All Forum Posts by: Jonathan Small

@Christian Pichardo hang in there.  Keep your head up. I would not sale. I would work to get it rented. It seems you need to put in more work and network with the right people.   You have owned the property for 7+ months and don't have a property manager. I am sure you put in a little more elbow grease and learn how to make this successful.

list the property on

https://www.affordablehousing.com/ to find a section 8 renter

https://store.biggerpockets.com/products/long-distance-real-... really helped me become a better long distance real estate investor

send DM if you need help finding a PM.  I think if you call 10 realtors in the area you will get some good referrals.  

@Victor Tofilski Don't give up my friend.  Not many people want to move at the end of the year.  Many people already have their kids locked into a particular school.  Many are spending their money on Christmas gifts.  I work with my property managers to complete lease renewals in April to August.  I don't like trying to rent properties August to January.  Consider listing your property on section 8 website.  DM me if I can help or share how I list my properties.

Rough calculations on what I need to be looking for:
90k deal (purchase and renovations to get max rent)
20% down = 18k from me
80% bank loan at 8%, 20 yr amortization = 72k
-------------------------------------------------- 
Here's my DSCR calculation:

1. Calculate Net Operating Income (NOI):

   • Monthly rent: $1250
   • 40% expense ratio (taxes, insurance, repairs, vacancy) = $480
   • NOI: $1250 - $500 = $750

2. Calculate Monthly Mortgage Payment:

   • Loan Amount: $75,000
   • Interest Rate: 8% per year (0.08/12 = 0.006667 monthly)
   • Loan Term: 20 years (20 * 12 = 240 months)
   • Monthly Payment ≈ $627.83

3. Calculate DSCR:

   • DSCR = NOI / Monthly Mortgage Payment
   • DSCR = $750 / $627.83
   • DSCR ≈ 1.20

Therefore, with a $75,000 mortgage at 8% interest over 20 years, the DSCR is approximately 1.20. $130 monthly cashflow. Good renovations done at purchase should decrease repair and vacancy cost. Holding the property should pay down the loan and give us tax benefits. We can later sell or refinance the loan to cash out of the deal. This is a good reference for myself and personal private lenders.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $135,000
Cash invested: $76,000
Sale price: $265,000

Type: Single-family house in older neighborhood
Location: Revitalizing neighborhood in North Valdosta area
Initial Condition: Structurally sound but extremely dated interior with original finishes, worn flooring, outdated kitchen and bathrooms, overgrown landscaping. Significant deferred maintenance.

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

Low initial purchase price of $135,000 offered a significant entry point. This lower investment reduced the overall financial exposure compared to higher-priced properties, making it an attractive option for a project with a tighter budget. It also allowed for more flexibility in the renovation budget, even with the ultimate higher-than-anticipated costs.

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

This property was offered through a property manager. The property was a long term rental that was dated and not taken care of by the tenant or previous owner. I negotiated the price directly with the owner and didn't have to pay realtor fees during the purchase.

How did you finance this deal?

I financed this deal with 75% bank loan from a small community bank. 3yr balloon payment. 8% interest. The 25% was funded using a personal private lender. I offered them 10% interest only per year on their money. The funded the 25% down payment and the renovations.

How did you add value to the deal?

Modernizing the kitchen and bathrooms with new fixtures and finishes created desirable spaces. New LVP flooring and fresh paint improved the home's overall feel, while replacing drafty windows enhanced energy efficiency. Curb appeal was boosted through landscaping and exterior updates. Crucially, addressing plumbing and electrical issues ensured the home's safety and functionality. These improvements transformed a dated property into a move-in-ready home, justifying the increased market value.

What was the outcome?

The renovations took longer than expected due to foundation and crawlspace repairs. We ended up having to waterproof the foundation. The renovations took 3.5 months longer than expected. We went over budget by 35k. Our entire profit was lost due to high rehab cost and extended carrying cost.  Private personal investor was paid their 10% interest and return of their capital.

