So in my first post 2 weeks ago I briefly introduced my desire to complete my first transaction in the next 6 months and my current financial situation. I was lucky enough to meet with 2 very bright and influential members of the BP community @Brian Davis and @Michael Noto. Can't give enough praise to these guys for their contagious passion, hard-work and drive. It is clear to me that surrounding yourself with individuals of this caliber is a must to achieve high levels of success in the industry.
Up until recently, I viewed at least 30 properties in the Hartford county and had not yet made an offer. It was not necessarily because I didn't think any could be a good investment, but because I felt like the price I was willing to pay was much lower than the ask so it was not worth my time to through in a low ball offer. I have made it a goal to start evaluating what I believe a fair investment value to be and to start making offers.
I have made one offer in the past 2 weeks with another to follow early next week so I figured I would share some specifics about the deals and see what everyone's thoughts were:
Deal 1: New Britain single-family near Farmington border
While single-families were never high on my radar, I realized that the BRRRR strategy could be tested on my first transaction with less capital through this avenue. I found a house in the short sale process that should have an ARV of 110K-120K. The house needs a new roof and lots of painting, some new floors, etc. Nothing seems too major, but certainly an eye sore that most people would instantly turn their noses up at. Although I have very limited knowledge of estimating rehab costs, I am confident this house needs less than 20K in work to achieve an average ARV for the neighborhood. I put in an offer for 61K, because this plus what I believe to be conservative rehab costs puts me in the lower 70's% for the rule of paying about 70% of the ARV minus repair costs. I got approved for a cash-out refinance for exactly 210 days from the time of closing. My offer was accepted by the seller, and is now conceivably in a huge stack of papers on a bankers desk.
Deal 2: Bristol 3 Family
This Bristol 3 family deal was a situation where a broker was working with an individual going through a divorce and looking to liquidate 3 multi families in Bristol. One of the units I had looked at and really liked, but it went under contract within a week of going on the market. I went and looked at another one of the guys properties and felt that the units were simply too small to achieve a rent that would justify anything near the purchase price (he listed it for 199K and I would be willing to pay maybe 135K). Rather than potentially burn a connection with the low offer, I decided to wait patiently to hear about the closing of the property I liked and the other property for sale. Turns out the original property I liked had the buyers FHA fall through do to the inspection. The broker came to me and said that he would be willing to take low 180's (originally listed 199K too) which tells me he will consider even lower too. This property has very large units for the Bristol area. The bottom 2 units are 1300 sq ft and the top unit is 1100 sq ft with higher ceilings. The bottom 2 units take in 1100 a piece and the top unit takes in 900 for a total of 3100/month. I got my hands on a copy of the inspection and certainly needs a lot of work, but the property is in rent-able condition and the 1st and 3rd floor units are rented. I am thinking I will get an electrician and plumber in there and get estimates for repairs before making an offer. I am also deciding whether I would do a conventional owner occupied investment with 5% down, or try to get it as an investment property for 15% down (I was able to get 15% down for the New Britain investment property in Deal 1).
Would really appreciate BP members thoughts and guidance. Thanks for your time!
