All Forum Posts by: Johnny Quilenderino

Team BP,

Thank you for all the kind words again. I hope everyone has a happy New Year and a prosperous one

@Javon Gordon I sent the information to your inbox.

@Lala Weiss Having my wife as a partner makes all the difference in the world. She laughs that she knows "nothing" at the moment, because Navy is our primary job, but understands once we are done serving, our "job" will be real estate in some fashion.

@Mike Bereck I am up for a Q/A session hit me up. Like I said in earlier in the post, I am a newbie, I have implemented a BUNCH of strategies at once to get where I am at. Seasoning and settling out period is where I am right now. 

Cheers,

Johnny

@Will Wiggins I had a loan on standby for that already, free and clear on C.C. My credit score should rebound next month.

@Scott Waterbury

@Scott Waterbury I might need to PM you in a few months, I will keep that in mind!!!!

@Lala Weiss  My wife and I are both Navy Officers, I have been in for 24 years, and she has been in for 16. I am looking to retire in about three years. The job has been the difference in buying a few to buying many! We began with one properties each, then combined forces and it has been a great ride.

@Justin Young I have built my network via BP, using my local real estate club, FB, and my active duty Navy network of people. I have had many, and I mean many "no"s due to my aggressiveness and my long term outlook. I look at items on the market for their 10 year potential, not their now potential. I am all about delayed gratification, and paying myself later. 

@Varun Parkash to qualify for the VA loan was not that hard. To finally get my financing, that was tricky due to my multiple acquisitions (this year) and that they were still in the "seasoning" period, plus loans in my name and my wife's name and figuring out the correct long term set up. As for books, I read all the free stuff first!!!! Then millionaire real estate investor, Set for Life, and all the forums of the topic you want to learn about. Business side of the house I am still learning, so I do not have any books at the time that I recommend. BP and all the free forums out there will get you the best start. If I knew this was around ten years ago, I would have been investing earlier!!!

@Darren Wade Yes, my first deal was from the dreaded "Zillow," and my last investment is from it too! Only one I used a wholesaler for was my 6 unit this month. I am trying to get on his preferred buyers list so I can purchase one or two more 4+ next year and eclipse my cash flow goals for 2018. 

So this year has not all been fun and games. Almost every closing had hiccups going into the last week, or just possible delays. If my wife was not "All In" and trusting, this could have been the end after the first deal. Now, I try to prevent all hiccups, by mass emails to all key players. I figured out that the last week prior to closing, you have to be a micro-manager or you will not close on time. As the saying goes, "Squeaky wheel, gets the grease, same with closing, the squeaky customer gets the attention!"

I hope I have answered everyone's questions. Please send me a PM or repost your question if I have not!!!! Good luck in 2018!!! Thank you for reading my post! Happy New Year's!!!

Very respectfully,

Johnny 

BP,

Thank you for the kind words!! You guys inspire me to do even more!

@Jason Ray Richardson I am in total seasoning phase right now. I have an extra 40k coming in June from a refi, and a rehab loan to pay down most of my credit cards, so I want to hit the debt hard for a bit but also, save for my wife's purchase in AUG. I have to purchase another SFR for her in AUG. After that, I am going to take over the left overs from 2018. I am looking at using my realtor and wholesaler to increase my net income by 1k-2k a month by 2019.

@Mathew Zorn Hit me up via PM, I am in the area until Mid Jan, then I got to start my journey in DC. I plan on some sniper shots and taking a few properties via sight unseen and by inspection only at the end of 2018. I am always available via text or email.

@Charles A. Getting a loan from a brick and mortar bank that has a personable loan officer and will allow creative financing had made the difference! Taking action is one thing, taking action with bank backing, million dollar difference. As I cast my net further, I will get into owner financing, possibly joint ventures and private money adventures. I talked to 50 banks before I found the bank that I found, but hands down they were a game changer.

@Angus Yang What makes me different. Hmmm, I am a planner, I am visualizer, I throw a million ideas on the wall and attempt what I can. I do not give up easily, I get creative, I have faith in the system, I have read and used a bunch of tips from BP, books, and mentors. I follow through, check and second check.

@Javon Gordon For my non-commercial loans, I used Federal Savings Bank @Upen Patel, for my commercial loans, I used Union Bank and Trust. PM me for the loan officer at Union Bank. He has made all the difference in the world. 

@Raymond Culbert I used a combined 39k down payment on my first two loans, a 1031 for the second loan, VA financing for the duplex, a refi of my first two properties to buy my second six unit, and credit cards to buy my 5 unit. I am getting a rehab loan to pay down 90 percent of my rehabs that were required to get my awesome refinance numbers (bought for 135k - reappraised for 255k).