Lessons learned? Challenges?

I need to spend more time evaluating the foundation and moisture problems

I need to increase rehab time and cost when dealing with repairs that require specialty contractors. For example, I have 6 vendors that can lay LVP floor. I only have 2 vendors that deal with wet crawl spaces.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $150,000
Cash invested: $210,000
Sale price: $230,000

The target property was a 3-bedroom, 2-bathroom house built in the 1960s, located in a transitioning neighborhood with increasing property values. While the area showed promise, the house itself was in a state of disrepair, featuring outdated fixtures, worn flooring, and deferred maintenance. This distressed condition presented an opportunity to purchase the property below market value. After careful market analysis and due diligence, the property was acquired for $110,000.

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

This deal was interesting to me because it was in a decent area and had minimal risk of getting our asking price. I also liked the idea that I could hold this property as a long term cash flowing rental if we could not get our sale price.

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

The target property was a 3-bedroom, 2-bathroom house built in the 1960s, located in a transitioning neighborhood with increasing property values. The house was in a state of disrepair, presenting an opportunity to purchase below market value. After careful analysis, the property was acquired for $110,000. The deal was presented by a wholeseller.

How did you finance this deal?

I financed this deal using 80% loan from local community bank. I personally funded the 20% and the renovations. After I purchased the property I brought in a personal investor and gave them 12% return on their money. This allowed me to get my personal investment back so I would have cash for another deal if it should come up.

How did you add value to the deal?

The renovation strategy focused on maximizing resale value by addressing key areas that appeal to modern buyers:

Kitchen Transformation: Complete kitchen remodel.
Bathroom Upgrades: Modernizing both bathrooms.
Interior Refresh: New flooring, paint, fixtures.
Exterior Improvements: Landscaping, curb appeal enhancements.
Addressing Deferred Maintenance: Repairing/replacing damaged/outdated systems.
The total renovation cost was $64,000.

What was the outcome?

Financial Analysis:

Acquisition Price: $110,000
Renovation Costs: $64,000
Total Investment: $174,000
Sale Price: $230,000
Gross Profit: $56,000
Realtor Fees and Seller Concessions: $23,000
Net Profit: $33,000
Profit Margin Calculation:

Profit Margin based on Total Investment: 18.97%
Profit Margin based on Sale Price: 14.35%

Lessons learned? Challenges?

It was easier for me just to offer private personal lender a nice interest rate rather than sharing the percentage. This particular personal lender was more interested in a guaranteed return via a 12% rate versus owning equity in the deal.

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

Hindsight:
I overpaid by about 10k when I purchase the property. I need to work at getting better fix and flip margins.

We bought the property at a good time in preparation to peak selling season. I need to be mindful the selling season of when the property will be listed. This may increase our holding cost.

I need to critique selling expenses and seller concessions. If we renovate the property well then I am less likely to pay closing cost.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $72,000
Cash invested: $107,600

Case Study: Cockroaches to Cash Flow
Property Acquisition
I found this property through MLS. It was listed by a realtor that I previously purchased a small portfolio from and therefore had a good professional relationship. The home was a bank foreclosure from a reverse mortgage. This is a 4-bedroom, 2.5-bathroom single family house.

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

It was built in the 2010s and located in an established neighborhood with convenient access to schools, amenities, and major transportation routes. While the property's location was desirable, it was evident that the house had been neglected for several years. The interior was outdated, the landscaping was overgrown, and several deferred maintenance issues were apparent.

How did you finance this deal?

Financial Highlights
• Acquisition Price: $72,000
• Renovation Costs: $35,600
• Total Investment: $107,600
• Funds: raised from personal savings and private lender

How did you add value to the deal?

The renovation aimed to modernize the property, enhance its appeal to potential tenants, and maximize its long-term value. The scope of work included:
• Interior: Major pest remediation that took 3-4 weeks. A complete overhaul of the kitchen and bathrooms, including cabinets, countertops, LVP flooring, electrical and plumbing fixtures.
• Exterior: Landscaping improvements, including tree trimming and shrub removal. Power washing the exterior, repairing the driveway, and painting the front door

What was the outcome?

