All Forum Posts by: Jason Turgeon

@Matthew Tanis make it easy for us. Don't make us scroll up and down piecing together clues.

Purchase price: $101,500 

Rehab: $75,000 (what does that include?)

ARV: $165-$185k

Projected rents: $2600/month?

Mortgage 402.21 (what terms/rates?)

Taxes: 250 (will these go up after rehab?)

Insurance: 83.25

Vacancy (5%): 82.50 (is 5% realistic for your city?)

Repairs (5%): 82.50 (I generally budget a bit more)

Cap Ex: 182.78 (If you've just put $75k in what capex do you anticipate?)

Water: 83.33

> That leaves $1166.46 positive cash flow per month if I use $1300 per unit for a total positive cash flow of $17,202.48/year. We would then have to subtract out the rehab line of credit and payments from that

Assuming you're putting in $25k in down payment and closing costs, plus $75k in rehab, $17k is still not that bad. That's 17% cash on cash.

But further assuming that you put in $25k down/closing, have a line of credit for $75k that finances the rehab, and eventually refinance out at your lower ARV of $165k * 80% ($132k) at 4.5 %, you have ~$48k in the deal and a monthly PI of $669.

If I piece together what you've told me and plug it into this calculator, I get some pretty outstanding returns on investment. Provided you have the cash and the numbers are accurate, I would definitely be interested in this deal. But it doesn't include property management, and it only has 5% vacancy, so I might want to be more conservative. Still, I think you're in the right ballpark.

The bigger question is repairs. Are you sure you can keep to $75k? It's easy to blow through cash. I've done 3 rehabs, and not one of them has been on budget, or even within 20% of budget. If you spend $100k on the rehab and the place appraises at $180k, do your cash flow projections make up for it? 

If you're looking for turnkey, why do you care where it is? I'd call @Account Closed and talk to him about his Indiana turnkeys. 

No matter where you buy, you are going to find that good property managers are rare as gold and just as valuable. When you do fine a good one, treat her/him with the respect they deserve and don't be the client they want to fire. 

I'm a preservationist at heart. While your windows may be too far gone to save, consider that they have made it 100 years and were designed to be maintained. Whatever modern vinyl thing you put in will be ready for the landfill in 1/4 that time. Plenty of people will gladly pay a premium to live in a restored old house, and vinyl windows aren't usually part of that.

Here's some reading material: 

https://www.amazon.com/Save-Americas-Windows-historic-windows/dp/146628644X

https://www.amazon.com/Window-Sash-Bible-Maintaining-Restoring/dp/1505299144

I'd rather spend $250/opening replacing cords, fixing broken panes, installing weather stripping, and installing/tightening storms (all of which will give you the same efficiency as replacements) than put in vinyl.

I say all this as a guy who eventually caved and put in 45 vinyl replacements in my own residence. The previous owners had absolutely butchered the old ones and they were impossible to repair. It broke my heart, but I was looking at $1000+ an opening to save them. Sometimes you have to make the tough decisions. But don't get rid of the old ones just because. If they're in OK shape, saving them can be cost effective and really help maintain the historic nature of the house.

I've been toying with this idea in New England for a few years. I had a rural farm wedding in Vermont and when we were shopping for venues the prices were eye-popping. We very nearly flew to Vegas and eloped! Fortunately my wife had some family friends and we were able to use their land for free. But even then, that free land cost us $10k by the time we rented tent, generator, tables, chairs, dance floor, portable toilets, speakers, got insurance, etc., etc. Later on, I did a trial run with a photobooth business and got to know the wedding space a little bit better. 

I think a lot of the naysayers here are coming from places like New England where zoning and neighborhood approval are real hurdles. It is nigh on impossible to convert a money-losing farm to a money-making wedding venue in Mass, VT, or NH. The neighbors don't want noise and traffic. The local officials don't want drunks driving back to distant hotels. The volunteer fire departments are worried about barns designed for livestock holding 200+ partiers. It's a real challenge to pull everything together here, and it can result in a huge investment. You can find incredible farms in Western MA and Southern VT for $500k-$1M, but by the time you get through zoning and permitting and fire safety and septic design and this that and the other, you might have double or triple that invested. All of a sudden $25k for a venue doesn't seem like so much money when you only get 16-24 weeks of rentals a year and you have to pay insurance, staff, maintenance, etc., etc., etc. on top of your PITI. You might as well just buy regular rentals, it will pay the same and have half the headaches.

