All Forum Posts by: Jacob Trimble

Hello BP, 

My wife and I just got out of Active Duty. I'm currently working as a pilot (I also have my RE license and am trying to do that whenever possible) and my wife works as a nurse. I have utilized all of my VA Loan as we currently have 3 investment properties 2 of which are under the VA loan. Therefore, my wife and I are looking to do an FHA loan to purchase a property at 3.5% down because we don't have enough saved yet for a 20% down payment.

I'm torn because I've always been, like most people, wanting to buy rather than rent. My mindset of purchasing property is sort of a hybrid between finding a good home and making it a potentially good investment. I've always bought property that could rent for more than what the mortgage would be. 

Currently we live in McMinnville, OR. The rough median house price for an Oregon home is $500,000 which with our income we could do. However, using an FHA loan at 3.5% down would put our payment close to $4,000/mo. For the same house, it could rent for probably $3,000/mo. I'm very familiar with house hacking but we have a daughter now so I don't want roommates and I have not yet found a duplex or anything of that sort for less than $6-700,000.

I'm not trying to time the market necessarily or anything like that, but it's such a weird time to try and buy. Everyone bought when interest rates were record lows, those who already had a home refinanced into a better rate, and mortgage rates have over doubled now. So not only is there low inventory, but I feel the prices, especially in Oregon are overpriced. That being said, is the best option to just continue to rent for possibly years to see what happens or is there a better scenario we may not be seeing? Hopefully, I gave the correct amount of information to properly analyze this situation, if not let me know. I appreciate any insight.

I apologize if this is going to be a long post. 

We currently were brought a wholesale deal for 7 apartments (80 units) in Elizabethton, TN. To start off with here are some numbers: 

Purchase price: $2.2 million

Estimated Rehab: $150,000 (15 units need work to become rent ready) 

8 cap current value: $2.9 million (with 20% vacancy)

8 cap proforma: $4.1 million (5% vacancy)

Preferred close: Feb 28th (We know this is a very short window so conventional lending is not an option. We have already discussed pushing this back so this is not a strict deadline just preferred). 

We have already talked to management companies in the area as well as contractors to price out repairs on the vacant units. The area where most the properties are located is on the main street. According to our property manager they are at virtually 0% vacancy currently because demand is so very high due to people wanting to move more out of the bigger cities etc. The properties have deferred maintenance and a reputation for not being the greatest properties. The property has just about everything we were looking for in a property as far as force appreciation, below market rents, off market, and under market value. 

The issue is I have experience in single family homes/out of state rentals but none in apartments. We are in one of those "master mind" groups where the individual helping us has a ton of commercial real estate experience and he is helping us through this process. However, we wanted to come on BP and get some other opinions on things like how to fund these types of deals etc. The initial plan is to use hard money and then raise the other money using a syndication. We have already talked to attorneys as far as setting up the PPM. We have approximately two and a half weeks before our earnest money goes hard. So I am trying to figure out all of our options within the next 10 days so we have plenty of time to pull out if it ends up not working out. Any advice or insights would be greatly appreciated and I'm sure I left some important stuff out so let me know and I can add it to this forum. 

Thanks, 

Jake

Hey, 

Just giving an update. We found that the property needed more repairs than expected. We asked them to come down to 67k however, they declined the request and we backed out of the deal before the inspection period was over. Overall, good learning experience. Moving onto the next one. 

I would like to try a crack at a direct mail campaign. We are trying to locate another investment property in AL. We are pre-approved, as well as have cash in hand for a flip/BRRRR property. However, it has been difficult to find a good property to flip/BRRRR. I have read a few articles and have noticed a few common themes: be consistent, get free information from .gov sites, consider pay services (Listsource, Propstream, etc.), consider absentee owners, pre-delinquent, divorce, probate etc. However, I'm wondering if people still consider this worthwhile and if so, what type of criteria should I focus on for a first time mailing? I plan to pay for a list from List source. Currently, I am interested in finding property to flip/BRRRR 3 bedroom 2 bathroom 1,500-2,500 sqft in the 50-120k range. I'm worried of getting the criteria wrong and spending lots of money sending mailings to the wrong demographic. I have a specific area code that I am looking to buy in as well. For those who have found success with this what criteria do you use? Does COVID-19 change any of your criteria? What paid services do you find the most useful? Finally, if my goal is to get 1-2 deals under contract how many letters should I consider sending? I understand that question is dependent on a number of variables but I'm just looking for a general number. I understand it's a trial and error process but I would just like to be sure I have the bulk of everything right. As always, thanks in advance for any advice on the subject.

