All Forum Posts by: Jonathan Small

Investment Info:

Single-family residence buy & hold investment in Jefferson.

Purchase price: $235,000
Cash invested: $10,000

Property details: 4 bedroom 2.5 bathroom single family house. New construction in a new subdivision. Great school district. Technology and logistic companies are economic drivers. I choose to self mange this property since it is at a higher rent rate and new construction.

Deal finding: Upside opportunity to increase rent over time. This is a high appreciation area. This is currently the only house that is less than 250k. I am expecting to increase rent 10% at renewal. Low rental inventory is leading to higher rent increases. This is a long term buy and hold investment. On a scale of 1-10 with 10 being a grand slam I consider this deal a 8.

Number analysis: I will have about 19% equity before the down payment. Taxes and insurance are about 6% of sales price. Area has about a 2.4% vacancy. I was able to work with my local banker to get the following terms: 3.5% rate, 5% down, 30 yr amortization.

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

New construction in an area with great appreciation. Area has great schools, low crime, and great employment.

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

I found this deal using an online broker builder. This is a discount builder. You don't get to choose any build options. You have to go online and bid for the house.

How did you finance this deal?

I used conventional loan with my bank that offers 2nd home financing. I had to put down about 5%

How did you add value to the deal?

I self managed and saved 10% in management fee. I spend about 20 minutes a month to deposit tenant checks using mobile app.

What was the outcome?

This property cashflows the most for me. No maintenance since it is new construction.

Lessons learned? Challenges?

This was a good deal due to housing and rental shortage. My financing made it a better deal. I learned to invest in great appreciating areas that have high quality tenants. I had tenants give me 12 post dated rent checks so all I have to do is deposit using mobile app.

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

Mitch Davis was my buying agent

Investment Info:

Large multi-family (5+ units) buy & hold investment in Valdosta.

Purchase price: $870,000
Cash invested: $170,000

We purchased this portfolio of single family homes from a corporation. All of the units had existing tenants

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

The seller connected us with a local bank that was ready to fund the deal with favorable terms. The homes were already rented. Seller provided inspection reports with the purchase.

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

We found this deal on marcusmillichap.com. We negotiated seller to pay some of the closing cost.

How did you finance this deal?

We use local bank that was introduced to us by the seller. We put down 20% that was funded from stock investments.

How did you add value to the deal?

We stabilized units. We increased rents as leases renewed. We collected tenant deposits. We renovated properties as units became vacant. We hired a professional management company.

What was the outcome?

This has been one of our best deals to date. This is a long term buy and hold investment.

Lessons learned? Challenges?

We learned the power of leveraging property. The bank has allowed us to put other property up as collateral which has lowered our out of pocket down payment on future deals. We found a great property manager from a referral on BP.

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

Mitch Davis, agent
Guardian Bank of Valdosta, lender
Jake Peterman of Mercer Hughes, property management
Trai Gay, Valdosta Home Inspection

Investment Info:

Single-family residence other investment in Greensboro.

This is a single family house. It was acquired through an inheritance. Property is rented to family. This is a long term hold that has some sentimental value.

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

This house was part of an inheritance.

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

Family

How did you finance this deal?

Property has a small mortgage. We paid it off using our savings.

How did you add value to the deal?

We have added a new roof.

What was the outcome?

Long term buy and hold property. We have family that lives in it.

Lessons learned? Challenges?

I learned the power of leaving an inheritance to your children's children.

Investment Info:

Townhouse buy & hold investment.

Purchase price: $72,500
Cash invested: $9,500

Deal finding: Upside opportunity to increase rent over time. I am expecting to increase rent 10% at renewal. Low rental inventory is leading to higher rent increases. This is a long term buy and hold investment. I found this property through one of my realtors that I network with. Property was off market. On a scale of 1-10 with 10 being a grand slam I consider this deal a 2-3.

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

2/1 Townhouse. Property was in good condition. I have another property in this subdivision. I purchased this property as a long distance investor. I have never been to the property. I am using our property manager, home inspector, realtor, and banker to vet out the opportunity. I have other property in neighborhood and area. Hospital, military base, and university are local economic drivers. Property can also be used as cross collateral to buy other property.

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

Off market listing from an agent. I negotiated HVAC repairs and home warranty to minimize risk or maintenance.

How did you finance this deal?

I was able to work with my local banker to get the following terms: 4% rate, 12% down, 5yr balloon that automatically renews, 20 yr amortization. I bought this property with a partner using 2 LLCs as a Tenant in Common agreement.

How did you add value to the deal?

I will have about 11% equity before the down payment. Taxes and insurance are about 6% of sales price. Area has about a 3.2% vacancy. I am getting a lower property management fee due to the number of unit I own in the area. I was able to negotiate HVAC repairs and a 1yr home warranty paid for by the seller.

What was the outcome?

This is a long term buy and hold property.

Lessons learned? Challenges?

