All Forum Posts by: Gaston Prevette

Donato Law off of battleground has been good to us as well. 

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $225,000
Cash invested: $95,000
Sale price: $300,000

We found this 8 unit through the broker relationship we created on the deal we closed 1 month before.

Property Details:
2- 4 units buildings ( one parcel)
All brick
Concrete parking lot ( ample space for parking)
New roof on 409 Sykes( replaced in 2017 from Tornado)
Roof replaced in 2010 on 407 Sykes
Newer vinyl replacement windows
All units are 2/1 – 800 sq ft
Central AC with Apollo gas water heaters
Washer/ dryer hook ups in all units
5 of the 6 occupied units had newer AC systems ( last 7 years)
Owner pays water
Tenants pay electric/ Gas ( 2 of the current units the owner was paying for Gas/Electric)
Low incidents of crime from last year analysis performed by Guilford County Police
Near bus stops
Close to Grocery/ Convenience stores and local employment
6 of the 8 were occupied
Tenants had Canisters for Trash ( roll ups they had to take up long hill)
2 units were vacant and down to the studs from fire 18 years ago

DEAL DETAILS:
Listed with the broker that was representing us from our last deal with him one month before
Seller wanted $300
Agreed to $225K
6 of the 8 units were occupied
Self managed
$3570 Gross Rents ( less water which owner paid, and utilities for some of the units)
Disinterested landlord who did as little as he could for his current tenants, and didn’t have any desire to get rents to market rate as he owned outright ( he was a slumlord)
Rents were under market between $50-$75/ door
Long term tenants that wanted to stay but wanted to have a nicer place to live and better customer service
Buildings were in great shape being all brick , but the area needed some TLC
Longer term tenants that were month to month
Opportunity to essentially build 2 brand new units and have this be a true 8 unit

Strategy:

Buy Right, Manage Right and Finance Right # WheelbarrowProfits

When we took over end of February 2019 the gross rents were around $3570/month ( less water $270/ month, gas/electric of 1 unit @ $200/ month which equated to $3100/ month and our projections are $5,110 Gross Rents with all 8 leased ( less water for all 8 units $240, no payment of any utilities ) equals $4870/ month Gross rents.

We had property management in place from our other 12 units and worked with them to start managing these 8 units for us as well and help us start repostitioning this property.

Finance Details:
20% down of Purchase Price with built in of Rehab budget of $90K ( $61K )
Closing cost of $6,000
5.25%
7 year Balloon on 20 year Amortization
Interest only first 6 months
Construction Draws provided as work was completed

The value add potential :

We knew that rents were under market between $50-$75 ( in some units) , we could decrease the water expense with ( low flow shower heads, new toilets, actuators in all faucets), we could eliminate paying any additional utilities outside of water for any of the tenants. The real diamond in the rough though was the 2 gutted units, and the ability to create two brand new units for $30K/ each which would dramatically increase the NOI because it would officially be an 8 unit.

Within the first week 2 tenants moved out but the other 4 remained which we didn’t’ expect but was OK because our plan was to rehab all of the units within the first year anyway. We had already built our scope of work before we closed, and had contractors lined up to get started so we were able to hit the ground running. Within in 12 weeks we were able to essentially build 2 new units ( will break that out below) rehab two more units, up-fit the existing units with water saving measures and fix the foundation leak, drainage issues ( another un planned cost) along with giving the entire complex a significant face lift.

