All Forum Posts by: Jeremy Johnson

Thank you for the advice, everyone!

We wouldn't plan to keep our business in the current location, so I'm not too worried about that. We also have a new building in mind already that would allow us more room to expand our current business as well as provide supplemental income with 4 rentals.

Even taking the tax hit doesn't seem too terrible, but we would prefer to roll things over tax free and hopefully keep growing what we're doing.

My partners and I recently (6 months ago) purchased a commercial building which we are also operating a business out of. Things are good and we are not looking to sell. However, another local business man has inquired about purchasing from us. 

This is our first commercial building and only our 2nd property (other one is residential). We have never sold a property so I am very unaware of what the process is like. I am slighty aware of things like capital gains taxes and am worried that since we've had the building for such a short amount of time, it wouldn't be worth it. However I am also slightly aware of programs to roll over into new investments and avoid taxes. The building is held in an LLC though and we would be happy to roll the profits over into 1 or more investments that are more passive (more rentals).

If we stand to gain a decent amount, is it worth it? What are the things I should be looking out for?

Hello,

I am still very new to real estate investing and looking for some guidance on a potential BRRR project.

Some context

• There are 2 houses next to each other that would need complete rehabs. They were built in the late 1890s and have barely been touched in the last ~10-20 years. A hodge-podge of updates over 100+ years have left the houses with awkward spaces and outdated everything.
• The larger house is 1,625sqft duplex with a 3 bedroom unit on the first floor and 2 bedroom on the second floor
• The small house is 1,150sqft duplex with 1 bedroom on the first floor and 1 bedroom on the second floor
• Asking price (FSBO) is around $240k for both (7 bedrooms total, 4 doors) but I'm fairly certain there is plenty of wiggle room
• These houses need *complete* remodels. We're talking new roofs, new interior layouts, bathrooms, kitchens, everything. 
• The houses are right next to each other on a corner lot that is ~2 blocks away from a brand new hospital that is being built in my town
• Current rents - these are definitely below current market value even before the new hospital goes in. For example, I see recently remodeled 2 bedroom units are going for ~$1,000, 1 beds going for $650+, and 3 units going for $1200-1400.
  
  • Large house = $1,500/mo ($900 for 3 bed, $600 for 2 bed)
  • Small house = $1,100/mo ($550 for each unit)

I see a huge opportunity here to buy these houses this fall/winter and let the current leases expire and then rehab them next spring/summer just in time to rent to nurses/young professionals working at the hospital. I'd like to hire a GC to do the remodels and be as hands off as possible as I have 2 other major projects that I'm currently working on.

The deal makes sense in terms of cash flow. I could put 20% down of asking price and still make ~$1,000/mo as is. There are current tenants and leases until next spring and our rental market is strong due to the local university. And I'm fairly certain after renovations the deal would bring in between $3,500-4,000/mo.

BUT, I would like to do this deal with a private investor and use the BRRR method. The part I'm struggling with is how to structure a BRRR deal, specifically in my market. I can't see these houses having a combined ARV of more than $300,000 based on recent comparisons. ($180k for the larger, $120k for the smaller) and that's pushing it. Being that I'm fairly certain a remodel using a GC would come in $80k-150k, it seems like this just doesn't make sense unless I can get the seller down.

I'm wondering if I'm missing something big here? The cash flow seems to be there, but based on the market I'm in, the ARVs don't seem to really reflect the income potential. Would I just need to get the houses at a much lower price than asking for it to actually work?

Hello,

I'm new here after listening to quite a few of the BP podcasts and deciding I wanted to go a little deeper. 

Background: I purchased my first duplex in Marquette, MI with partners (~2 years ago) using seller financing and just refinanced with a local bank this past spring. It's in a very central location in a very rural town but we have a university and a brand new hospital nearby so the rental market is strong. We're currently in the process of fixing it up as we can and search for our next deal whether that's another rental, fix and flip or something else.

Since listening to BP I've learned a handful of things we did wrong on the first deal (probably should have fixed the property up before refinancing with a bank but we were afraid to do work on it until we "owned" it). 

Although I am primarily based in Michigan's Upper Peninsula I consider Minneapolis to be a home as well and am super interested in investing there. 

At this point I'm just trying to learn as much as I can, make connections and do better on the next one!

I'm just getting started myself, but as others have mentioned, Marquette is expensive and hard to find deals. I got lucky a few years back and my landlord at the time mentioned that he was selling all of his properties and we worked out a seller-financed deal. I refinanced this past spring with a local bank and am currently trying to find the funding to finish our remodel and start on a new property. I haven't had much luck looking for new properties in Marquette and at this point I'm looking to Negaunee / Ishpeming as well, but even there, the deals seem to go fast (There was a sell-financed rental in Ishpeming that lasted less than 5 days on CL ~a week ago)

Over the last ~2 years myself and 2 partners) managed to purchase our first property. It started out as a land contract in summer 2015 and we got a loan from the bank in the spring of 2017. We replaced the roof (20+ years old) in summer of 2017 with a few things left to finish once spring hits and we are now looking to remodel the rest of the house ASAP and are looking for ways to finance it.

Details of the house:

Duplex, each unit is 3 bedrooms and 1 bath. We live in the top floor and rent the bottom floor out for a total cash flow of +$200 each month

Currently have about 21% equity into the house (133k left to pay on a value of 167k. Total loan from the bank was 136k)

We need to gut both units and plan to do it ourselves as we all have extensive contracting experience. We also would like to reside the house and pave the driveway (it's currently dirt). I'm hoping all of these fixes as well as the new roof add a significant amount of value to the house. 

We have not done any estimates for the rehab at this point as we've kind of just been doing things as we go and have the money to do them. However, we would like to get as much as possible done this summer as we all have the time to do it. So now I'm looking for the best way to finance this project.

From what I've read, a Equity line of credit seems like a good option for our situation but I'm worried that having very little income at this point will be a negative to the bank. Are there any options for low income earners?

Any other words of advice to newbies on our first purchase / rehab?