All Forum Posts by: Jackson Carr

The triple deal killer right there. 

Thanks Wes.

Hey all,

I have an off market opportunity in North bay San Francisco (Napa CA in particular) on a 6 plex and I need a little advise from some more experienced flippers than myself.  My experience has mainly been small flips 30-50k remodels, so this would be my largest and most extensive. What do you all think. I will try to be as in depth as possible.

Property is zoned for mix use of heavy commercial/residential. It has a 3/2, 2/1, 1/1 house on the site with a approximate 2000 sqft commercial building (currently being used as a 3 plex) on the .33 acre site right off the freeway in Napa.

Issues:

Structural- The 1/1 has cracking slab foundation. Haven't even brought anyone out too look at it yet. I am still trying to determine feasibility.

Roof- All four need new roofs with all units showing signs of water intrusion. 2 units have full ceiling cracks with sagging.

Aesthetics- Needs a complete makeover (lipstick on a pig). Floors, paint, kitchens, bathrooms.

One room has a pair of vice grips sticking out of the wall that have been plastered and painted in.

Permitting- Nightmare. Unpermitted add on bathrooms, garage bathrooms, electrical submetering area, 1 water line for 4 buildings, sewer, electrical, water.......... Etc.

The big question- Can the commercial building currently being used as a 3 plex stay that way? It is worth double the amount that way.

According to my GC- total rough cost between 100/sqft. This is in Napa and I wanted him to go conservative. I think he is in the ballpark considering pulling a water permit might make us have to go back to the street and upsize a line as an example of the financial Pandora's box we can open with every turn. Total being between 480k.

Comps/Cost- The cost of this will be about 1 million after closing costs. I am unsure of hard money costs on something this large and risky. I have the down payment though at 75% LTV. Then add the additional remodel costs. The comps are hard for this property due to the uniqueness of the situation. I have talked with multiple realtors who have came in around 1.8-2.0.

So total

Comp sale- (acquisition + remodel+ hard money) = Worth it?

1,800,000- (1,000,000+ 480,000+ 200,000?) =120,000

This all leaves some room for error, but not much.  For 120k profit I feel like I could do a few SFHs for

Thanks,

Jack

@Jason Howell

There is a great network of investors in the North bay area. It is a wonderful area to start, but very expensive. Deals are out there though.

 Let me know if you need anything! 

Jack

Hey @Christina Womack

Great choice! There are many people here on BP from Sacramento area that would be more than happy to give you a hand on investing.  @Account Closed has some great spreadsheets on 2-4 unit buildings in the Sacramento area. 

Let me know if you need anything.

Goodluck,

Jack

Hey Bradley Ward Welcome to BP. Sacramento is a great area to start this journey. Sounds like a great business idea and I would start with a 4 plex. I would have done the same but they are considerably more expensive in Napa. Good luck Jack

Hey @Rommel Pascual I have a great one is the Napa/Solano area. She might know someone in Vacaville area. She is amazing. Pm me and I will give you her contact info. 

Good luck

Jack 

@Steve Babiak... Really it can't be unoccupied and occupied at the same time? That's strange. 

It's 95% occupied. A typo in my original post. 

@Wes Blackwell strikes again!! I was looking at that same exact crime map yesterday and thinking the exact same thing. I think what is important to consider is the type of crimes. Pick pocketing, department store theft etc does not  concern me and the tenants would probably never notice. What I avoid is the areas with rape, home burglary, etc. 

I pulled up a nice property in Elk Grove  and when I looked at the crime report almost every other house around it had been broken into in the last year. Pass!

Thanks everyone. @Mark Creason the appraised value with your tax rate puts me at my calculation of around 60k/year. 

@Edmund Chiang.... I misplaced the decimal point and cut my debt/year in half. That's why I was thinking this was a good deal. Thank you for the math doublecheck. 

@Rod Hanks as someone who does maintenance and costing out capital expenditures for a living; the 50% rule is a nice tool to evaluate if the property is even worth looking at. Then I go in an dig up maintenance/cap numbers. If i did that first on every property, I would never be able to sift through 5-6 deals a day. Thank you for your input though. The property is currently at 95% occupancy. My calcs were at 85%. 

Thanks again,

Jack

Hey @Mark Creason

Property taxes will be 54k a year according to the OM provided by the seller. Does that sound right to you? Do you think 50% rule will still have more than enough to cover that? 

Thanks,

Jack