All Forum Posts by: Jake Marin

Foam Brewers is a great place, off the main drag, not too loud and easy parking. Wednesday and Friday evenings work well for me but whatever you want to do!

Good call on the house hacking idea. If I wasn't so settled with kids and a great house, I'd be a serial hacker for sure! (not sure why that sounds nefarious?) Anyway, regarding your question about whether I am all in on Rutland or just feeling it out, I'm not sure yet. This is my first project in a while and my first commercial loan (triggered by anything 5 units+) so I don't want to sabotage by doing too much too fast. Once this project is settled (assuming it goes through, of course) and I have everything chugging along smoothly, I would definitely consider more property there. There is a ton of inventory and the prices are very decent for the rents they can support, so I think I'd be crazy not to keep my eyes open there. Best of luck on your move!

Hi @Brian Budrow,

I’m just getting started with investing in Rutland. What I’ve found is that most investors are intimidated by the Rutland market. Definitely a hard, working class area though there are some great, cash flowing properties. Don’t count on market appreciation as prices have been more or less stable for 20 years. That said, with such good cash flowing opportunities (I’m under contract for a 5 unit at 14% cap rate) I’m hoping to do some forced appreciation and build equity through buying down the principal quickly. There are some gorgeous buildings for a great price in Rutland. 

There are some great employers there as well. GE Aviation has a major manufacturing center. There is a hospital and others. Every time the state does revitalization projects, they focus on Rutland. Definitely a diamond in the ROUGH. 

Can you define "re-positioning"? I like the sound of "BRRRR on steroids"!

Excellent question on why the unit is below market. The property had very high expenses - water, electric, and heat all WAY higher than normal. I feel confident that these issues have either been resolved or I have a plan to resolve. I'm guess that threw a lot of people off the property. 

10% Cap is my sense for this type of property in this location. Nearby markets are closer to 6% but this is a tougher town. Not a "war zone" by any means, but a real working class area.

Thanks @Todd Dexheimer and @Oleg Shalumov! I was hoping that it would be possible to skip the refinancing step by structuring the loan around the ARV since the current value is so much more than the purchase price but the lender shot that idea down firmly.

Have you ever heard of 100% financing on commercial loans based on an appraised value that is significantly higher than the actual purchase price? 

I'm under contract to purchase a 5 unit multifamily building. Being over 4 units makes this "commercial" from a lender perspective so I'm going through my first commercial financing process. The lender is looking for 20% down which I plan to do with a HELOC I've already got in place. What I'm wondering is whether or not anyone has ever done a BRRRR under a commercial loan. I've got to get my HELOC $ back out or I won't be able to scale up and repeat this again. Any thoughts?

Some more details: 

Contract purchase price - $144,000

Assessed value - $189,000

Cap Rate @ $144K - 14.7%

Property value @ 10% Cap Rate - $197,000

Lender informed me that they will loan 80% LTV or purchase price, the lesser of the 2 - so not possible to loan 100% of purchase despite results of valuation.

Any thoughts? BRRRR potential? Other ways to get my ~$30K out for additional investment?

Jake

We missed you guys! Had a great meetup. Hatchet had 25+ Hills Farmstead beers on tap. Great conversation and some good new relationship formed. Catch up next time!

Does anyone know a great property manager that would service the residential market in Rutland, Vermont? Any leads would be greatly appreciated!

Having a hard time making a decision on this one...to purchase or not to purchase- that is the question.

Description of the property:

5 unit brick multi. Excellent location on a park in a downtown.

Asking price - $390K

Current Rents: $3675/month (could easily be brought up to $4875 with almost no investment)

I'm optimistic that I can get the property for $300K. Needs $25K in rehab. High Capex due to the fact that there are several pending projects (3 old boilers will need to be replaced though currently functioning well). Half the roof needs replacement (why does anyone do half a roof???) Some brick work and basic carpentry. Much of that included in the $25K rehab but this is a 7,000ft2 OLD building. I'm sure there will be projects galore. Cap Rate 10.5% with upgraded rents. Sounds decent, right? But...

CoC is only $600/month. Pretty anemic for a 5 unit building. I'm also concerned that I won't be able to pull my money back out with a cash-out refi due to the fact that I'll have $325K (plus closing costs) into the building and my bank will only do a cash out refi for 70% of the value. That means it needs to appraise for over $450K. No way. OK to leave some money locked up but I would estimate that the appraisal wont come in over $375K from what I can determine. That locks up a bit more of my cash than I would like.

Thoughts? What would you do?

Jake

Excellent! Friday, March 15th at Hatchet in Richmond. Let’s say 5pm.