Team, I had a lot of help, no partners (yet), but I could not do it without this forum, I am still learning and consider myself a newbie. I am still having fun and making mistakes but learning every day and I mean every day! My ultimate goal is to retire in three years, and my freedom number is 20k NOI a month but making 15k due to vacancies and what not. I have to be real with the goal, but I have to set it and shoot for it. Good luck everyone! Once again thank you for the kind words, and keep pushing forward!

Very respectfully,

Johnny

Team,

Love all the responses. Here is how the deals went down: (sorry kind of long post)

First two purchases in Suffolk, VA, a two for one deal for 7 units total, a four unit and a three unit. All traditional financing for 135k, had to put 39k down on the project. Current all cash flowing.

I found these deals on Zillow, same owner so I asked how much for both, he came back with three different properties and 150k. I was off to the races to fund all three, a week later I had the money but he only had two properties left. Closed the same day, and turned over to a property manager. COC (20 percent once I evicted all the horrible tenants)

Unit count (8)

Second purchase was in Norfolk, VA a six unit that was full and cash flowing. I had to sell our negative cash flowing property in Boston through @Charlie MacPherson. He got us a KILLER sell. Then we executed a 1031 in 84 days ask @Dave Foster about that one, got the property for 320 financed, and turned it over to my Norfolk PM. Had to create my second LLC to keep this one within the realm of the 1031 since I was not on the deed or the mortgage. COC (infinite) we put no money into this deal.

Unit count (14)

Third purchase I had to do some financial moves that drove my CPA insane. 1. Had to refinance OUT of a VA loan on my only SFR property. 2. Had to qualify for a VA loan with the zero down option. This deal closed this week, I found a duplex in DC for 16k down, the property is in a hot area and the final cost was 619k. I will house hack this for half of my mortgage. I have a plan to get out of this one in a year and fund another VA through my wife. She is a military member also. Expected cash flow at the end of the year 400 dollars a month, with very little CAP Ex, it was a fully rehabbed property. Also, I never stepped foot into the property until the day I bought it. Thank you @Russell Brazil for being patient and getting me through this challenging one!

Unit count (16)

Fourth purchase I asked my lender to combine the Suffolk purchases under a portfolio loan, and if I could pull some money out. The appraisal came back for both properties at 255k, I bought the properties for a combine130k. My lender said go fetch and I came back with a 4 unit, but backed out of it, I did offer 90k when they asked for best offer. While I was in a "rut" I posted on Facebook that I had a lender that would lend me up to 1 million if the deal was right. Two weeks later, I got a hit, a FB message and I was off to the races. The deal was a 6 unit, 4550 in incoming rents. When I came back to the lender, he stated I had a solid 56k in money to buy, and I had to come up with the extra 24k. Granted this was when I though I was able to pull the full 200k (ish) out of my newly refinanced properties in Suffolk. The lender asked what could I do for the next three weeks to get approximately 40k until he settled a business loan for us to consolidate. That is where the credit cards came in. I pulled from my two business credit cards and one of my personal ones to come up with 40k for a down payment. This one closed on Wednesday. COC is about 30 percent when full, break even is 33 percent full.

Unit count (22)

Final purchase this year! Literally this year, closing is on the 29th. Everything is on track. I have the appraisal coming in on the 26th and the insurance is being bounded right now. Remember that four unit that I backed out of and fell into a rut. Well, I circled back to it. Seen that it was still on the market, and I asked if it was available. Obviously it was yes. My previous offer was 90k. Now, I am playing ball, the listing was 75k and I offered 65k. Sold!!!! The seller jumped on the deal. Upon inspection, I found the property was not a 4 unit but a 5 unit. Even better, I have a commercial lender and not a residential lender, I am in! I hope to close on the 29th as long as everything keeps tracking. This one I am going to have to do some work to the foundation, and the fifth unit was a storage unit. So, I have to get everything out of that one.

Unit count (27) 29 Dec!!!

Cheers,

Johnny

BP, Well next week will be officially 7 months in the trenches real estate and I will officially be at 27 units. 2 six units 1 five unit 1 four unit 1 three unit 1 duplex 1 single family only thing not bought this year. I will be at my third closing this month. I have learned a ton and still learning every day. I have done everything from a 1031 to pulling money from credit cards to buy houses. I am down to three residential loans and the rest are commercial loans. I have seasoning plans until my new acquisitions settle out. Once that happens it will be buying season again. Thank you BP for showing me a new direction and giving me the knowledge to step out there make mistakes, but ultimately make money. Cheers, Johnny

Scott,

My answers are in bold. I still have the "meat and potatoes" questions #5 to answer. I will be calling GC's and insurance agents tonight.