REHAB BUDGET and SCOPE OF WORK :
$90K ( built into loan)
$30K for each Gutted unit
$5K per existing unit x6 = $30K
TOTAL Spend was $100K
$4500 for Foundation issues, landscaping, etc

2 gutted units:
new electric- 200 amp upgrade
Blown insulation for attic ( r38)
new sub floor
New insulation throughout
New sheet rock ( 5/8 fire wall for exterior living room walls, kitchen and in stair well)
New 6 panel doors throughout with all new satin nickel hardware
New 6 panel Steel Front and Rear Entry Doors
New plumbing
New HVAC system( all electric got rid of gas)
New Thermostat
New lights
New Hot water heater
New kitchen layout ( removed half wall to open up to living room, built alcove for fridge to increase floor plan)
New white shaker cabinets with hardware, countertops , fridge, stove, range hood
New LVP throughout
New Carpet in bedrooms
New bathrooms ( vanity, tub, enamel over steel tubs, tiled surround, vent fans, vanity lights, faucets, low flow toilets, shower heads, and actuators)
Added 1 new window in each kitchen

Other units: ( completed in 409 B and 407 D ) other units will be rehabbed once tenants move out
New LVP in LR, BR, Kitchen and hallway
New Carpet in Bedrooms
New six panel doors/ hardware
Glazed existing tub/tile
New shower hardware
Low flow water options ( toilets, shower heads, actuators throughout)
New water heaters ( 407 D)
Replaced AC 409 A ( it was 28 years old)
New Fridge 409A
New Fridge 407C
New Stove 407 A
Painted stairwells ( versatile grey) had attractive/durable commercial grade carpet installed on stairs
Installed new lights in stair well and motion sensors in 409
Installed Motion Sensor Flood lights on all the corners
Installed Video Cameras on problem areas
Had Duke Energy replace old lights with brighter LED on two poles
Installed keypad entrance for both exterior stairwell entrances
Cleaned/ repaired other AC units
Fixed any issues with plumbing as needed
Fixed any issues with existing water heaters
Installed new black shutters on both building
Implemented quarterly Pest Protection
Installed raised landscaped beds for 407 ( parking lot facing)
Installed new Numbers for both buildings
Painted all exterior doors black installed new hardware
Painted central mailbox black

We are still actively repositioning this property and will have another two tenants moving out end of this month ( September) but the property has generated enough profit from the other units at the increased rental rate that the business will be paying for these upcoming turns.

Once fully occupied we will have gross rents around $5000/ month which after ( PITI), monthly reserves and the other expenses we have built in will create 17% Cash on Cash for our business.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $225,000
Cash invested: $95,000
Sale price: $300,000

All brick 8 units off market with 2 units down to the studs means huge upside

We found this 8 unit through the broker relationship we created on the deal we closed 1 month before.

Property Details:

2- 4 units buildings ( one parcel)

All brick

Concrete parking lot ( ample space for parking)

New roof on 409 Sykes( replaced in 2017 from Tornado)

Roof replaced in 2010 on 407 Sykes

Newer vinyl replacement windows

All units are 2/1 – 800 sq ft

Central AC with Apollo gas water heaters

Washer/ dryer hook ups in all units

5 of the 6 occupied units had newer AC systems ( last 7 years)

Owner pays water

Tenants pay electric/ Gas ( 2 of the current units the owner was paying for Gas/Electric)

Low incidents of crime from last year analysis performed by Guilford County Police

Near bus stops

Close to Grocery/ Convenience stores and local employment

6 of the 8 were occupied

Tenants had Canisters for Trash ( roll ups they had to take up long hill)

2 units were vacant and down to the studs from fire 18 years ago

DEAL DETAILS:

Listed with the broker that was representing us from our last deal with him one month before

Seller wanted $300

Agreed to $225K

6 of the 8 units were occupied

Self managed

$3570 Gross Rents ( less water which owner paid, and utilities for some of the units)

Disinterested landlord who did as little as he could for his current tenants, and didn’t have any desire to get rents to market rate as he owned outright ( he was a slumlord)

Rents were under market between $50-$75/ door

Long term tenants that wanted to stay but wanted to have a nicer place to live and better customer service

Buildings were in great shape being all brick , but the area needed some TLC

Longer term tenants that were month to month

Opportunity to essentially build 2 brand new units and have this be a true 8 unit

Strategy:

Buy Right, Manage Right and Finance Right # WheelbarrowProfits

When we took over end of February 2019 the gross rents were around $3570/month ( less water $270/ month, gas/electric of 1 unit @ $200/ month which equated to $3100/ month and our projections are $5,110 Gross Rents with all 8 leased ( less water for all 8 units $240, no payment of any utilities ) equals $4870/ month Gross rents.

