a manager.

There also seem to be ALOT of these type of buildings.  Before I start buying all of them (:D), I thought I'd ask here.  I feel like I'm missing something.  I know nothing about Milwaukee, so maybe some of you know what's going on.  Is the city trending down? Or is unemployment high?  Is there some hidden cost/drawback I'm not seeing?

Hi everyone,

I've been lurking here for a while, but haven't been ready to take action until now.  I apologize up front if this post is disorganized, but I'm sure there are other people who are or have been in my shoes and can offer guidance.

About me: mid-30s, high-paying day job, telecommute and somewhat flexible hours, married with kids, own a duplex in Los Angeles county.  I have access to some capital but probably not enough to invest locally.

I want to build an empire.  My long-term goal is tens of millions in real property and hundreds of thousands a year in cash flow, so that money no longer an obstacle in life.  Not just for my family, but even my community, if I can achieve so much.  I want to leave a legacy of philanthropy.  I'm already known as a generous, hospitable person, but I want to be the guy that can handle any need of any person I know at any time without wondering what the impact to my own finances will be.  I want to care for unwed single mothers and pay their childcare costs.  I want to pay the salaries of people who work hard to make their communities better when the community itself can't afford to pay that.  Enough about that.  We all have our reasons, these are just a few of mine.

You all know LA county and Southern California in general has insane pricing for real estate. Here's my conundrum. I have access to enough capital ($110k cash, $140k HELOC) to make some good deals almost anywhere but here. I'm considering starting out somewhere cheaper, but I don't know where to begin. I hear good things about lots of up-and-coming cities (Indianapolis IN, Mesa AZ, Madison WI to name a few), but I know nothing about those markets, the culture of those towns, the good and bad areas, or even how to find a good property manager over there. Since I don't live in or near those places, I have no idea how to find good deals in those places since I have no network there. Down the road when I'm more comfortable I can see myself going out of state, but I don't think I want to for my first experience.

If I'm totally honest, I'm probably too risk-averse to make my first property(ies) outside of comfortable driving distance (max 3-4 hours), leading me to look in places like the high desert (Joshua Tree, Yucca Valley, etc) or mountain destinations like Lake Arrowhead/Big Bear. I'm attracted to the stability of SFHs and duplexes with long-term renters, though I hear vacation rentals can cash flow really nicely if you get 60%+ occupancy. I'm open to either, or another option if that's more profitable. Flipping scares me because I don't think you can flip properties that aren't local to you, and I can't afford to flip properties near where I live. Not yet, anyway. Honestly I'm way more attracted to buying something distressed in driving distance, put some cash into fixing it, re-fi to 75% LTV, and then cash flow for 30 years.

What would you do if you were in my situation?  Anywhere other than So Cal I'm basically loaded with options, but here I feel barely middle class with zero options for investing.  I'm not willing to move because my family and community are here and frankly, we love it here.  We also have a newborn and would like to remain in our current home with her at least for the next few years.

I'm willing to get creative, willing to get my hands dirty (as in demo/construction, not burying bodies...).  I'm great at money/math/analysis (my day job, senior analyst with 14 years exp), and my wife is a very good creative with an eye for design/aesthetics.  We're both hard workers.  

I admit that I have much trepidation about starting this.  I'm working on getting over it, but need any and all suggestions for alleviating that fear when so much cash is on the line.  Thank you all for reading.  Best,

Elliot