All Forum Posts by: Jeff Ostrander

Simcha, where are these condos and what are you wanting for them? I’m an investor in fort smith and I could inquire with my lenders if the deal makes sense to me. 

Thanks

Jeff

@Colton Looper welcome to BP. I’m also looking to do some investing in NWA. I’m currently in Ft Smith so it’s not too far out of town so I know the area fairly well. Where do you want to live? Fayetteville has a bunch of new construction duplexes that might be a good buy if you can rent out the other side at the right price. That way you can get into a fairly low maintenance deal up front with good quality renters which is what I’d want if I was living there. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Fort Smith.

Purchase price: $130,000
Cash invested: $40,000

Four plex in a revitalizing area of town. Cash flows about $200 a door which will only increase as the area continues to become more desirable to live in.

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

I love the idea of a cash flowing multi family within SFH neighborhoods.

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

My friend and mentor was presented this deal but he is no longer interested in purchasing more rentals. Knowing that I wanted to grow my portfolio, he introduced me to the owner, where we agreed upon a price with the guidance of my mentor.

How did you finance this deal?

Residential financing with 30 year loan and 25% down.

How did you add value to the deal?

Currently updating the cosmetics of the property from paint colors to landscaping. The previous owners were older and hadn’t made the units more modern.

What was the outcome?

Yet to be determined but hope to attract more desirable tenants.

Lessons learned? Challenges?

I learned how to negotiate an off market deal without the help of a realtor along with the entire buying process. I received lots of help from biggerpockets forums and friends.

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

I really enjoyed working with the private banking section of Arvest for my financing.

@Nel Landerito how would you summarize rental market demand and competition in Fayetteville? Do you invest in the area? If not, where? 

@Colton Webber I sent you a PM but I'm also a physician from western Arkansas that does REI. I currently have 10 units and wished I had started right out of residency. You're doing a really smart thing by investing now, especially before you start getting used to making an attending salary. It's so hard to back track and reduce your expenses later on.

@Henry Washington I’ve met the owners of Quantum Properties a couple of times to possibly manage mine. Andy and Shaun are really good guys who are active in the local real estate group. They are also very active investors who are trying to focus on helping their customers build a larger portfolio. 

Otherwise there is Trinity Multiproperties that a friend of mine uses and he’s been satisfied with their service but I’ve also heard of others who weren’t. I’m sure that’s the case with anybody though. 

@Michael Ward it is rent ready. Currently fully leased but I will do some cosmetic improvements as vacancies occur. The lady owning it is getting older and doesn’t want to go up and down stairs to show it. I just happen to know the guy that they’ve sold properties to before.

A couple of more details.

85% LTV is real. Not a ton of appreciation but it's in a revitalizing neighborhood. I could probably turn around and sell for 160 right now.

Option 1 - $348 cash flow with 11% coc

2 - $130 cash flow with 15% coc

@Leopoldo Vazquez

That would actually put me about 30k in because of closing costs being paid twice. I’d need to save more than that to make the cash buy worth it because they’ve already accepted my offer.

I have a question on financing. I’m trying to determine the best of the two following options for financing a property that I’m buying for 130k.

1. Financing 75% at fixed 5% over 30 years. $36k up front cost.

2. Paying cash up front and then refinancing at 85% of appraisal which we think will be around 150k. It'd be a 5yr ARM at 5% with 25 yr amortization. About $12k up front.

Would the security of the fixed loan or less cash invested be the preferable option? This is my first deal but I would like to grow quickly so I’m leaning on option 2 but the somewhat conservative side says to go with 1.