We had property management in place from our other 12 units and worked with them to start managing these 8 units for us as well and help us start repostitioning this property.

Finance Details:

20% down of Purchase Price with built in of Rehab budget of $90K ( $61K )

Closing cost of $6,000

5.25%

7 year Balloon on 20 year Amortization

Interest only first 6 months

Construction Draws provided as work was completed

The value add potential :

We knew that rents were under market between $50-$75 ( in some units) , we could decrease the water expense with ( low flow shower heads, new toilets, actuators in all faucets), we could eliminate paying any additional utilities outside of water for any of the tenants. The real diamond in the rough though was the 2 gutted units, and the ability to create two brand new units for $30K/ each which would dramatically increase the NOI because it would officially be an 8 unit.

Within the first week 2 tenants moved out but the other 4 remained which we didn’t’ expect but was OK because our plan was to rehab all of the units within the first year anyway. We had already built our scope of work before we closed, and had contractors lined up to get started so we were able to hit the ground running. Within in 12 weeks we were able to essentially build 2 new units ( will break that out below) rehab two more units, up-fit the existing units with water saving measures and fix the foundation leak, drainage issues ( another un planned cost) along with giving the entire complex a significant face lift.

REHAB BUDGET and SCOPE OF WORK :

$90K ( built into loan)

$30K for each Gutted unit

$5K per existing unit x6 = $30K

TOTAL Spend was $100K

$4500 for Foundation issues, landscaping, etc

2 gutted units:

new electric- 200 amp upgrade

Blown insulation for attic ( r38)

new sub floor

New insulation throughout

New sheet rock ( 5/8 fire wall for exterior living room walls, kitchen and in stair well)

New 6 panel doors throughout with all new satin nickel hardware

New 6 panel Steel Front and Rear Entry Doors

New plumbing

New HVAC system( all electric got rid of gas)

New Thermostat

New lights

New Hot water heater

New kitchen layout ( removed half wall to open up to living room, built alcove for fridge to increase floor plan)

New white shaker cabinets with hardware, countertops , fridge, stove, range hood

New LVP throughout

New Carpet in bedrooms

New bathrooms ( vanity, tub, enamel over steel tubs, tiled surround, vent fans, vanity lights, faucets, low flow toilets, shower heads, and actuators)

Added 1 new window in each kitchen

Other units: ( completed in 409 B and 407 D ) other units will be rehabbed once tenants move out

New LVP in LR, BR, Kitchen and hallway

New Carpet in Bedrooms

New six panel doors/ hardware

Glazed existing tub/tile

New shower hardware

Low flow water options ( toilets, shower heads, actuators throughout)

New water heaters ( 407 D)

Replaced AC 409 A ( it was 28 years old)

New Fridge 409A

New Fridge 407C

New Stove 407 A

Painted stairwells ( versatile grey) had attractive/durable commercial grade carpet installed on stairs

Installed new lights in stair well and motion sensors in 409

Installed Motion Sensor Flood lights on all the corners

Installed Video Cameras on problem areas

Had Duke Energy replace old lights with brighter LED on two poles

Installed keypad entrance for both exterior stairwell entrances

Cleaned/ repaired other AC units

Fixed any issues with plumbing as needed

Fixed any issues with existing water heaters

Installed new black shutters on both building

Implemented quarterly Pest Protection

Installed raised landscaped beds for 407 ( parking lot facing)

Installed new Numbers for both buildings

Painted all exterior doors black installed new hardware

Painted central mailbox black

We are still actively repositioning this property and will have another two tenants moving out end of this month ( September) but the property has generated enough profit from the other units at the increased rental rate that the business will be paying for these upcoming turns.