Financial Highlights
• Acquisition Price: $72,000
• Renovation Costs: $35,600
• Total Investment: $107,600
• Funds: raised from personal savings and private lender
• Appraised Value: $160,700
• Monthly Rent: $2,150
• Cash-Out Refinance: $3,200 after paying off private lender and myself
• Rate and Term Refinance: 30 yr amortization, 7.25% interest, 70% LTV
• DSCR: 1.45%

Lessons learned? Challenges?

Hindsight Critique
• Continue to build relationships to increase deal flow
• Property manager (Mercer Hughes) is critical to completing renovations and quick tenant placement
• Continue to build relationships with private lenders and personal investors
• Have cash available to make quick competitive offers

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

Here's the breakdown of rental income and expense analysis:
1. Annual Gross Income: $25,800 (Monthly rent of $2,150 x 12)
2. Annual Expenses: $25,800 * 0.40 = $10,320
3. Annual NOI: $25,800 - $10,320 = $15,480
4. Annual Debt Service: $10,680 (Calculated previously using a mortgage calculator with a loan of $131,775, 7.25% interest, and a 30-year term)
5. DSCR: $15,480 / $10,680 = 1.45 (approximately)

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $72,000
Cash invested: $107,600

Case Study: Cockroaches to Cash Flow
Property Acquisition
I found this property through MLS. It was listed by David. He is a realtor that I previously purchased a small portfolio from and therefore had a good professional relationship. The home was a bank foreclosure from a reverse mortgage. This is a 4-bedroom, 2.5-bathroom single family house.

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

It was built in the 2010s and located in an established neighborhood with convenient access to schools, amenities, and major transportation routes. While the property's location was desirable, it was evident that the house had been neglected for several years. The interior was outdated, the landscaping was overgrown, and several deferred maintenance issues were apparent.

How did you finance this deal?

Financial Highlights
• Acquisition Price: $72,000
• Renovation Costs: $35,600
• Total Investment: $107,600
• Funds: raised from personal savings and private lender

How did you add value to the deal?

The renovation aimed to modernize the property, enhance its appeal to potential tenants, and maximize its long-term value. The scope of work included:
• Interior: Major pest remediation that took 3-4 weeks. A complete overhaul of the kitchen and bathrooms, including cabinets, countertops, LVP flooring, electrical and plumbing fixtures.
• Exterior: Landscaping improvements, including tree trimming and shrub removal. Power washing the exterior, repairing the driveway, and painting the front door

What was the outcome?

Financial Highlights
• Acquisition Price: $72,000
• Renovation Costs: $35,600
• Total Investment: $107,600
• Funds: raised from personal savings and private lender
• Appraised Value: $160,700
• Monthly Rent: $2,150
• Cash-Out Refinance: $3,200 after paying off private lender and myself
• Rate and Term Refinance: 30 yr amortization, 7.25% interest, 70% LTV
• DSCR: 1.45%

Lessons learned? Challenges?

Hindsight Critique
• Continue to build relationships to increase deal flow
• Property manager (Mercer Hughes) is critical to completing renovations and quick tenant placement
• Continue to build relationships with private lenders and personal investors
• Have cash available to make quick competitive offers

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

Here's the breakdown of rental income and expense analysis:
1. Annual Gross Income: $25,800 (Monthly rent of $2,150 x 12)
2. Annual Expenses: $25,800 * 0.40 = $10,320
3. Annual NOI: $25,800 - $10,320 = $15,480
4. Annual Debt Service: $10,680 (Calculated previously using a mortgage calculator with a loan of $131,775, 7.25% interest, and a 30-year term)
5. DSCR: $15,480 / $10,680 = 1.45 (approximately)

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $72,000
Cash invested: $107,600

