All Forum Posts by: Craig Shrimpton

While researching a potential REO for rehab I came upon something in the property records that I found curious.

There was a document from the owner stating she had voluntary turned the deed over to the bank and an acceptance letter indicating the bank had taken obsession.

What does that mean and why would an owner or bank do that? It does not look like there was any previous attempt to sell the property. No short sale or foreclosure notice. The owner just bailed on the property.

Thanks,

Craig

Greetings everyone! My name is Craig Shrimpton and I'm from the Greenfield MA area (Hawley). 

Lately I've been looking to diversify into real estate and have been investigating landlording and flipping. I think my personality is more geared to rehabbing than collecting rents so I've started looking for a potential flip.

Unfortunately my area doesn't seem to offer much in the way of potential rehabs. Not that there aren't lots of distressed properties, there are, but many of them are too far gone for a beginner to tackle and the ones that require only basic rehab are too close to ARV to make a decent profit in what I believe is a risky market (Greenfield, MA). I believe this to be due to the very high percentage of rental properties in the area. While I will keep looking, I'm not convinced my backyard is the best place to look.

One other option is to pursue something in the Sarasota / Tampa / Clearwater area. Pickings appear better there and it looks like there are better support services available. Naturally, there would be more competition, but I have time to wait for the right deal.

In addition, I have relatives and friends in Sarasota and I really like the area.

I'd like to connect with some investors and buyers agents in the area as I will have to do most of this remote. I don't need mentoring per se, just some pointers on which areas I should be looking at for a first flip that would have a good chance of success. 

While I don't have any flipping experience yet, I do have rehab experience as I've almost completed a restoration of an 1846 Greek revival farmhouse. Oh yeah, I went over budget by 4x my initial estimate. I hope I learned my lesson :-)

Anyway, if anyone can give me some pro and cons or possible contacts that could be helpful in either the Greenfield, MA or Tampa / Clearwater area, I'd appreciate it.

Thanks,

Craig

 Thanks, I'll get those books.

Craig

All,

I'm looking at a four unit building that has a single furnace with four zones. The chimney is presently power vented through the wall as there is no chimney.

If I add three more furnaces and power vent them like the existing one, I would gas out the first floor apartment.

My question is what kind of venting solution is available short of building a four flue masonry chimney?

There seems to be reference to a setup that will allow multiple furnaces to vent into some kind of specially engineered pre-fab chimney, but it's a bit confusing trying to figure out what's legal, safe and available.

Anyone solved a problem like this? If so, how did you do it?

Thanks,

Craig

I don't mind land-lording if it pays enough. My family owned many apartment buildings when I was growing up so I know what a PITA land-lording is. I remember the old man cursing when he had to go out at 2am to fix a broken oil furnace only to find out the tenant neglected to re-fill the tank!

My thinking is if I can get 5-6% after tax with a REIT, doing it myself needs to pay at least twice that. The deals I'm looking at in my area don't come close as they are mostly turn-key.

So it would seem that I'm actually looking at the wrong types of properties.

Possibly my best options for direct ownership that provides at least double the return of a REIT seem to be:

1. Buy run down SFRs and duplexes, rehab them and either flip or rent depending on current conditions.

2. Buy duplexes to rehab, rent out 1 unit and then sell the whole duplex to a buyer looking to get into their first home, but can't quite swing the mortgage without a tenant.

The existing returns on ready to move in duplexes seem to fit with option #2 as an owner occupier probably would be happy with a 5% return, where an investor would not. Or, if the duplex in question is cash flowing, I could just rent the other unit and keep it.

I already have a bunch of REITs and was using them for comparison. There are loads of junker houses for $40-$50k in my area that I can rehab.

Thanks,

Craig

All,

When looking at properties to rehab, which repairs are generally too much to tackle? For example, would you consider replacing the sills, the roof trusses, rebuild the foundation? In other words, at what point does the property become a tear down?

Do you always calculate the repair costs, or are there some things where you just say "forget it!"?

Thanks,

Craig

I have been looking in Greenfield and saw one place that was around $60K, but it looked like it was next to a crack house. Buying the cheap stuff in crummy neighborhoods brings tenant problems plus many of the older units have structural problems, which can cost $$$$.

There were also some possibilities in Ware, but that's kind of far for me to do small maintenance jobs or let people in if they lost their keys, etc.

I wouldn't mind doing the landlord gig it it was worth the time. Having only a single property (looking to get my first one), it's kind of a pain to deal with tenants. My first place needs to be fairly close physically, unless I can find something with a high enough return that makes it worthwhile to hire a management company.

Craig

Hmmm... I have seen nothing in my area that's even close to a 10% cash on cash let alone 15% or more. Most of the stuff around here (Massachusetts) is grossly overpriced for an investor.

In Western Massachusetts, a typical 2 family is priced at $249K with about $1900 per month in rental income. Using the 50% rule as a screen, you are looking at a negative cash on cash. You can get some converted 4 units for about the same money that can produce maybe 4% cash on cash, which is not worth even considering.

In the Boston area the same 2 family is $400K with $3000 in rent but still negative.

These properties are priced for owner occupiers looking for help on the rent.

Thanks.

All,

I've been looking at 2-4 unit multi-families and I'm contemplating the relative merits of proper duplexes (houses built specifically as multi families) vs split-up singles. 

The re-muddled single families I've seen scream bad plumbing, bad electric, bad heating systems (usually one for the entire building) and generally high maintenance. The duplexes (trips and quads included) seem simpler in construction which should lead to easier maintenance.

They also seem like they would be easier to sell as they offer an owner the opportunity to live in one unit and rent out the other. However, that unfortunately seems to be the trouble with them as well. They are usually not priced the same as non-owner occupied investment property and often have anemic cash on cash returns.

Any opinions on whether the lowered maintenance costs are worth the lower returns? Are proper "plexes" a better deal/investment than converted single families?

Note that it is my impression the maintenance is lower due to factors such as no need for house electric, tenants shovel their own driveway and mow the lawn, more straightforward construction and usually better designed heating systems. If this impression is incorrect, let me know.

Thanks,

Craig