All Forum Posts by: Joel Fine

Investment Info:

Single-family residence buy & hold investment in Austin.

Purchase price: $267,500
Cash invested: $60,000

Round Rock, Texas
Deal closed 6/28/18
Cosmetic rehab completed 7/31/18
Rented out 10/5/18
Cash out refi 10/15/18 - got all but $60k back out

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

Interested in relocating to Austin area someday. This is our "stake in the ground" there!

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

MLS

How did you finance this deal?

Paid cash, then did a cash-out refi.

How did you add value to the deal?

Minor cosmetic rehab - new floors, paint inside & out

What was the outcome?

Rent now covers PITI. Property was built in 2003 and got a new roof a few years ago so repairs should be pretty low. Cash flow not great but decent appreciation potential near major tech employers including Dell & Apple.

Lessons learned? Challenges?

Cash flow isn't great, looking elsewhere for that.

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

Denise Braun, agent - she was great
Axos Bank on refi

As long as there are no structural issues, that house should remain erect for a good long time.

Great story @Johnny Situ. Appreciate you sharing both the ups and the downs. Sounds like you have a great sense of your "why" which will keep you going through any rough patches. But, with the energy you show and the positive cash flow on 9 SFRs I suspect you've got a terrific future ahead. Congrats, and keep us posted!

I'm applauding you and slightly jealous at the same time. Hope to be where you are within the next couple of years. Congrats! Keep us posted on how the journey goes!

In Ohio where I'm buying, the standard purchase contract includes a clause staying that security deposits are credited to the buyer at closing. So it's never even been a question. You might check your purchase contract to see if it addresses this issue.

Just revise the terms slightly: 

"Move-in fee converts to refundable security deposit after 12 months or any increase in rent, whichever comes first."

Boom, not shady any more.

Prosper Cleveland is linked to Real Wealth Network, run by Kathy & Rich Fettke. RWN runs educational webinars and live events around the country and connects retail investors with turnkey companies in about a dozen cities. Prosper Cleveland is the company RWN uses in Cleveland. Here is a link to a recent webinar hosted by RWN, discussing Cleveland turnkey opportunities. I think the presenter is from Prosper Cleveland.

https://www.realwealthnetwork.com/learn/growth-cas...

If I were looking for turnkey in Cleveland, I'd probably give them a call.

This post would seam to be (a-hem) tailor-made for alteration. Maybe if you shared the ad-dress we could suggest a suit-able remedy. 

This is a great question, one that all RE investors grapple with: Am I better off keeping an asset I own, or selling and redeploying?

You are missing one very important piece of information: how much equity do you have now? The properties may be worth $3M but how much debt do you have on them? The key question: how much would you walk away with (after debt pay-off, transaction costs, and taxes) if you were to sell the properties?

You are also missing some elements of the net, after-tax return you are getting from the properties. You are losing 20k per year in cash flow, but that's offset by principle paydown and tax benefits of depreciation (which are quite predictable) as well as appreciation (which is not predictable).

Once you know the net, after-tax equity AND the net, after-tax return you are getting, then you can meaningfully compare with alternatives. Appreciation will be the wild card - you could deal with that by running a few calculations using different numbers for apprecation.

Index funds over very long periods have returned about 10% per year. Compare that with the net return you are currently getting on your equity. Then you can decide whether you are better off selling.

Now I see why they call it a BRRRR.