All Forum Posts by: Jeremy Fenceroy

Hey Bobbie! I'm actually shopping around for loans myself as I'm preparing to refinance a multi-family.  Leading contenders that do investment properties (including 5+ apartments) in AZ are RCN, LimaOne, and I'm looking into Atlantic Union. PM me if you'd like to discuss in more detail what you're trying to accomplish, and I can pass on some of the information I've collected so far.

J.J.

Thanks for the inputs @Ryan Swan.

For my next project I am selling my house in Arlington, TX and am looking for a quadriplex!

I'm looking for something less than $900k in which I can live in one unit for at least a year to qualify for VA financing/post-rehab refinancing. And I'm looking for something that meets the 1% rule (1 month of total rental income *100 > the purchase price + rehab), or if the property is in good shape I'll consider as low as .8% (rental income * 80).

I am leaning towards Phoenix because I have family in the area and already have some connections there as a result of another multi-family I already own in Phoenix. Although I would be happy with a turnkey place, based on the 1% rule qualifier I expect this property will probably be a rehab. I'm open to doing 12-month leases or short-term rentals as I have experience in both areas.

I'll soon have $200,000 cash to put down, but would love any tips anyone has on how to get:

- a loan pre-approval to make cash offers, or

- a bridge loan and

- tips on how to refinance from a bridge loan with a VA loan after rehab

Investment Info:

Large multi-family (5+ units) buy & hold investment in Phoenix.

Purchase price: $762,500
Cash invested: $236,500

14-unit of 1BR & Studios that I purchased after another investor had fully renovated it and leased all units. The property is about 1/2 mile from downtown Phoenix and 15 mins from Sky Harbor Airport. All units have been rented to low-income tenants receiving assistance through voucher programs, and I plan to stick with low-income tenants to help alleviate the low-income housing stock in Phoenix.

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

After having success with an 8-unit MF in Florida I was looking for another MF to put cash I had from sales of other properties that could cash flow, and appreciate over time.

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

While I was living in Florida I came to Arizona to visit family near Phoenix and I figured I'd touch base with a Realtor and see if the Phoenix area had anything to offer. The Realtor found only 2 properties meeting my criteria. The one I was hardly interested in at all from the sheet data and a site visit, but the 2nd was this property that had been newly renovated and the investor was eager to cash out and move to another project. Looked great on paper and showed well.

How did you finance this deal?

I had just sold two single family homes that had been my personal residences long before, and that I had rented out long term after I was reassigned in the Air Force. From the equity in those plus a little bit of savings I was able to put down $236,500, and finance the rest through a conventional mortgage lender.

How did you add value to the deal?

This property was turn key when I purchased it, and the seller stayed on to manage it.

What was the outcome?

The property was producing well at around a 9% Cap rate until late 2019 when my manager got sick and the place started going down hill. I was living in Texas and after two other managers who just continued to let the place deteriorate I was down to 4 out of 14 tenants left, and homeless, squatters, gang members, and people conducting illicit activity overran the place vandalizing units and leading to regular police visits including for a homicide. 2nd half of 2021 is focused on rebuilding.

Lessons learned? Challenges?

- Most property managers are familiar with low-income housing vouchers, but very few have any idea how to work with them, or how to oversee a major renovation.
- When investing out of state it's better to have a larger property management company that has someone available to take over in case the primary manager is unable.
- As soon as a property starts having any trouble get involved and as proactive as possible to turn things around. Things can go downhill fast!

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

I am currently working with Dunlap and Magee who specialize in low income housing in the area, and who have the know how and network to oversee major rehab projects. They have only been on board for a few weeks, but I'm finally optimistic we can turn this around and provide safe, affordable housing to struggling low-income Phoenix residents.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $79,500
Cash invested: $79,500
Sale price: $160,000

I bought this 1,800 SF, 3BR/2BA property as a pre-foreclosure in 2012 when my step-mom, who lives across the street, saw it was up for sale. Purchase price was $77,500 cash with another $2,000 in closing. I put about $6,000 into it and then rented it out to the same tenant until 2018 when I decided to fix it up to put it on the market. After replacing the roof, foundation repairs, flooring and more I put about $50,000 into it and sold it for $160,000. Overall I was ahead by a little bit.

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

I had been renting the two previous houses I had lived in for a number of years already and they were appreciating and generating a little cash flow. This property came at a really low price and I figured I'd pick it up and rent it for more cash flow. It never really cash flowed that great though.

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

I was stationed in Japan at the time, but my stepmom lived across the street and told me it was in pre-foreclosure as the owners were getting divorced. Didn't really negotiate much, and picked it up at $77,500.

How did you finance this deal?

I had been stashing away cash from the numerous overseas deployments I was doing for several years, so I paid cash for the property and repairs before renting it.

How did you add value to the deal?

I used it as a rental for 5 years during which time it appreciated significantly. I then started to do paint flooring and minor repairs when we ran into the roof problems and the foundation issues. So got those fixed before putting it on the market.

What was the outcome?

It turned out to be not terribly impressive as a rental, pretty much breaking even. Although the value had doubled in the 6 years since I bought the place, the expenses of getting it move-in ready ate into much of the appreciation.

Lessons learned? Challenges?

Because I paid cash I didn't have an inspection which probably would have found the foundation problems. I also learned my niche is as a passive investor and not as a flipper. While I'm handy enough, I just didn't really enjoy the hands on part. I brought in several iterations of terrible contractors along the way and learned that unless you protect yourself, contractors will screw you. Put it in writing!

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

My Realtor, Loretta McNally, with EXP Realty was phenomenal! I was living in Texas at the time and she went above and beyond to help me out during the rehab, and with the sale. Highly recommend!

Michael S. did you ever come up with a solution? I'm currently looking for ways to improve security at my 14 unit in Phoenix. I'm down to getting bids from 2 security firms, but still need a gate manufacturer and a security guard for random stops. Would appreciate any leads you've come across, and happy to share what I've learned so far.

Congratulations!  Great way to close out the year.