Once fully occupied we will have gross rents around $5000/ month which after ( PITI), monthly reserves and the other expenses we have built in will create 17% Cash on Cash for our business.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $260,000
Cash invested: $35,000

We found These 2 quads on the MLS and in less than a year we are currently generating just shy of $4100/ month in gross rents and have a fully stablized property. With many of the big ticket capital items dealt with in our first year ( new roofs, new windows, etc) we can now focus on keeping our tenants happy and our units occupied while we move onto to our next bigger deals.

Buy Right, Manage Right and Finance Right # WheelBarrowProfits

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

2 all brick quads on seperate Parcels
Separately Metered
Tenants paid all utilities
Out of town landlord
Bad MGT in place
High Expenses
Under Market Rents
7 of the 8 units were occupied with long term tenants
2/1 - 700+ sq ft
Washer hook up available
Understanding the market dynamics ( doing our homework on what other simalar style units were bringing locally)

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

MLS with a Realtor
Out of town landlord wanted to close fast they had these listed along with another property separately and since we purchased 2 together and got there first we we able to negotiate a better price.

How did you add value to the deal?

New Roofs, Windows, Rehabbed/ rented up a vacant unit, raised rents and kept all existing tenants .
**worked with one tenant who had been there for 17 years and took him from $338/ month to $495**
Once the work had been done in his unit ( New energy efficient windows, new AC units, repaired/replaced his sub floor in bathroom/ part of kitchen, with new toilet, vanity,flooring) he shared with our crew he was now proud of where he lived and would have paid more years ago if this was done sooner.

What was the outcome?

$2900/ Month Gross rents when we took over 1.1.18 and $4100 gross Rents by August 2018
- Capital Heavy in first year but now both quads have new roofs ( 1 due to a hurricane) all new windows ( except one unit) , 2 units have been completely redone ( and upfits should last at least 2-3 turns) ,
- Opportunity to conintue increasing our NOI by decreasing expenses and increasing rents
We can focus on keeping our tenants happy and improving the property to differentiate us from the competition

Lessons learned? Challenges?

Work with crews that are FAST and be willing to spend more. TIme is money and with a project where you are investing heavily on the front end you want your vacant units available ASAP. Insure your goals/expecaations are understood by your property mgt. We had to part ways with our initial team 6 months in because our expectations and their services didn’t match up . We are now working with a group that understands our vision and wants to grow with us on our Multifamily adventure.

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

Yes Pam Hood with Allen Tate Realtors .
She was and is awesome.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $260,000
Cash invested: $35,000

We found These 2 quads which happened to be on separate parcels on the MLS. Wewere able to successfully reposition them to a cashflowing property for us which has helped us purchase additional properties in 2019.

Property Details:
2 4 unit buildings
All Brick
2/1 -750Sq/ft
Hardwoods in one of the quads
Separately metered ( water/ electric)
Can Trash can pickup provided by the city
Adjoining Properties that share a common area
Washer hook ups in units
Clothes lines in back of properties.
One unit had all new replacement windows
Low Crime Report
Near Bus stop
Local shopping

Deal Details:
Asking Price was $300K
Purchase Price - $260K
7 of the 8 units were occupied
Two 4 unit all brick quads
Out of state Landlord with bad property mgt in place, high expenses and below market rents helped us realize the opportunity to re position
Rents were significantly below market in some units ( >/=$150)
Buildings/Properites in need of a lot of love but still in great shape and all brick
Long term tenants with 80% being month to month

Strategy:
Buy Right, Manage Right and Finance Right # WheelbarrowProfits

When we took over first part of January 2018 the gross rents were around $2900/month.
We knew that rents were under market between $100-$150 ( in some units) and with many of them being long term tenants we decided to approach them with our plan for improving their units, the property and increasing their rents to market rates.

We know that it is more cost effective to keep a good paying existing tenant than it is to find a new one, so we decided to give them options. You can stay, sign the new 1 year lease, pay the new market rents and we will improve your unit significantly or it would be time for them to find a new apartment.