Case Study: Cockroaches to Cash Flow
Property Acquisition
I found this property through MLS. It was listed by David. He is a realtor that I previously purchased a small portfolio from and therefore had a good professional relationship. The home was a bank foreclosure from a reverse mortgage. This is a 4-bedroom, 2.5-bathroom single family house. It was built in the 2010s and located in an established neighborhood with convenient access to schools, amenities, and major transportation routes. While the property's location was desirable, it was evident that the house had been neglected for several years. The interior was outdated, the landscaping was overgrown, and several deferred maintenance issues were apparent. The biggest problem was that the home was infested with insects and rodents. Many pest companies stated this was the worse infestation they had ever seen.
Despite its condition, the property presented an attractive investment opportunity due to its below-market listing price. After conducting thorough due diligence, including a professional inspection and market analysis, the property was acquired for $72,000.
Renovation and Transformation
The renovation aimed to modernize the property, enhance its appeal to potential tenants, and maximize its long-term value. The scope of work included:
• Interior: Major pest remediation that took 3-4 weeks. A complete overhaul of the kitchen and bathrooms, including cabinets, countertops, LVP flooring, electrical and plumbing fixtures.
• Exterior: Landscaping improvements, including tree trimming and shrub removal. Power washing the exterior, repairing the driveway, and painting the front door.
• Systems: Servicing the HVAC system, replacing the water heater, and updating the electrical panel.
The renovation was completed in 13 weeks and totaled approximately $35,600. The project was managed by one of my property managers for a 10% fee.
Leasing and Property Management
With renovations complete, the property was ready to be leased. Market rent analysis was done using 2 different property managers and Zillow. The property was leased for $2,150 per month.
Refinance and Return on Investment
After a stabilization period of 6 months, the property was refinanced to leverage the increased value created through renovations. The new appraisal came in at $160,700. Doing a 70% cash our refinance allowed me to get our initial purchase and renovation investment. This provided a substantial return on the initial investment and freed up capital for future projects.
Financial Highlights
• Acquisition Price: $72,000
• Renovation Costs: $35,600
• Total Investment: $107,600
• Funds: raised from personal savings and private lender
• Appraised Value: $160,700
• Monthly Rent: $2,150
• Cash-Out Refinance: $3,200 after paying off private lender and myself
• Rate and Term Refinance: 30 yr amortization, 7.25% interest, 70% LTV
• DSCR: 1.45%
Here's the breakdown of rental income and expense analysis:
1. Annual Gross Income: $25,800 (Monthly rent of $2,150 x 12)
2. Annual Expenses: $25,800 * 0.40 = $10,320
3. Annual NOI: $25,800 - $10,320 = $15,480
4. Annual Debt Service: $10,680 (Calculated previously using a mortgage calculator with a loan of $131,775, 7.25% interest, and a 30-year term)
5. DSCR: $15,480 / $10,680 = 1.45 (approximately)
With a 40% expense ratio, the DSCR is approximately 1.45. With a 40% expense ratio, the DSCR is approximately 1.21
Hindsight Critique
• Continue to build relationships to increase deal flow
• Property manager (Mercer Hughes) is critical to completing renovations and quick tenant placement
• Continue to build relationships with private lenders and personal investors
• Have cash available to make quick competitive offers

@J. Mitchell Bernier Thanks for the housing data.  It seems I can get $1200-1295 for a section 8 rental.  What does my purchase price and down payment need to look like for the bank to provide financing?  What loan terms are currently being offered for these type of rentals?

Congratulations on getting into the game.  I agree with @Twannisha Jackson  I have been successful because I work with EXCELLENT property managers.  Excellent property managers refer me and often have relationships with others I need on my team such as bankers, attorneys, vendors, contractors, agents, and most importantly deals.  

I recommend a boring long term rental, 1980 or later build, in a good area.  I have found my boring investments are the most profitable.  

I would stay away from flips.  Flips are exciting, you learn a lot, more risk, more upside, more headaches, more short term taxable income.  I think you need more experience, reserves, and a financial cushion to do a flip.