However, you're in Vegas. It's a completely different world out there. The mindset is 180 degrees from what most of us deal with. You're encouraged to take risks (hey, it's a gambling city), permits are easy, the neighbors mind their own business, and I think you have a real chance of success. 

But one thing that is consistent between Vegas and New England is that when you do this you are venturing from pure passive rental real estate to running a business. You are now in the world of Yelp reviews and Instagram posts and super demanding brides who are stressed beyond the breaking point and want to take it out on someone. Not that you can't make a go of it (and make a very nice profit while doing it), but you have to be ready for the crazy time commitments and stress that running a service business entails. 

From what I've read, you are ready for the challenge. I think you have a real chance at making this into a nice income stream. But be ready for all the headaches of running an active business, not just a passive real estate venue. Good luck!

Hi @Son Tran,

Welcome to Mass. The guy who helped me get my start when I first got my license is Tom Truong. He's not here on Bigger Pockets that I know of, but he is very active in Central Mass (Southborough) and has contacts all over the state. He's always happy to help new people get started in real estate and has a great network. Give him a call and tell him I said hello.  

https://teamtruong.exprealty.com/agent/MMF77955FFADEC4D1ABE33587A3AF84E6A

I'm in the "always shop local for appliances" category. Local appliance store has trained & qualified installers and they stand by their work. Do I sometimes spend and extra $50 for an appliance? Sure. But I never, ever deal with what you are dealing with.

Speaking of horror stories about HD appliance installation, check this one out: 

https://www.bostonglobe.com/business/2019/05/12/home-depot-makes-wrong-delivery-and-for-weeks-refuses-make-things-right/IQvSwAoFqa4AHkygQvWclN/story.html

Thanks for the offer, @Mike Reynolds! Fortunately, it seems we were referred a painter who could start right away closer to our budget so we are back on track. I appreciate it!

That's a big project! Have you done anything this scale before? What kind of hoops does the city make you jump through? Here in Boston that would be several years of meetings, permitting, neighborhood negotiations, zoning approvals, lawyers, etc., etc., etc. 

You can't afford to buy this house as a personal residence, and you don't have a plan of any kind to make it a profitable investment. You have 4 options:

1. Go out this month and find $35,000 cash to make up the difference (down payment assistance from family, etc.)

2. Get a better paying job in the next couple of weeks that allows you to afford a $200k mortgage

3. Move somewhere you can afford. 

4. Convince one of your other roommates to go in on this with you, buy the house together as co-owners each owning 50%, and hope that it works out. I have 2 sets of friends who have done this successfully, but it is generally a risky proposition to go into a major purchase with a friend unless you are very sure it will work out and also have a predefined way to get out of it without hating each other if something goes wrong.

I'd say you are looking at option 3, but maybe the first 2 options are available to you. Since you can afford to buy *something,* just not your current rental, you should be learning about house hacking as a strategy to boost income and reduce expenses in the place you move to next. There's tons of advice on here about what makes a good house hack.

Sorry, I thought you had her "Age/year of death, place of death, middle name, other relatives," but I guess that you meant you didn't have any of that stuff.

I love a good mystery. Can the friend who inherited the house provide any sources of DNA from the deceased son? Maybe a hairbrush or toothbrush if the house hasn't been cleaned out? If you can get a usable DNA source, you could do an ancestry.com test and from there they have professional people who help track down living relatives. Usually this is for an adoptee trying to locate birth parents, but if you can locate some surviving distant family maybe they can give you enough info to find the death certificate.

The only other thing I can suggest if you have been unsuccessful with PIs, attorneys, and title companies is to just throw some money at the biggest names in the online people search space and see if any of them are useful. Might cost you a few hundred dollars but at this point you've got nothing else to go on.

The seller better be giving you a price that reflects the amount of work you're doing on his behalf! Don't just show up with the death certificate and then let him run off and sell the house to a higher offer.