All Forum Posts by: Jake Lilly

Looking for recommendations for a CPA/tax strategist in Missouri.

Investment Info:

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

Purchase price: $155,000
Cash invested: $32,000

This is a distressed 2 bed 1 bath duplex in an excellent location that was bought with a construction loan. The bank required 20% down, and will loan improvement costs as needed up to the difference between the current loan and 75% of the ARV. Bought for $155k. Estimated $35k improvement costs. ARV is $220k-$225k. Estimated rent from $1,000-$1,200/month. Estimated Cash on Cash return is 16%, including holding 8% of rent for repairs, 8% for Capex, 8% for vacancy.

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

Location/ Chance to create equity immediately

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

Friend of a friend who wanted to get rid of the property

How did you finance this deal?

Construction loan with local bank

How did you add value to the deal?

In the process now

What was the outcome?

TBD

Lessons learned? Challenges?

In the process now

Investment Info:

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

Purchase price: $155,000
Cash invested: $32,000

This is a distressed 2 bed 1 bath duplex in an excellent location that was bought with a construction loan. The bank required 20% down, and will loan improvement costs as needed up to the difference between the current loan and 75% of the ARV. Bought for $155k. Estimated $35k improvement costs. ARV is $220k-$225k. Estimated rent from $1,000-$1,200/month. Playing with the idea of furnishing and renting to traveling nurses because of such close proximity to the hospital. Estimated Cash on Cash return is 16%, including holding 8% of rent for repairs, 8% for Capex, 8% for vacancy.

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

Location/ Chance to create equity immediately

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

Friend of a friend who wanted to get rid of the property

How did you finance this deal?

Construction loan with local bank

How did you add value to the deal?

In the process now

What was the outcome?

TBD

Lessons learned? Challenges?

In the process now

Investment Info:

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

Purchase price: $155,000
Cash invested: $32,000

This is a distressed 2 bed 1 bath duplex in an excellent location that was bought with a construction loan. The bank required 20% down, and will loan improvement costs as needed up to the difference between the current loan and 75% of the ARV. Bought for $155k. Estimated $35k improvement costs. ARV is $220k-$225k. Estimated rent from $1,000-$1,200/month. Playing with the idea of furnishing and renting to traveling nurses because of such close proximity to the hospital. Estimated Cash on Cash return is 16%, including holding 8% of rent for repairs, 8% for Capex, 8% for vacancy.

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

Location/ Chance to create equity immediately

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

Friend of a friend who wanted to get rid of the property

How did you finance this deal?

Construction loan with local bank

How did you add value to the deal?

In the process now

What was the outcome?

TBD

Lessons learned? Challenges?

In the process now

@Jibu V. Yes, the real estate taxes there are accurate. And I did speak to a real estate agent prior to computing the numbers so I could be as accurate as possible. He gave me a "ballpark" figure but I should have an actual quote within the next day. I have also spoken to two different lenders that I've used in the past that can refi up to 75%-80% LTV.

The only thing you've mentioned that I have yet to do is actually contact and speak with property managers. That is next on my list. As far as the rent, I am familiar with the rent in this market and I'm confident I would at minimum be able to get $550/unit, plus the additional income the detached garage will generate as a storage unit.

Thank you for your feedback, and I will keep you updated on the outcome!

View report

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

I have a potential first BRRRR that I will be looking at to possibly purchase this week. This property has been for sale for 1 few years. Up and Down duplex. Unfinished units that need to be completed. Also has a detached garage that rents out separately for extra income. 

My question for any investors is this. My only hold up about this property is that it isn't in the greatest area of town, and it is in a flood plane. I did factor in about $1,000/year in flood insurance alone. The area is my main concern. It isn't the worst, but I am a little hesitant. This isn't a growing area, but is close to a ton of jobs in the industrial sector. It probably isn't a property that will appreciate a ton, but I think this can be a great cash flowing property with minimal money left in the deal. Good deals are hard to come by these days, and I feel like this has potential to help facilitate financial freedom a little faster. Maybe hold for several years and upgrade as I grow.

Any thoughts from other investors that may have started in the lower priced houses and then worked up to nicer/better quality properties? Would this be something you would consider? I'd be very interested to see any of your thoughts.

Thanks.

@Allen McGlashing & @Evan Polaski thank you both for your input!

Hello,

I have never done a BRRRR before. I am looking forward to it, but have yet to find a deal so far. However, I have been using the BP BRRRR calculator tool for some offers I have made, and my question for the experienced BRRRR investors is this:

If you rehab the property to the point where almost everything is new (roof, kitchen, baths, HVAC, electric, etc), why do you still need to factor in 50% of the rent as going towards expenses if you don't expect any? I get there are some things like yard maintenance, and I know there are unforeseen expenses that can arise, but is this mostly for putting away $$$ for future expenses? Or is it more of an extra measure used to be more confident in a property's ability to cash flow?

Where I live, many investors flip homes. However, the houses being flipping in this market would be extremely hard to rent using the 1% rule once you get over the $90k ARV mark, which makes the 50% rule hard to meet with many of the houses renovated.

Thanks for your time and thoughts!

@Jon Kelly I accidently left out Insurance, Which I expect to be around $58/month. I also added in 5% cap ex, 5% monthly expenses along with the 5% vacancy I had. I think I agree with you. As I've suspected, it seems like it would be more of a flip than a Refi.

Thank you for the response.

@Jorge Rosales I think it depends how you look at the investment. My wife and I bought our first duplex last year. The price was $255k for a 20 year old, 3 bed 2 bath, 2 car attached side by side duplex. When analyzing the deal, I was looking at what we could do in order to get the other side's rent as close to the mortgage as possible. Because of this, we put 20% down, which gave us a monthly mortgage of around $1,242. I'm not saying this was the smartest thing to do, because we put a large chunk of cash down, but the tenants pay $1195/month, which means it costs us $42/month. This enabled my family and I to move to a larger place that needs little maintenance, in a nice part of town, and save money even faster than we were before. It is worth around $275k, and we plan on making some minimal improvements when the tenants leave, and increase rent to around $1250-$1300. When we move, we will get another $1200-$1300 for our side in rent, and when the duplex is eventually paid off, it will gross $31k/year. Yes there will be expenses, but I'm thinking long term. 

I wanted to make investments that would slowly cover my family's costs of living every month. The largest cost was rent/mortgage. The next to check off the list will be utilities, then groceries, etc. Income coming in vs. expenses going out, the ole Rich Dad Poor Dad outlook. There are a lot of factors. Like Luke said, maybe you utilize a larger down payment. Maybe you can make some improvements and increase rent, and slowly improve the side you're living on while your living there (which is what I'm doing).

Hopefully I was able to add something that might add value to your decision process.