My wife and I are trying to get all our financing options together. Currently we have private money (close family and friends) as well as pre-approval from our bank to purchase some investment property. I want to explore into hard money to expand our options and network as far as lending goes. However, I have noticed a great deal of scammers out there that are actually pretty good at looking like a legit company. We understand being weary of unusually low interest rates and we've also been told to ensure that they are able to roll their fees into the loan. I'm wondering what else people look for (Like certain accreditation from BBB) to help authenticate a hard money lender. We would like to use them as an option for the future but I'm having a hard time trusting many of the companies I run into or come across. To better help us what rates, fees, LTV, should we expect to see for a basic fix and flip or BRRRR type of investment in the range of 80-150K? As always we appreciate any insights and advice.

Thanks,

Jake

Hey Ryan, 

Per my agent, since we are using cash he said the closing costs should be very minimal, around $1,000. We were supposed to see the property today but will have to wait tomorrow. So far the estimate for a minor rehab is 10-12k to bring the the property ARV to around:115-120k. It's not a homerun but we are looking to just do some conservative, base hits, so we can get a better feel for the people we currently work with and the market over in that area. If it does not flip for what we want then we plan to place a tenant in the property and do a cash out refinance to pay back our investors. I appreciate your input and welcome anything else you got.

Jake

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

So I know some people will determine the cost to rebuild a property when they are analyzing it so that they may acquire it for less than it would cost to build; thus, helping to assure they get a good deal. I'm wondering if anyone can explain how this can be done and if they feel it is effective when looking at deals. As always thanks in advance for any help. 

Jake

@Michael Plaks thanks again for your quick response. Again, I'm fine paying what's fair I am just looking to see and have the value add of these services provided to me explained. $3,000-6,000+ may not be a lot to other businesses but it is to us so I want to understand what we are getting. Not just that but what we need to do on our end. I understand the importance of a useful CPA so I'm okay with paying.

Also, I am not averting the documentation. I need help knowing how to categorize the receipts and information. I assume as an accountant they don't want a single file with 1,000 transactions. I am currently in school for my MBA and use our computer room for both school and work. Can I write that off? If so, what about my supplies? Do I send this all to them at the end of the year or can do I send it monthly? Should I have been using a bookkeeping software for my rental properties to provide to them? If so which ones? I'm also in a real estate mentor program that we pay into, is this a write off? I'm not looking for you to answer these but I'm just trying to show where I'm coming from. I want to have everything organized that way tax time I'm able to be organized and have everything prepared for my accountant to save us both time and money. I essentially don't know what's expected of me which I have told them without a clear response. Like you said now I'm dealing with someone who is being unethical by trying to get my business from the company that I'm currently paying. Probably more than you want to hear but I don't want to seem that I'm being cheap or don't appreciate the value of a good CPA. I'm just new and am trying to make sure we have our taxes set up and done correctly in order to better help us personally and with our business. Thanks again for the help and advice.

@Michael Plaks my wife and I have always done our taxes and it was not until recent that we decided to get the help of a CPA. I do not mind paying but I am just trying to see what is the right amount. The issue I have now is the company I am using now has an annual fee starting at $3,000/yr (we pay $250 month) and then the fee of handling the tax return at the end of the year. The issue is they do not handle any monthly bookkeeping. I wanted a company that could help me set up a system where I stayed on top of my taxes each month. However, this company as I'm finding out does not do that. They offer consultation but I am required to provide all documents at the end of the year. I am unsure of software I should use to track my properties and I'm also unsure how I should organize all other information that needs to be sent to them. So essentially I feel as though I'm paying for some advice I could have gotten with just a one time paid hourly consultation instead of paying $3,000/yr plus the return.  I should have mentioned that my current accountant works for this said company and has offered me the rates I had mentioned above in if I decide to join his own company/business. The accountant agreed that the company does not do a great job with smaller clients which is why he recommended his company because it sounded closer to being what I wanted. Again, I would just like to make sure that we are staying on top of our taxes monthly and are also making the best decisions possible both for us personally and our future business. I hope this clarified some of our issues. Again, I really appreciated your guys response. 

Jake