All Forum Posts by: Jon Deavers

@Ana M.

Hey Ana!

Finding cashflowing rentals in Richmond near VCU (especially in the Fan, Jackson Ward, or Carver) is a tall order. Returns are far higher and turnover damage liability is far less in most every other part of the city. The exception is what @Bill Morrismentions above regarding commercial multifamily. The reason being that 5+ units require commercial financing and thus the competition level is lower and buyers are more sophisticated in that space. Also, commercial buildings are more likely to be valued by the income they generate and not as heavily influenced by comparable sales. The owner occupant demand for single to four unit buildings in and around VCU drives up the sale prices in those areas.

Another note about rentometer. It has been found to be reliable but the search filter criteria only includes bedrooms and doesn't differentiate between a single family 3 bed and a 3 bed unit in a duplex. Those have different market values and so you have to be familiar with the area you're looking in. In the areas discussed above, you have to take rentometer with a big grain of salt but in a neighborhood like the old west end of Richmond in the JR Tucker High School district there are an overwhelming amount of very similar 3bed/1bath brick ranchers so you can be a little more confident in the comps rentometer gives you.

Market knowledge and familiarity is key (and cannot be gotten simply by surfing the internet, no matter how well the data is represented) which is why you should consider working with an investor-friendly Realtor (shameless self-promotion aside...). ;)

Hey @Brett Alphin

Great analysis on the property. I saw this one on the hotsheet and sneezed a little at their estimated rents too.

That area is actually pretty supportive of closer to $650/$750 for 2 bedroom units in decent shape. The issue on the listing is that the $950 per unit is not for any existing leases, it's the owner's (presumably) opinion of the rent there. 

One thing I'll add is to make sure to compare apples to apples when it comes to rental demand. While it may be true that schools aren't very good in that district, when compared with a GoodSchools.com rating in the rest of Richmond city (surrounding counties are a different story) there isn't much of a statistical difference in quality anywhere inside the city limits which levels the playing field a bit.

So that brings it down to whether a potential investor is comfortable landlording in Barton Heights. BH is an interesting neighborhood. When originally developed in the 1910's it was a luxury bedroom community for the downtown financial district and over the last 100 years has fallen into disrepair. BH and Highland Park are separated by the main commercial corridor of Brooklyn Park Blvd which is seeing an accelerated rate of commercial rehabilitation. BH is lagging behind the HP  neighborhood in residential renovation but the change is going to bleed over in due time. 

The nice thing about Barton and Highland Park is that there has always been a high demand for quality units there. I've seen tenants in those neighborhoods set up house and stay for years and treat the property very well, making it a home. Yet, the spotcrime statistics don't lie. So, in the end, I think you can buy good deals in this neighborhood and attract fantastic tenants and the key to that combo all comes down to tenant screening. Diligence and consistency in that process is the secret to success to investing in BH.

For a little more perspective on the level of revitalization headed to Barton Heights, check out this article. You can see the bird's eye view of this property on Google Earth by looking for the intersection of Lamb Ave and Roberts St. It's pretty impressive!

http://www.styleweekly.com/richmond/rotting-mansio...

@Aj Bowman

I can't speak to the Maryland market much but as far as your LLC question goes, that is more of a way to structure your business than it is where the business' assets are located. There's a ton of info on BP regarding the pros & cons of holding inside an LLC or flipping with an LLC. The short answer is you shouldn't need a Virginia LLC to operate in Virginia. A better question would be whether you need an LLC at all. For that it will depend on your current financials and goals so I would dig in on the forums here for multiple opinions on LLC formation first.

Best of luck!

@Rose Davis

Hi Rose. One other note, that you may already be aware of...

Most Auction.com listings (and other forms of auction) are as-is with no inspection period. So in order not to jeopardize your EMD you want to check that and perform any inspections before bidding. That being said, also no guarantee you can get the bid so the cost of inspections can be a gamble too.

Best of luck!

For me it would depend on your local market. If there were still lots of good deals out there I would put any extra capital towards a new deal altogether. If not, I would then look at forcing equity. I wouldn't consider reducing debt-load unless I could significantly increase COC return (i.e. refinance instead of pre-pay at a lower interest rate and/or extension of term or remove PMI from a residence mtg). Chances are, even if you're not investing it in real estate, that extra cash could earn a decent spread over whatever your mortgage rates currently are.

Hi @Corinthus Wilson

Congrats on taking the step forward in your career!

Not sure if Illinois is much different, but here in Virginia the pre-license class is all about how to stay out of trouble whilst transacting real estate and the school I attended had a corresponding CD/web-app that was called "Test Taker" that would randomly generate practice questions to quiz yourself in preparation for the state and federal exams. I would suggest seeing if your instructor/school has something similar available. The purpose of the exams are to make sure you understand all of the laws and terminology associated with them so I would focus on studying the legal stuff and stay away from learning how to actually sell or interact in the market to keep on track. Learning how to fill out contracts and find properties will come after your license posts.

Best of luck with it and congrats again on the big step forward!

@James Park

Thanks for the thread James!

I serve the Greater Richmond Metro area including Tri-Cities in central Virginia. Chesterfield, Henrico, Hanover, Goochland, and Dinwiddie counties are all included in the area I serve.

The majority of my business is working with investors and BP has been priceless for meeting great people and new clients.

I specialize in distressed/REO and small multi-family properties.

I have worked with flippers as well as buy-and-hold investors for both acquisition and sale of property. 

@David Cornett

Welcome to the site and happy new year!

@Chris Landrum

Hi Chris! Happy new year! Congrats on the acquisition. Here are my two cents:

1) I would upgrade the service panel regardless, especially if you're already in there "under the hood". As technology develops, you will need the additional amperage sooner or later so may as well head off the costs. As far as the microwave, I would let the tenant purchase or bring a counter top model. A dishwasher would be a better investment if you're going to add anything (and could help cut down on pests versus letting neglected dishes accumulate in the sink before hand-washing).

2) The deck would be more of an equity play. Richmond is a unique market where almost every part of the city is in a different part of revitalization. So the location of your property is going to be a critical factor here. You probably wouldn't get the return back from your tenant, but it could help you rent more quickly (depending on the neighborhood) and would add some value to resell if you ever liquidate. Could always do this down the road.

3) Tile is a lot more durable but the nice thing with vinyl is if you get sub-floor damage under the sinks or toilets (which is likely with long-term rentals) it's a heck of a lot easier to replace sections of sub-floor by pulling up a few vinyl tiles versus busting up ceramic and grout. The tile provides more protection against said water damage, so it's really going to come down to your budget/tolerance for the repairs. 

Best of luck with it!