All Forum Posts by: Joe Forte

Investment Info:

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

Purchase price: $58,000
Cash invested: $50,000

4 Bedroom 2 Bath Up/down duplex with 1600 sq feet total - built in 1958.

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

My goal for year-1 was to add a duplex to my portfolio.

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

My wife found it. Bought it off a wholesaler. They agreed to come down $5k.

How did you finance this deal?

Cash to buy, hard money to pay for rehab.

How did you add value to the deal?

Complete rehab - new kitchens, baths, all new flooring, new windows, added central air for both units,

What was the outcome?

All in for 108k, Appraised for 133k. Left $16k in the deal. Rents for $1,450. Cashflow = $600. Cash-on-cash return = 45%. Met the 1% rule.

Lessons learned? Challenges?

My first experience with a hard money lender was fantastic. From the application process, through the end with the draws, I was quick to respond to their requests, and provided highly detailed documentation on my draw requests. I built a level of trust with my professionalism on our phone calls and email correspondence, to the point when I started requesting draws, my draw requests were detailed with before/after photos, and receipts - they did not bother to send out an inspector.

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

My Hard Money Lender was amazing - Capital Funding Services Corp - capitalfundingsvcs.com

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $82,500
Cash invested: $10,000

Dutch Colonial on the East side of Barberton

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

My cousin is a Realtor, and she got me interested in Real Estate. She tried to get me to become a Realtor, but I was turned off after going to one of her company's open house events. It seemed like everyone was getting a cut of my commission - way to much work. Now Real Estate Investing - that was more my style. Little did I know how much work I would be doing. Eventually, I will remove myself from this rehab work eventually.

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

Realtor

How did you finance this deal?

Conventional Investment loan with 20% down

How did you add value to the deal?

Replaced the roof. Added 4th bedroom in basement. Added Central Air.

What was the outcome?

Rehab was $20k, all in for $36k. Rent is 900/month. Cash flow is 300/month. Cash-on-cash = 10%. Met the 1% rule.

Lessons learned? Challenges?

Made typical mistakes of most 1st time investors - Overlooked some big-dollar repairs that had to be done after moving in tenants, such as A/C did not work, the hot water lines (galvanized) were so packed/clogged, they had to be replaced, the windows are original - from 1921 - I will be replacing those next year, as they are painted shut...

Also - snake the main drain before the tenants move in.

The rehab took about 4 months, we me doing most of the work.  Sweat Equity!!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $50,000
Cash invested: $35,000

3/2 Brick Cape Cod build in 1942

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

After my first deal using a conventional loan, I discovered the BRRRR method. After doing my research into how how I would complete the refinance portion, I stumbled on this Cape Cod. I was excited to get started BRRRRing....

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

Realtor. Offer included incremental counter-offers of $500 over a other offers, up to $5,000 over my asking price.

How did you finance this deal?

Paid Cash.

How did you add value to the deal?

Complete rehab. Gutted the kitchen, Gutted both bathrooms, Replaced electric panel, A/C, all new flooring - vinyl in the bathrooms, laminate in the kitchen, living room and dining room, carpet in the bedrooms and all of the 2nd floor, carpet squares in the basement.

What was the outcome?

The home appraised for $105,000, I pulled out $78,000, and left $7,000 in the deal.

Lessons learned? Challenges?

There is pried in renting. Families want nice finishes, and will pay extra for those nice touches. Coming back through to inspect the property after the tenants had been there for a while, was so rewarding. The decorations everywhere where all about family and love. They put mulch in the flower beds, and planted flowers, They made it their own, because I gave them a shot.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $82,500
Cash invested: $10,000

3/2 Dutch Colonial on the East side of Barberton. Added 4th bedroom in basement.

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

Typical Newbie mistake. Fell in love with the house. Completely overlooked age of a/c and old water lines.

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

Realtor.

How did you finance this deal?

Conventional loan - with 20% down.

How did you add value to the deal?

Added 4th bedroom, new roof, new a/c, new furnace.

What was the outcome?

All in for $36,000 ($16k down, $20k rehab). Rents for $900. Cash flow $300. Cash on cash return 10%.

Lessons learned? Challenges?

Always snake the main drain before renters move in.

@Christopher Fougere

I cashed out my 401k with my previous employer 8 months ago, to buy my first 2 rental properties.

I ran the numbers - factoring in the 4 profit centers, I estimated I would recover the 10% penalty, 32% fed tax and state taxes within 3 years.

Assuming your 401k had 100k, you would have 53k to invest. After just 3 years, your 2 rentals would produce:

Cash flow: $18,000

Depreciation: $7,194

Appreciation: $35,650

Amortization: $6,362

Total: $67k

Time to start looking for some multi-family homes...

@Josh Thomas  Sorry for not responding sooner.  I just wrapped a 4-month rehab project!!  I was able to double the value of the house, and brrrr out all the money I put in.  

I set up the LLC right out of the gate. I needed that to set up my business banking account. Basically I wanted to separate all of my business finances from personal, and put the real estate I purchased into the llc's name, to protect my personal assets. The llc is also needed if you get into BRRRRing, so when you are ready to refinance, you don't have to wait 6 months, to pull your money back out. With the rehab I just completed, I will be able to pull out all of my cash in about 6 weeks. I was able to do this by having my llc lend me "money", as a secured mortgage - putting a lien on the title. Then I went to my lender, and they can do a basic "rate and term" refinance on the existing mortgage.

So yes - I recommend setting up the llc as soon as you are ready to start investing.

@Josiah Barkman Thanks.  Currently looking in areas between Barberton and Massillon.  I live in between - near Clinton.

Hello BP World!  

I have lived in the Akron area my whole life.  I currently live about 1/2 hour south-west of Akron.  

I have worked in IT for the past 26 years in various positions, with the most recent as an IT Infrastructure Project Manager.  

About a year ago, my cousin tried to recruit me to join her as a Real Estate Agent, and gave me a book to read "The Millionaire Real Estate Agent".  I skimmed through it, and decided "this isn't for me".  Then I bought "The Millionaire Real Estate Investor" book.  Although it was 15 years old, it peaked my interest.  Last summer I started scouring the web and YouTube for more information on Real Estate investing.  

I subscribed to several YouTube Real Estate channels, and joined a couple REI Forums. Then I joined BP in August and I was hooked!!! I bought 3 books from BP, including BRRR, which I didn't read until after I closed on my 1st house.

I almost signed-up with a turn-key company, but instead bought my first house 2 months ago with a conventional mortgage (20% down), fixed it up, and just placed a tenant last week. During the close period, I discovered BRRRR!!!! I read the book, and I found a podcast on BP (Episode 301 with Alex Felice) that blew me away. I listened to that over and over while fixing up my new investment. About 4 weeks ago, I bought my 2nd investment property with cash. After closing on my 2nd house, I used the knowledge I gained from Andrew Postell's post on "How to: Cash out 1-4 unit Property", to convince my mortgage broker to do a rate-term refi once I finish my rehab on my 2nd house.

He was skeptical at first, but ran it by his underwriter, and they agreed - I had found a legitimate "loop hole" to pull out my money and refi my mortgage with my LLC. So in January, I plan to place my 2nd tenant, pull my money out, and start on my 3rd investment property.

My goal is to have 6 single-family homes by the end of 2020, get to 10 in 2021, then who knows...

Thanks BP world!!  You helped me find my way and my why!!

Joe Forte - BP Pro member for life!!!