All Forum Posts by: James Andrews

I'm under contract to buy a house for $140k, that needs $50k ("high" guess) of repairs, to bring an ARV of $220k ("low" guess).

I had a 3y balloon loan lined up for $100k, but the local bank backed out after seeing the interior, because the house isn't habitable. I can make the deal work anyways, I have the cash to buy it outright, and can spend the first 3-4 weekends of weekend rehab doing demo, bleaching walls, patching minor drywall issues, painting walls, refinishing the wood floors, etc. 

What else does an appraiser want for "habitable"? Does it have to have a stove installed? Fridge? Just an obvious place for those? Cabinets? Etc.?

I can easily visualize that 90% of the "omg this is a dump" is mostly elbow grease... sure there might be structural, HVAC, electrical, etc. issues that I'll have to address, but never had an appraiser go "I don't like that crack in the foundation". 

I'm asking all of this because I'd prefer to get it in good enough condition to get the balloon loan on it, versus trying to scramble for an expensive hard money or personal loan. The lender already said she doesn't care about reimbursing me directly, since she wasn't going to be able to close it in time for next week.

I'm treating this first real, deep rehab as a learning experience... sure I want to make $ from it, but as long as I make SOME money from it, I'm going to learn a helluva lot during it.

Investment Info:

Single-family residence other investment in Charlotte.

Purchase price: $375,000
Cash invested: $155,000
Sale price: $417,500

SFH in high-demand, high-rent 'hood. 1924 bungalow on a picture-perfect corner lot and a 4-block walk to some of the best bars and restaurants in Charlotte. 2br/2ba, 1200sf, mid-00's updates, and high-grade appliances. It was a magnet for young, white-collar professionals, renting their first high $ place.

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

I thought the house had room to appreciate as the Lynx blue-line extension was just being finished nearby. I was cash poor and the house's demand as 1 of 3-4 like it in the whole 'hood meant vacancy risk was mitigated.

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

It was a primary converted into a rental.

How did you finance this deal?

God favors fools and drunkards. I was cash poor, knew that was a risk, but felt there was too much opportunity, and that I could use the equity I had to get out of big trouble if it went bad.

What was the outcome?

Net cashflow of $18,915, an annualized ROI of 6%.
Net profit of $33,590, an annualized ROI of 10.8%.

That's taking into account its conversion at $375,000 in 2018. 

Lessons learned? Challenges?

The art and science of tenant screening. The subjective (art) signs like written communication, friendliness, warning signs, and the objective (science) of quantifying income, credit, and rental history.

RE agents are the one helper that I'll never ***** about having to pay for.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dana Burleson is THE agent for NoDa, period.

Hi Avery! I’m in Durham, and not quite new at RE, but certainly a novice. It’s a ripe market here rn!

I’ve been lucky enough to make some really great contacts up here since moving from Charlotte a few years back, and would be happy to share.

TREIA is also a really good resource, definitely worth the $150 a year (I think) for membership. 

I'm looking to make my first cash buy in my BRRRR journey. I'm intending to raise capital from other investors, make a cash buy, refurbish the house, and then do a cash-out refi. The investors would be cashed out at the time of the refi, with a pre-defined ROI that's based on ARV, costs, etc. I'd then continue to own the property as a rental.

What I can't figure out is how to let folks "buy in" and "buy out" of individual properties, while I "buy and hold". 

Can I do this as a sole proprietor, and structure their investments as "loans" with repayment terms that depend on ROI?

Or can I set up an LLC, and let them buy in as members but retain a strict option of buying them back out?

Thanks in advance,

James

The downside is the possibility they may pull from an agency that isn't reporting derog info that another agency is. I think the upside is that an applicant who knows how to pull their own is likely more financially savvy than the average Joe or Jane, which may indicate less risk of nonpayment. 

I'm looking at income and credit history to determine the risk of tenant defaulting or nonpayment, based on financial agility (DTI, ITR ratio, savings) and health (on-time payments, credit usage).

Hi all,

I got into the RE game when the Army moved me to Durham from Charlotte, renting out my house from 2018 to now. I'm selling that house now, as for its size/style it's likely reaching $ ceiling for the 'hood it's in, and will be focusing on SFH, duplex, and quadplex in Durham, especially the Tuscaloosa-Lakewood and surrounding 'hoods within 3 miles of Duke.

I love Durham and its growth potential, and looking to build a portfolio with a goal of acquiring 1 rental property a year in the next 7 years; after that I'll retire and do REI, and other investing, full-time.

I hope to use BP for networking and knowledge-building. 

Thanks for reading,

James