All Forum Posts by: Simon Wold

I used a hard money loan to buy my first investment property and refinanced into a conventional after rehab, just nothing of this scale. You can't use a commercial loan to acquire a property at auction, correct?  You need to buy cash and refi out.

Hey All-

Came across a property today. Here is the link to my quick analysis: https://www.biggerpockets.com/calculators/shared/569632/d4e219db-48c9-4f8d-8d63-7a5cbda2c8ad

It is going to go to auction on Friday and opening bid is 413k. I think the deal looks great, but would like others opinions! I have three rentals (two 4-plexes and one condo) so I have some experience, but nothing of this scale. My plan would be to use the BRRRR strategy on this one.

Is anyone familiar with financing these deals? I have private money available to make the 450k purchase cost, but would have to get the construction costs elsewhere. Could a HML be acquired after purchase to pay for rehab? Could a HML be used instead of a private money investor to purchase / rehab? Any help is greatly appreciated. I am more unprepared in terms of having my financing options available for a property this scale, but this deal seems too good to pass up!

To note:

• Property was mismanaged by new owner and led to foreclosure. See: http://www.apartmentratings.com/wa/tacoma/carlyle-apartments_253581061498499/
• 200k rehab budget may be excessive. From the reviews it looks like it is going to need flooring, ext/int paint, cabinets, upgraded entry doors, maybe windows.
• ARV will be ~1,000,000. I put 900k to be conservative.

@Kenson Goo check out this review:

http://www.reviews.com/property-management-softwar...

From the looks of it, Tenantcloud starts charging you once you have 75+ units. Also, Tenantclouds reporting / accounting features aren't as in depth as Buildiums. As the review states, "Accounting is limited to a basic money in vs. money out model, and there are only seven types of reports offered (compared to dozens on Buildium and AppFolio)."

Anyone tried Tenantcloud? I just started using it.  Free and good for anyone with less that 75 units.  It's working great so far.  I'll probably switch to buildium once I have over the 75 unit mark.

@Daniel Cuevas here is how it worked:

1. Hard money loan @ 12% interest to purchase property at auction. ($80,000)
2. Rehab to rental condition (~$5,000 of my personal money)
3. Had an appraisal that came in at $82,500. **Side note here: be careful on condo appraisals.  I was expecting the appraisal to come in at ~110k which would have allowed me to refi without putting much money into the deal. Little did I know, there weren't comparatives in my complex. Instead of just taking comps of condos on the same road, they pulled from the most recent sales in my complex which were in 2010**
4. Refinanced into a 30 yr loan of $61,875 (75% LTV)
5. Down payment was the difference between the hard money loan and the refinanced 30 yr loan.

Keep in mind that the 30k cost I was referring to included all of the loan / holding / rehab costs associated with the purchase.  The numbers aren't exact because I don't have them in front of me, but they are close. 

If you use this method correctly, you can acquire a REI with little or no money down. Just using what is coined as the 70% rule / BRRR Strategy.

Hope this helps!

@Daniel Cuevas I used a private lender and a refi to pay them back. Worked out well, but I learned after the fact that condos aren't the best rentals due to HOA discrepancies / assessments. Luckily, my HOA is managed correctly. It could have easily been a nightmare from the HOA point of view. I would recommend sticking to SF or MF buildings for this reason.

I bought my first investment property after saving up 30K.  It was a condo on foreclosure and puts ~$5500 in my savings / year to spend on other properties. If I waited until I had 100k, I would have never bought this deal. 

My first live-in flip provided me with 100k+ to kick off my multi-family buy and hold business.  In my area, this allowed me to acquire two cash flowing 4plexes.  If I waited until I had 100k, I would have never bought the live-in flip deal or the two multi-family properties.

Take small steps. You don't need the 100k to start. Start with something you are comfortable with and re-invest your returns. After a few deals, you will realize the snowball effect of REI and 100K will become easier and easier to acquire.

Thanks @Lynn McGeein!

Hello All,

So I am scheduled to close on a 4-plex at the end of the month. I Just received the title and it states that each unit is actually a separate condo! My lender called and said that they can't provide an FHA loan on "condos". Is there any way the seller can convert these "condos" back into apartment units? Any other solutions / advice would be greatly appreciated.

Here is a link to the property just in case its needed: https://www.redfin.com/WA/Lacey/6116-Glen-Mary-Ln-SE-98503/home/15687705

Thanks,

Simon Wold

There are multiple ways to go about it:

1. Contact property managers in your area to see what vacancy rates they are experiencing
2. Start a post in the Dallas local real estate section on BP.  There will be a lot of people in your area that will share their vacancy rates with you
3. Do a simple google search.  You should be able to find articles online with vacancy rates.

Once you own properties in Dallas for a couple of years, vacancy rates will be very easy for you to track and calculate.  Remember to tailor your management system if you are experiencing a higher vacancy rate than others in your area. Hope this helps! If you want me to take a look at the 3 duplexes, PM me the link.  I would be more than happy to give you my opinion!