We decided to start from the outside in and began beautifying the property by removing the overgrown bushes from the front of the building, along with the trees that were swallowing up the units. We then had a new roof installed on one of the buildings and improved the landscaping for both buildings. We then had to pull about 10 truck loads of trash out from the crawl of one building, and do some minor repair underneath for plumbing, subfloor and installed new vapor barriers for both units.

As we were improving the outside and addressing issues in the crawl space we were working to turn the vacant unit. It needed quite a bit of work but after the rehab we were able to get it rented for $525/month

- new windows, LVP installed throughout, toilet, flange, new vanity, new plumbing, new doors/hardware/hinges throughout, paint cabinets/ new hardware , paint throughout, new base board units, new window AC units, new entry/ exit doors, new stove/ fridge, light fixtures throughout, handrail for outside stairs

We then moved on to our lowest paying tenant ( $338) who had been there 17 years. He bucked our offer initially but after looking around and considering the cost to move he was more open to our offer of improving his unit for the new rental rate of $495/month .

We provided him with the following:
All New energy efficient windows, new AC units, Completely re did his bathroom ( new subfloor, new flooring, new toilet, new vanity, new lights), fixed his kitchen floors( which he said had been sinking/falling apart for the last 3 years ) and the leak he had been dealing with behind the walls for YEARS in additions to new storm doors front/back.

*once all of this was completed he shared with our crew that he finally felt appreciated as a tenant, was proud of where he lived and was thankful for the new owners. Also that he would have been willing to pay more years ago had they just fixed the issues he was dealing with **

Now that we had proven out our concept we worked with the remaining tenants to address any outstanding issues and in turn increased their rents to market averages.

In less than a year we are currently generating just shy of $4100/ month in gross rents and have a fully stablized property. With many of the big ticket capital items dealt with in our first year ( new roofs, new windows, etc) we can now focus on keeping our tenants happy and our units occupied while we move onto to our next bigger deals.

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $260,000
Cash invested: $35,000

We found These 2 quads which happened to be on separate parcels on the MLS. Wewere able to successfully reposition them to a cashflowing property for us which has helped us purchase additional properties in 2019.

Property Details:
2 4 unit buildings
All Brick
2/1 -750Sq/ft
Hardwoods in one of the quads
Separately metered ( water/ electric)
Can Trash can pickup provided by the city
Adjoining Properties that share a common area
Washer hook ups in units
Clothes lines in back of properties.
One unit had all new replacement windows
Low Crime Report
Near Bus stop
Local shopping

Deal Details:
Asking Price was $300K
Purchase Price - $260K
7 of the 8 units were occupied
Two 4 unit all brick quads
Out of state Landlord with bad property mgt in place, high expenses and below market rents helped us realize the opportunity to re position
Rents were significantly below market in some units ( >/=$150)
Buildings/Properites in need of a lot of love but still in great shape and all brick
Long term tenants with 80% being month to month

Strategy:
Buy Right, Manage Right and Finance Right # WheelbarrowProfits

When we took over first part of January 2018 the gross rents were around $2900/month.
We knew that rents were under market between $100-$150 ( in some units) and with many of them being long term tenants we decided to approach them with our plan for improving their units, the property and increasing their rents to market rates.

We know that it is more cost effective to keep a good paying existing tenant than it is to find a new one, so we decided to give them options. You can stay, sign the new 1 year lease, pay the new market rents and we will improve your unit significantly or it would be time for them to find a new apartment.

We decided to start from the outside in and began beautifying the property by removing the overgrown bushes from the front of the building, along with the trees that were swallowing up the units. We then had a new roof installed on one of the buildings and improved the landscaping for both buildings. We then had to pull about 10 truck loads of trash out from the crawl of one building, and do some minor repair underneath for plumbing, subfloor and installed new vapor barriers for both units.

As we were improving the outside and addressing issues in the crawl space we were working to turn the vacant unit. It needed quite a bit of work but after the rehab we were able to get it rented for $525/month

- new windows, LVP installed throughout, toilet, flange, new vanity, new plumbing, new doors/hardware/hinges throughout, paint cabinets/ new hardware , paint throughout, new base board units, new window AC units, new entry/ exit doors, new stove/ fridge, light fixtures throughout, handrail for outside stairs

We then moved on to our lowest paying tenant ( $338) who had been there 17 years. He bucked our offer initially but after looking around and considering the cost to move he was more open to our offer of improving his unit for the new rental rate of $495/month .