1. Purchase price is 1.3MM for the land plus the condo approvals? Reason for asking, if luxury condos sell for 120k, then the 1.3M purchase price is 54k per door just for land, which is nearly 50% of your cost basis. This sounds very high. We like to underwrite land on for-sale homes and condos somewhere between 20% and 25% of revenue. So if you sold units at 120k, 20% would be 24k. Remember, you have to pay for land, const. costs, soft costs, interest carry on your loan, permit and development impact fees, your profit, and fit that all into 120k per door on the unit sale (BTW, 120k per unit walking distance from Chesapeake Bay sounds cheap, but I'm not familiar with the market). Purchase price is for the land and condo approvals. I would still have to get a GC into to demo the 7 units on the property. You were right, luxury condos go for a median price of 220k and higher depending on amenities. I am not a condo person, but I am a commercial buyer.

2. Has the developer done any construction drawings beyond the condo approval? Yes, proof of concept (POC), and architectural drawings were done due to the airport close by, and flight/height restrictions all approved in 2008.

3. Has the developer completed all the legal and technical parts of the subdivision for city of Norfolk or state of Virginia subdivision requirements? Subdivision is approved in 2008 by the City of Norfolk development board.

4. Will the architect who did the design for the project approvals stay on board to do the CD's, and what is their charge for that design? The architect will stay onboard, but did not give his fee  for the design.

5. Have you run any numbers on the deal? I always run numbers very first thing, to see if the deal even works at all in the beginning. You'll have to ask around for hard costs and fees, but most land brokers in your area should have some guidance on this for sites that they've sold recently. You can also call local small and midsize GC's for their budget guidance on hard costs.

Still working on this answer. I do have a local broker that is running the numbers.

You can do a very simple proforma as follows:

Revenue from sales

Less

Broker fees for condo sales, closing costs for unit sales, warranty costs for units sales

Land, closing costs for land, broker fees for land

Soft costs, architecture, civil eng, MEP/S engineering, soils report, Phase 1 if needed, developer insurance, prop. taxes during const., marketing, subdivision costs, HOA formation and reserves

Hard costs - GC contract costs, overhead, profit, insurance

Development impact fees, permit fees, school fees, park fees, etc.

Loan costs for const. loan, interest carry, loan fees, appraisal costs, lender legal, funds control

Developer fee

Equals (what's left) - developer profit, normally shared between equity investor and developer.

6. Why is the developer selling? What's wrong with the project that they want to sell? Maybe nothing is wrong, but you ALWAYS want to ask yourself this question. What issues does the developer avoid if he sells to you? Permit issuance constraints/lottery, soft market, lack of const. loans or equity, condo defect liability (maybe more of a CA thing), or whatever else. You don't want to be the greater fool.

The developer had it rezoned in 2008 (then the crash hit), he did not pursue the land conversion, and just built two duplexes and a triplex within walking distance of the beach. He knows it is a good sell, but does not have the equity for a year long project. Once I figure out most of question 5, I will know if I am able to possibly execute the buy and hold until the units come online.  

@Javier Graves I used Capital One and cold called them, they gave me a 30k card and I was off to the races to fix up my two properties. I did foundations on both, two kitchens, repainted both of them, repointed the brick one before I repainted, and a paid for the initial pest control for both properties. Now that I have been in business for 8 months, Wells Fargo has offered me a 100k card, but I am politely bowing out away from that one.

Good luck!

Johnny

Team,

I am an example of how to use Business Credit to your advantage:

This year I formed 2 LLCs, bought my first two properties under my name, did a 1031, refinanced my two properties (newish properties) under an LLC after 6 months of seasoning, used BUSINESS CREDIT to fix up the first two properties, prior to the appraisal, to refinance both properties under my LLC in a blanket loan. Now, I have a 60k HELOC under my LLC that I am going to use to pay down the Business Credit Cards and improve my Business credit rating. Also, I found two properties to put a small down payment on, from the HELOC, and close next month.

BLUF (bottom line up front) it is doable, I am one of many that have done it. Without it, I would not have reached my goal of 5k a month in cash flow, nor would I have been able to close on 25 units this year.

Cheers and good luck!

Johnny

Scott, I am looking at a 1.3M value add project. The project is Norfolk, VA Currently the property consists of two gorgeous houses with a pool and is 3 acres within walking distance of the Chesapeake bay. The owner got it approved for a 24 unit condo conversion, but would rather sell, then go through the year long process to build these units. Fact: luxury condos sell for 120k in Norfolk if built right and correct ammenties Fact: There are two bases, five shipyards and 7 major boroughs with in 30 miles of this land. Fact: I would have to demolish the current buildings and then start the project. Fact: most condos take about a year to build in the area What would be my next step if I got funding? How do I prepare for a contractor? Where do I go to find out how much it costs to build condos in the area? What am I not thinking about thank you, Johnny