All Forum Posts by: Johnny Quilenderino

I have the opportunity to buy 12 SFR in a C and D class area. The gentleman is getting out of the business and is offering owner financing. All of them would get 300 dollars a month back after PITI. I would need 18k for broker and realtor fees, plus another 5k for the termite and home inspections. What questions should I ask? What contingencies should I put in the contract? How should I go about paying off each one individually once I have them? I already have a HELOC pulled for the 23 k needed for the transaction. Just worried that I might be over-extending with all twelve at once. Any feedback would be greatly appreciated.

I have the opportunity to buy 12 SFR in a C and D class area. The gentleman is getting out of the business and is offering owner financing. All of them would get 300 dollars a month back after PITI. I would need 18k for broker and realtor fees, plus another 5k for the termite and home inspections. What questions should I ask? What contingencies should I put in the contract? How should I go about paying off each one individually once I have them? I already have a HELOC pulled for the 23 k needed for the transaction. Just worried that I might be over-extending with all twelve at once. Any feedback would be greatly appreciated.

@Ayana Miller hit the nail on the head and drove it home. I would say anything under 50k watch out for structural, electrical, crazy tenant, or overall class D neighborhood that is not going to be gentrified in the next ten years. I too invest in multi-family but I am attempting to move away from quad plexes and tri-plexes and move up to a 6 or 8 plex. 

Always check the following: flood zones, zoning districts, tax assessments, and last two years of tax returns prior to making a deal.

There are great lenders in the area, and the market right now is great depending on the area you intend to invest. All cities have their macro-economies that you must be in tune with. 

My last two deals were for sale by owner and I happened to be at the right place at the right time. Either way, as long as the economy is moving and we are spending on defense then this area will be pretty stable.

Good luck.

Good afternoon BP,

The dust is still settling from my two purchases this month that are long term buy and holds, that I got for a combined 135k that would sell for 400k once repaired. The problem is that these are MFR that are fully rented, so I am in a dwell period until my next buy or when a tenant moves out.

What does everyone do during their dwell period?

Happy Sunday,

Johnny

Thanks Michael and thank Austin!

It helps when your wife is all in too!!!

Good afternoon BP,

So today we closed on two properties, a quadplex and a triplex, 6 of the 7 units were rented. I also turned them over to a property manager at a 7 percent rate.

Property number 1) The Alamo

Quadplex in a C area, within walking distance of town hall and gentrification is in progress in the area. This house was on the market for 135k that appraised for 79k and I got for 75k. Similar quadplex in the area that are rehabbed go for 250k and up. I nicknamed this one the Alamo because of the all brick walls and four chimneys that look like guard posts.

rent roll is as follows: 2200 gross rent

Monthly Expenses:

PITI - 550

PM - 174

Water - 300

CAP Exp - 220

NOI = 956

Property number 2) My First Victorian

Triplex also in a C area, within walking distance of town hall and gentrification is in progress in the area within a mile of house number 1. This is a Victorian that needs windows, roof, and siding painted but the inside has hardwood floors an 80 percent of the 2000 sq ft. This house was on the market for $80k and I picked it up for $60k and it appraised for 80k. There are similar houses in the area that are rehabbed that go for $200k and up. 

rent roll is as follows: 1700 gross rent

Monthly Expenses:

PITI - 490

PM - 105

Water - 180

CAP Exp - 170

NOI = 755

I had to use conventional financing to get these two houses. Each one was 30 percent down and has chewed into my safety net for now. My intentions are to build up the safety net again, surpass it, then work on the curb appeal of both houses. Also, my intentions are to update all interiors over the next four years to get a better market rate on all apartments. These are my first set of MF properties in my quest to get 30+ in the next seven years. I have plans to get two more this year via a 1031 and maybe one more next year after I fix up the curb appeal and refinance. 

These were not the best deals out there, but for what I could afford and my skill set these were the ones that made sense. 

Lessons Learned:

1) Secure financing, I repeat secure financing before you start looking for your dreams!

2) If you are taking a property "as is" see if you can inspect it anyways and see what lies under the rafters and in the crawl space.

3) This actually was a three for one deal ... three properties for $180k but I was afraid to say yes because I did not have #1. I ended up pulling the trigger two days to late!!!!

4) Section 8 tenants are tenants are not that bad, but the inspectors will get you!

5) If you are buying from a guy that is using an "under the table" PM, make sure you get all the keys at closing. I actually had to get two sets of keys from the PM and tell him he is no longer employed.

Well that is my story, hopefully this adventure goes well and we start pulling in some of the potential cash flow. Thank you for reading

Johnny

Dennis, 

Welcome if you really look you can get deals, but you will have to repair them down the road. I am in the process of buying two. 200 dollars a door is my minimum. Right now I am getting about 300. Good luck. Analyze, ask questions, and get a good realtor.

Cheers,

Johnny

PM me we are using a company out there and it is a ten percent fee of the rent. I will not disclose the company name on this forum because I do not recommend them. Here are three reasons why:

1) Attempted to charge me for a full repair of my boiler. When I questioned them on what was wrong and how many quotes they got for the repair, the answer was one. This was a 18k repair they were attempting to have me pay. When I challenged that Property Management and quote, they had another contractor go out and repair the boiler for 150 dollars!!!!! If I had not challenged that I would have still been paying that 18k down!

2) Every time I call about my property, I never get the same person, nor do they pull my file while we are chatting to see what was on the email or emails to between the company and us. They normally have to have someone call back, at their own leisure. 

3) They have not been able to keep up with their system to send the right documents to us on-time to review ie we got a report that a window on the door was broke, ten days after it was reported to the company. Granted they took care of it, but they did not ask the question "how did this happen?" this was not normal wear and tear. We ended up with the bill and it should have been the tenants. Either way we are not using their service as on June this month. 

Send me a PM and I will tell you who it is. Cheers and good luck up there.

Thanks,

Johnny

@Megan Greathouse, 

For your single family rental are you executing a 1031? We are upgrading in September from a SFR to two MFR in Oct, I have three perspective set of deals to attempt to set the 1031 up right.

If you have not looked into that and you do not want to get crushed on end of year taxes that is how I would save a lot of my proceeds from the tax man. Granted they are not easy, but a good QI will get you in the right mind-set.

I like your plan to rehab and rent out, that is what I am doing with my May project. 

Good luck!!! Have fun, maintain your passion, and when you need advice hit this place up and your local real estate groups up. Nothing in the business is a new occurrence!

Cheers,

Johnny

Good morning BP,

So what are you goals for 2017-18?

In Jan while on deployment my initial set of goals for 2017 was to start our Rental  Business and make 12000 this year.

Fast forward to now:

Goals for the year:

Finish closing on two MFR that will bring 1500 a month in NOI. (May)

Sell our Boston home in a 1031 tax exchange (Sep) We were losing money on the rental.

Buy two MFR properties for 400k in Norfolk (Oct)

HELOC to pay off the two properties that we bought in May and Quit Claim Deed them to the business (Nov)

Business will possibly go from 200 dollars a month NOI to 3000 a month NOI in less than a year

Goals for 2018

Fix up one of the properties bought in May of 2017 (windows, siding, roof) (Feb 2018)

Refinance and buy another MFR residence (Jun 2018)

Move out of the Hampton Roads area for three years and let our properties grow.

Does this sound aggressive, am I fooling myself into a debt snowball that cannot be recovered? Just wondering, and wondering what everyone else has plans on executing!!!! I think this is going to be an exciting first year for my family business.

Cheers,

Johnny