All Forum Posts by: J. Mitchell Bernier

@Daniel T Stockman no problem. I have taken the plunge on deals to early before and I made it out ok, but alot of sleepless nights so wouldn't recommend without proper reserves. 

Good Luck and congrats on the first property! 

@Daniel T Stockman My first question is when you say your emergency fund, are you talking about personal or business? I personally would say that your personal can be somewhere between 3-6 months in emergency fund and another 3 months minimum in reserves. So if this takes you below that I would say wait, if you have 4 months of reserves for the business and your personal emergency fund is solid the Go For It! 

@Andrew Syrios Thanks Andrew!

@Stephen Brown Thanks Man!

Property Information:

Two Single Family homes in Albany, GA. Both currently rented and across the street from one another.

Purchase Price: $60,000

Appraised Value: $78,000, $40,000 on one and $38,000 on the other

What made you interested in this deal?

Pure Cash Flow. The properties were rented for $550 and $500 currently and we knew that with a little work the rents could increase to $650 and $600.

How did you find this deal? How did you negotiate?

These two properties had been listed on the MLS for quite some time and were marketed for sale separately, but buried in the listing it said "willing to sell as a package". Once we found out the other property was just across the street we were all in. He was originally asking $45,000 for one and $38,000 for the other and they had been listed for quite some time. We made an offer of $60,000 for both, with $1,000 in EM, and a short due diligence period. Seller never countered and accepted our offer.

How did you Finance the deal?

10yr Balloon with a 20yr amortization period at 5% rate with a local bank we use through our LLC. This rate may seem high with current market, but the bank only charged us $600 bucks for the loan fee and only wanted 10% down.

Outcome?

We finally received the settlement statement today and our closing on Monday. Property manager has already met with tenants and got new leases signed over and will start cash flowing day 1. We plan to fix up one property at the time have the rents raised to market by year end. Also with the purchase being way under the value, we are expecting to pull al our cash back out or set up a line of credit for small repairs within 3 months after purchase. 

Estimated Cash on Cash Return: 51.41%

1-2% Rule: 1.75% at current rents once raised 2.08%

Monthly Free Cash Flow: $290 a month or $145 a door

Challenges?

COVID Delays!! We were originally supposed to close this in Middle of January, but appraisal came late due to COVID, attorney’s office was shut down due to COVID which pushed it back two more weeks, and then getting a quote for repairs took longer as well. Side note, everyone is fined who was effected by Covid. But finally got the all clear and will get these in the Portfolio on Monday!

@Emily Segal really appreciate you setting that zoom up. Great first meeting and look forward to more!

Luckily, I have a good friend in the Lumber Supplier business. He deals directly with Mills then sells to local and small chain hardware stores. What he said echoes what most people heard and have already mentioned about the Mills making the wrong prediction on demand in a pandemic. However there is a new problem. The Mills are making alot of money...

Per my conversation with my good friend, he has said that the mills he deals with directly are making in profit around 17k a truck that leaves the mills with a load, so you can imagine how many trucks leave daily. They have realized that due to housing shortages and rates being low many consumers are ok with paying these higher prices. The mills could drop prices now, but why would they when demand has not slowed with prices going sky high.  So when will the prices come down? When people quit buying at these ridiculous prices. Until that stops, prepare for this to continue. 

Good to hear! Look forward to hearing about what is going on in Tallahassee Rental Market. I work as a commercial lender just up the road in Bainbridge, but invest primary in Albany and Valdosta Ga. 

@Jonah Stiles Your NOI should include all income and expenses, except for debt payments. So all income would be rent, late fees, non-refundable deposits(pet fees), application fees, inspection fees. Your expenses would be Maintenance, Cap Expenditures, Insurance, Taxes, Vacancy Reserves. You would take all the income and subtract all those expenses and that will be your NOI. Then you would subtract your debt payments to get Net Annual Cash flow.

Good luck!

@Logan Hughes, I don’t know when the last time you were in Valdosta was but I would consider you taking a trip. That town has been a boomtown in South Ga the last 5 years. Really about the only growing market south of Macon. I travel there monthly and a new complex, or new business, or new subdivisions is getting put up regularly.