All Forum Posts by: John Gentile

Thanks @Nancy DeSocio!  Couldn't agree more that it is very rewarding.  And I appreciate your support over the past year.

Thanks @George Blower  Much appreciated.

And thanks @Owen D..  Very helpful.  I have a goal to purchase the next one soon so I will definitely reach out to your contact.  Thanks!

Investment Info:

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

Purchase price: $392,000

Contributors:
Lewis Brugger

I recently closed on my first multi-family. It was a long search to find a property that met my standards in terms of growth potential and having solid numbers on day 1 (especially in the southeastern Massachusetts area). I have already started updating the property and will continue to do so throughout the year. I inherited 3 tenants (month to month) who have all been great so far. Thanks to all of those in the BP Community who have provided support throughout the journey to my first deal

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

The opportunity to make some improvements that would boost rents was a big draw. I also liked the town and the proximity to my primary residence.

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

My agent @Lewis Brugger helped me find and negotiate the deal. I received 7k back at closing to take care of a few repairs.

How did you finance this deal?

I financed this deal via conventional financing.

Lessons learned? Challenges?

I worked with a local bank that promised 20% down when we first talked and continued to promised that down payment percentage throughout the process. Within about a week of closing, they said I needed to put down 25% down. I was still able to make the numbers work, but it was a disappointing setback at the time. They also forced us to change the closing date 3 times (seller was agitated). This bank did come highly recommended from another investor... But I will not be using them again.

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

Yes - @lewisbrugger

LRB Acquisition is an experienced investor/flipper who is seeking a contractor to complete a residential renovation project.  

LRB recently acquired a property in Easton, MA that they are looking to bid out. The house needs everything inside and out, plus a full dormer to be added to the front side of garage.

LRB is looking to work with a GC who is reliable, efficient, professional, licensed/insured and understands how this business works in terms of pricing/affordability and time frames.  If this project goes well, there could be more project opportunities in the future.

In addition, you must have a working relationship with all subs that are licensed/insured, professional and efficient as well. 

If interested, please contact @Lewis Brugger via direct message or 774 287 9750

Thank you

Hi, 

My partner and I are currently shopping for 10-20 unit rentals in south eastern, MA and RI.  Does anyone recommend a quality property manager close to this location?

Thanks!

John

@Christian Allen Thank you!  I agree 1200 could be a stretch, which is why I'm not 100% confident about this deal.  Taxes are a bit lower but they still feel high ($6350) to me considering some of the towns I have been analyzing in Mass, which are in the 2000 - 5000 range.

@Nancy DeSocio  haha that's pretty funny you saw the same place.  It's nice to see you had to think this through also.  I got a bit emotionally attached because my wife liked it also, and she is usually picky with real estate.  I'm usually strictly numbers.. if they don't work, I move on.  Thank you!

@Dan Curto thanks very much.  Yes I would manage the property on my own.  The prices are very high right now. It's frustrating.  

Taxes are very high in Providence.  They are astronomical as you get closer to Brown.  

Makes you consider using one of those turkey companies in the midwest or down south and getting the 12-15% ROI. But where's the fun in that?

@Anthony Thompson and @Joseph Birbiglia thank you for the reply.  

Anthony - I would pay for water/sewer.  The tenants are paying for heat/electricity.    Yes it's a conventional loan at 25% down.  I feel pretty much the exact same way - with closer to market rents it's a better investment but not great.  Doesn't get me super excited to do the deal.  It's an assumption to assume I can get the rents.  From what I've heard, the current owner didn't want to raise them because he likes the tenants.  He hasn't had turnover in quite some time.  Very helpful.  Thanks!

Hi BP Community,

I'm in the Massachusetts market, south of Boston.  I have been looking at Rhode Island for more favorable prices.  My wife and I found a 3 family in Providence (east side a couple blocks from Brown University) we really like.  Asking price is 349k and we could get it for 335k (we are in the middle of negotiation).  It has a new roof put on a year ago with a lifetime warranty.  All capital expenditures are good for a long time.  Each unit was updated along with windows in 2013.  

The units are all rented but rent is below market - 950, 950, 900 (2BR, 2BR, 1BR).  I want to add access to the basement (it was closed off due to the stairs collapsing a number of years ago), to give tenants storage access and also to install washer and dryer units (these updates don't need to be done immediately, but I'm factoring them into the analysis).  Considering these additions along with some minor cosmetic updates and where the market is at, I feel like rents could be 1200, 1200, 1000 (sellers agent says 1200-1400 for the 2brs but I think that is high given the smaller sq footage).  Leases are up in March, April, May.  If the current tenants stay I may only go up by a smaller amount - 1100, 1100, 950.  I've been told they are excellent tenants.

The link below is the BP calculator analysis with current rents. As you can see, metrics like cash on cash ROI are not favorable. We really like the area, the property, and the fact that it attracts quality tenants and I know you can't put a price on that. Should I move forward with this under the assumption I should be getting better rents and knowing there aren't any big expenditures around the corner (pending an inspection)? I have analyzed a number of properties over the years and have been less excited about properties with better numbers that come along with other issues.

I know appreciation is lower and taxes are high in Providence. Also I'm funding a portion of this from a HELOC and that int payment will eat into some cashflow. However, if the rents can come up to where they should, cash flow would be an additional $600 cushioning that blow.

Thanks!

https://www.biggerpockets.com/calculators/shared/257326/9f4dfe3e-ad5d-4e9f-9607-37c274f7203e

Hi BP,

My goal in 2018 was to buy 2 single families or condos via the BRRRR method, and a more traditional multifamily investment for my SDIRA (which I have not began searching yet).

I like condos because the prices are lower and the properties are lower maintenance (as long as the HOA details check out). The downside is it is difficult to obtain the margins needed to get a big portion of my initial cash input with the BRRRR method.

Single families are more favorable for the BRRRR method because you can add more value and forced appreciation. However the prices are too high in my area. I'm looking to stay within the 100-125k range.

I'm finding in the expensive eastern Massachusetts market, it is difficult to make the numbers work - the prices are high and a lot of offers are going for close to asking price (even for rehab properties). My next step is to attend some local AREIA meetings and find wholesalers who have some off market deals with value (to this point I have been using MLS only).

I'm not giving up on the BRRRR strategy, but I am starting to consider other possibilities. I was hoping to get your thoughts:

1. Using a turnkey company:  The ease of this is appealing and the numbers in the more favorable markets are even more appealing.  I don't like that the property is so far away, and in the beginning at least, I want to be more hands on and not use property management (I may research turnkey more in depth in the forums)
2. Partnering with another investor: I know 50% of a deal is better than 0% of no deal. I'm doubting anyone wants to partner on smaller investments. That typically works for multifamily. If I go that route, I'm not sure I can build the volume of properties as the down payments, even when split, will be very high. The reason for using BRRRR was to be into properties for as little as possible and to build a portfolio as I am preserving capital. It could also take awhile to find a partner whose goals align.
3. Buy local condos or single families in my area, but forget about BRRRR. Just ensure it cash flows and the numbers/details check out. The pros are I invest local, but the cons are it takes longer to achieve goals and build capital for the next deal, as I have eliminated the refinance and repeat pieces. Not sure that trade off is worth it.
4. I have a friend who flips properties. I can focus my efforts on partnering with him this year and building capital. This allows me to find some more expensive properties where I can add value and continue with the BRRRR method. The downside is I may have to put the "buy 2 properties per year" goal on hold.

Any input or insight you can provide would be much appreciated.  Thanks!