We provided him with the following:
All New energy efficient windows, new AC units, Completely re did his bathroom ( new subfloor, new flooring, new toilet, new vanity, new lights), fixed his kitchen floors( which he said had been sinking/falling apart for the last 3 years ) and the leak he had been dealing with behind the walls for YEARS in additions to new storm doors front/back.

*once all of this was completed he shared with our crew that he finally felt appreciated as a tenant, was proud of where he lived and was thankful for the new owners. Also that he would have been willing to pay more years ago had they just fixed the issues he was dealing with **

Now that we had proven out our concept we worked with the remaining tenants to address any outstanding issues and in turn increased their rents to market averages.

In less than a year we are currently generating just shy of $4100/ month in gross rents and have a fully stablizezed property. With many of the big ticket capital items dealt with in our first year ( new roofs, new windows, etc) we can now focus on keeping our tenants happy and our units occupied while we move onto to our next bigger deals.

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

Value Add property
Under market rents
Separately metered
All brick

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

MLS

How did you finance this deal?

Conventional Financing

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Greensboro Bmc.

Purchase price: $110,000
Cash invested: $30,000

Property Details:

1/1- 500sq f
One vacant
Base board heat
Sepertely metered

REPAIRS NEEDED
$10k

Monthly cash flow once completely repositioned
$2000- $1243 in expense ( PITI, Mgt, $75/ door for reserves, lawn, etc)
Monthly cash flow $456/ month
19.5% COC
Will have all our money back in 5 years

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Greensboro Bmc.

Purchase price: $110,000
Cash invested: $30,000

4 unit c class apt- under market rents
Crime report was clean
Bus stop in local proximity
Local shopping and other necessities close as well
Professionally managed

Property Details:

1/1- 500sq feet each
No AC or window units currently in any units
One vacant
Base board heat
Sepertely metered
Tenant pay water/ electric
Replacement windows
Current tenants keep their units nice, they have just been underserved by the previous owners and their units needs some repair
Professionally managed with current leases and deposits in place
With it being a quad all tenants have a trash can ( no expense for a dumpster)

REPAIRS NEEDED:

2 subfloor repairs needed in 2 units, flat roof needs minimal repair, 3 waters heaters need replaced, about $1,000 allocated for any plumbing repair, bracing underneath as needed or where any joist are weak. Plan on pressure washing entire building, fixing any loose/missing vinyl, paint window trim as needed , paint foundation slate grey, repair handrails ( paint white) , paint all 4 doors black, and add modest landscaping to improve the outside appearance of the property

TOTAL spend budgeted $10,000 for Repairs/ Upfits

DEAL DETAILS:

Purchased through a broker
Original asking price was $130,000 we were able to get it under contract for a $110,000 cash offer because another person who was trying to buy it kept it under contract for 3 months and the owner was ready to close fast.

Currently 3 of the 4 units are rented for $1225/ month so out of the gate it meets the 1.1% rule. We will end up putting almost $10K in for rehab throughout occupied units as tenants move out and are almost done rehabbing the vacant unit which we plan on renting for $500
.

Our strategy for this property is to utilize 30 year money for the fixed rate, and create a large cash flow stream that will help us purchase larger Multifamily properties for our portfolio moving forward.

Monthly cash flow once completely repositioned
$2000- $1243 in expense ( PITI, Mgt, $75/ door for reserves, lawn, etc)
Monthly cash flow $456/ month
19.5% COC
Will have all our money back in 5 years

Montana,

I live in Summerfiled and we are looking for properties throughout the GSO/ Winston/ KVille area. 

SFH

Duplex, Tri/ Quads and Multifamily 

Look forward to hearing from you. 

Gaston