All Forum Posts by: Jessie Niu

This building is 2 hours away.  I manage the 18 units I presently have because they are very close.  With 2 hours I think it might be a little too far. 

The building is in a B area.

My big question is how exactly was the portfolio valued at 1,140,000? At 22 units (obviously a little rough) that averages the unit value somewhere around $50k per unit. For single family homes and duplexes, this seems low. What exactly am I missing in understanding how a deal like this exists?

Hello everyone,

Technically I'm not starting my career in real estate, I have 4 rentals, I was pretty much an accidental landlord, that started out with 2 rentals and now I'm up to 4, I credit this to the recession prices, I got lucky, I wasn't savvy, just a hard worker. I quit my job last year and finishing getting organized with the vacation rental side of my business and by November will be ready to tackle this new phase in my real estate career full steam ahead and grow my business.

This is my current situation, 4 rentals, plus my own home:

Home 1 - Vacation Rental - worth about $160K - Owe 42K (conventional 4.25)

Home 2 - Vacation Rental - worth about $185K - Owe  $50K (conventional 4.25)

Home 3 - Long Term Rental - worth about $165K - House free and clear

Home 4 - Long Term Rental - worth about $95K - House paid off but have lien from SBA Owe $30K

Home 5 - Primary Home - worth about $200K - Owe $120K (FHA, 3.75 BUT also pay PMI so in reality it's 4. something)

All my houses are doing really well, I tried to get rid of the cheapest one to finance buying a more high-end home but no bites so just kept it as a rental which is fine by me.

My goal is to acquire more properties in my area (suburbs north of Detroit or something close to downtown Detroit) or in South Florida (used to live there and have family there), my options would be:

- Property to flip (have a friend contractor that has done work for flippers so I would partner with him)

- Long term rental

- Vacation rental

My first hurdle would be financing, I was trying to hold on to my high stress job until I acquired at least 1-2 more properties but it was my health or 1-2 more properties so I chose my health. So now I'm self employed, all the houses are under my name, which is something else that I want to take a look into (maybe create an LLC(s))

My plan is start listening to as many podcasts as possible, start contacting banks to see what type of financing I can qualify for and take it from there. What would you experienced investors do in my situation? Any particular way you would use the houses to help finance other properties? 

Thank you very much in advance for the advice!

 It's from having a long healthy relationship with a portfolio lender. 

You make your money when you buy! I'm closing on a 22 unit portfolio that consists of 12 single family homes and 5 duplexes. The sellers first offer for the package deal was $1,140,000. Through a LOT of strategic communications and negotiations, I eventually got them to accept a price of $790,000. 

The appraisals came in at $1,264,725... $474,725 above the sales price! So just by closing on this deal my net worth goes up by nearly 1/2 a million bucks. 

.

But this gets even better... 

Since I bought so well my bank only required 10% down of everything including closing costs. I sold a 6-unit building which net just enough to 1031 for the down payment on this portfolio. So there will be no money out of my pocket to purchase the portfolio. 

There's a value add play too. The properties need approximately $200k in work and I wrote the contract for $890k with a $100k credit at closing. My bank will escrow that $100k for me to draw on as work is completed. 

I will only have to come up with the ~$100k to finish out the work. I'll do some of it cash and I'll pull some short term debt at the end. Then when the work is complete (6-8 months) I predict the value to be ~1.55 million. At that point I'll refinance at 70% LTV which will put ~$300k back in my pocket and cash flow ~$3k per month (my 6-unit was about $1k per month)

SO +1/2 Million net worth... with no money out of pocket to buy... AND half the rehab costs are covered... 

THEN at refinance +$200k cash in my pocket from before the deal... AND +$2k more in cash flow