Be patient. Wait for better deals with more profit.

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

Vicky Knowles, agent
Mitch Benier, lender
Emma Smith, property manager
Dave Owen, inspector

Investment Info:

Townhouse buy & hold investment.

Purchase price: $72,500
Cash invested: $9,500

Property details: 2/1 Townhouse. Property was in good condition. Hospital, military base, and university are local economic drivers. Property can also be used as cross collateral to buy other property. I have another property in this subdivision. I purchased this property as a long distance investor. I have never been to the property. I am using our property manager, home inspector, realtor, and banker to vet out the opportunity. They provide me with videos and pictures of the property. Property came with a tenant and professional property management in place. Lease was at market rent and renewed in 5 months. Inspection went well. Roof and HWH have 70%+ life. HVAC has 10% life.
Deal finding: Upside opportunity to increase rent over time. I am expecting to increase rent 10% at renewal. Low rental inventory is leading to higher rent increases. This is a long term buy and hold investment. I found this property through one of my realtors that I network with. Property was off market. On a scale of 1-10 with 10 being a grand slam I consider this deal a 2-3.
Number analysis: I will have about 11% equity before the down payment. Taxes and insurance are about 6% of sales price. Area has about a 3.2% vacancy. I am getting a lower property management fee due to the number of unit I own in the area. I was able to negotiate HVAC repairs and a 1yr home warranty paid for by the seller. I was able to negotiate a longer closing time which gave me time to shop the deal to my other partners. I was able to work with my local banker to get the following terms: 4% rate, 12% down, 5yr balloon that automatically renews, 20 yr amortization. I bought this property with a partner using 2 LLCs as a Tenant in Common agreement.

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

I have other property in neighboorhood and area

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

Off market listing from an agent. I negotiated HVAC repairs and home warranty to minimize risk or maintenance.

How did you finance this deal?

Local bank. 15% down

1.2M divided by 30 units = 40k a unit in cost

226,000 rent yr divided by 12 months divided by 30 units = 625 avg monthly rent

Those are good numbers. How many condos or houses would you want to buy at 40k if they rent at 625?  This is way over the 1% rule.

I have a similar portfolio. They tenants are paying down about 2k per month due to amortization. I also get cash flow. I also get a ton of tax benefits.  I also get to claim depreciation. In short, If you don't get much appreciation then this is still a winner.  In 20+ years of investing in real estate,  I have not bought any properties that didn't appreciate. 

Seems like age of building and renovations is a risk and concern to you. Consider contacting a property management company that manages something similar in the area to get maintenance expectations. 

Look to see if any permitted work has been done.  Pull the permits and contact the company that did the work. They can give you insight to what you are getting into.

Consider contacting some GC in the area to consider process, expenses, and their experience maintaining these type of properties. 

Ask a DSCR lender if they will give a line of credit for renovations. They could give you a 100k LOC and still have debt service coverage greater than 1.25 which is what many want.

Feel free to reach out or drop me a line if you would like tips on how to maximize your due diligence for this project. I wish you much success.

Congratulations on moving forward with investing. I have been able to find financing by looking for DSCR lenders. They are lending based on that you can put done money (you have skin in the game) and that the property will cash flow (tenant will pay the mortgage)

We have about 21 units now. My lenders are looking at my ability to pay if property is not leased for a month or two (cash reserves). They mainly looking at how much rent am I collecting to pay the mortgage (Debt Service Coverage Ratio).  

I have also found success partnering with people to strengthen my position with the bank. They see it less risky to have 2 people on the note versus one.

Feel free to reach out or send direct message if you want me to share tips on how I find my lenders.  I wish you much success.

We have about 21 units now. BRRRR is a great way. However, you may often will still leave 10-15% in the deal after refinancing. I have found partnering with others allows me to continue buying good deals.

Research "Tenants in Common" as a way to partner on deals.

I am open to discussing my success with getting my investment money out of a deal or how I am working with partners.  Feel free to message me if I can help you. I wish you much success.

We have about 21 units now. I like to collect as much of a security deposit as possible.  The point of the security deposit is to make it painful for the tenant to mess up the property. If a tenant has savings to pay 1 to 1.5 the rent as a deposit,  then it shows they manage money well. If they are willing to pay high deposits it is because they know they are going to take care of the property and get their money back.

I have found some creative ways to make sure I get quality tenants. No hassle. Pay on time.Take care of our property. Feel free to send me a direct message if I can help.

Great post that I can relate to very well. I have about 21 units now and I invest in South Georgia. I can get properties that cash flow. There are economic generators such as colleges, military bases, and hospitals in the area.  I have lenders that are willing to loan  good terms on income producing properties. 

I am finding a lot of my deals by networking with realtors that have sold investment properties in the past. Off market deals give me time to be more creative in the acquisition. 

Feel free to message me or reach out. I am open to sharing some tips and tricks on finding the right properties in the right market.