All Forum Posts by: Jared Ebert

For everyone who's been on the edge of their seat the last couple years, I finally closed on that property.  The trailer was in complete disrepair. Was basically a meth house. Even it was in remotely usable shape, the tongue had been cut off so it couldn't be towed. We've been waiting to get to a stopping point on another large project and 2 years later, it's finally been removed by an excavating company piece by piece. Was definitely the right decision.  Thank to all who commented!

 I'm setting this up as a purely hypothetical question for my own education.  In this situation I am purchasing a turn key (no significant room for forced appreciation)8 unit apartment building.  The seller has been successfully self-managing the property without a property manager for several years. I purchase the turn key property and because I know I don't have the time and don't want to self manage, I immediately get a quality property manager on board.  Because it's a turn key property and the sellers have taken great care of the property, even though I have a great property manager, there isn't really any rent increases.  Now 6-12 months after purchase I decide to have this property appraised.  The rental income is the same.  The maintenance fees, taxes, and insurance haven't changed.  However, I'm now paying 10% PM fee. Have I just lost equity in this property??

I'm not sure if in appraisals, property management fees count towards your expenses and thus lower your appraised value.  

This is what I'm planning on doing, but I'd still lose the equity.

I'm looking at a 7 unit apartment building.  I would call it a C property in a B location, so I think there's potential for forced appreciation.  The real hangup is the building is really a 6 unit building with Mobile Home parked behind it.  I feel like the trailer really detracts from the property/location.  If I were to purchase the property, my real desire would be to have the trailer removed.  But how can you just say goodbye to $350/month rent?  Because it's a commercial multifamily, I assume you would be losing a ton of equity in losing the income. And I don't think getting rid of it would allow me to raise the other 6 rents enough to compensate.  What would you do?

This is more a question of the mechanics and timing of renovations mixed with how to finance.

I may have the opportunity to purchase a 6 unit apartment building.  The property is what I would call a C property in a B area.

I think given the amount of work needed, I could get into the property for about $125k. I could put $40-50k in renovations and I estimate the ARV to be close to $250k.

We have some local lenders that work really well with real estate investors. If the property was vacant, it would be simple to get an interest only construction loan and only pay a down payment on the purchase price (20% of $125k --> 25k). And then once it was renovated and rented, I could refinance the property. Essentially the BRRRR strategy.

Buuuut, the property isn't vacant.  I don't want an interest only construction loan lingering for a year or more.  So then I'm obligated to move towards more traditional financing and rehabbing the building over time as tenants move out.

Here's where I get hung up:

Option A, Construction loan: I get into the property for 25k and use the bank's money to do all the renovations and when I come up with another 25k from my primary job I buy another property

Option B, Traditional financing: I still get into the property for 25k, but instead of using the bank's money, I'm using my own funds to renovate.  Money I could've used to purchase another property.  

This is all very tentative, but I may have the opportunity to buy 2 multi family properties in a solid B, borderline A class, side of town. 

One is a 7 unit which matches the area.  The other is a 6 unit which I would call a C property in a B area, so huge potential there.  

What I have to work with is $30-40k for a down payment.  I think it's possible I could get the 7 unit nicer property for close to 200k.  A 20% down payment would take all my cash without much left for closing costs, etc.  

I think I could get the 6 unit for about $125k. I could put $40-50k in renovations and it would probably be valued close to $250k.  We have some local lenders that work really well with commercial real estate.  I could get an interest only construction loan and only pay a down payment on the purchase price (20% of $125k --> 25k).  

As far as CoC return it seems the 6 unit would be a better bet, but I would like to find some creative way of purchasing both properties. A thought I had was to purchase the 6 unit using a bank financed construction loan and try to purchase the 7 unit using seller financing. Once the 6 unit is renovated, I could then refinance and then subsequently refinance the 7 unit from seller financing to bank financing.

Thoughts?

Hi all,

Im I’m Missouri and have in laws in terre haute. My brother in law is a professor at the college and my sister in law works from home with the 3 small kids. They are in urgent need of a rental as their current rental has mold issues. Their budget is $1,200 monthly and they need at least 1450 sq ft with at least 3 BR. My sister in law is very particular with her kids as far as lead paint, crime, and old dirty carpet. They are very incredible people and would be extremely low maintenance and take incredible care of any property they’re in. Does anyone know of any potential properties they could move into? Thank you!

@Karl B. Wow, thanks so much for taking that time! I've really thought a lot about SFR vs larger multi family and I think duplexes are a decent middle ground for me just starting out. Seems like you've had decent experience with them. Thanks again.

@Marcus Long how bad does the HOA eat into your cash flow? And with a condo, what happens when the roof needs fixed? Owners share the cost?

After living in Columbia for almost 10 years, my family and I just moved to Cape Girardeau, MO. We've been researching REI the past couple years and and have been planning to start investing once we were settled here in Cape. Cape is actually pretty small, and we're both back and forth to Columbia almost monthly for business reasons. We know the area and we know contractors we trust. Now that we're finally settled, I'm wondering if Columbia might be a great place to invest. I'm a beginner with no investments yet. My plan is buy and hold.

Anyone having success in Como? What's working in Columbia? Are you liking college rentals, SFR, or multifamily? Thanks!