All Forum Posts by: Jordan Mummau

Assumptions: 5 year term. 80% LTV, Financing ~600K with an appraised value of 800K. $2,000/mo net cashflow. Property to be refinanced, sold or exchanged after 5 years. Let's also assume independent investor wants 12% annualized return on $100k investment.

Hello everyone, 

I wanted to get some idea's of appropriately structuring partnership deals when providing investment opportunities within your portfolio. I have several BRRRR's that I've completed over the course of time and as I'm sure many other long term buy and hold investors experience, I have several people wanting to "invest with me" or in my deals.

I actually have one right now I'm doing. 6 unit with two garages I bought here locally in Central PA. It's a BRRRR that I just finalized renovation on. If I get 80 or even 75% cash out at refi I will have replaced my purchase and rehab costs. However, what I'm interested in doing is taking something like, $100k from an outside investor. I'm trying to figure out a structure that would allow me to essentially pocket the $100K rather than applying it to debt. Additionally, I would rather not use a significant amount of cashflow to factor in the return to the outside investor. I'm happy to give up equity but would rather keep most if not all of the cashflow. Let's assume the "term" is 5 years for both the bank loan and the $100k outside money.

How would you structure it?

@Nathan Barshinger

…still looking. I see you’re from PA too. While our market has flourished here locally, it’s nothing like Monroe County in Florida. As I’ve been shopping for awhile down there, I’ve seen places sell I was looking at prior to covid and resell within the last couple months for DOUBLE. It’s really crazy to watch and unfortunate because I realize I missed the ride up.

My family and I are heading down there tomorrow for one to two weeks and will be looking in person again. We’re sticking with buying in Marathon.

I have a couple multi units in Hershey, Palmyra and surrounding areas. Also a local agent. Shoot me a message when you get in town and I’d be happy to meet with you. 

@Jason Abel

You’re best bet for two hour radius from Central Pa (I live and invest in Lebanon County and Hershey/Derry Twp) would be the Poconos, in my opinion.

Derry Twp is very tight on STR and there's quite a lot of money HERCO has spent to ensure they capture the seasonal tourists in their hotels and entertainment venues. The township just doesn't allow it. Right outside Hershey are possibilities, both in Hummelstown and Palmyra but you're going to have better returns, year round in the Poconos for STR.

I've actually looked into purchasing a few boutique motels that have popped up for sale in Hershey to focus on STR by room but the hotel taxes can be a real deterrent depending on the cap x needed to renovate appropriately.

Midtown has been really undervalued for a number of years and would be worth looking into for long term rentals. Central PA as a whole has been a great place to cash flow with mid to long term tenants. Target multi’s in the 3 to 8 unit range.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $135,000
Cash invested: $18,000

BRRRR on a large single family home with 5 bedrooms. Rent to College Students. Appraised for 230K. Rents for $2150/mo.

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

I own a property right next to this one. Owners told me they were thinking about moving. We signed a contract that day.

How did you finance this deal?

Cash offer and close. Cash out Refi

How did you add value to the deal?

Added a second bath downstairs

What was the outcome?

Cashed out $35K to the positive. Cash flows $1,000+/month

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $115,000

BRRRR deal with $0 spent in rehab. It was just a good buy. Appraised for $165K. I had the appraiser in the property the day I closed in order to expedite the cash out refi. This is a college rental and rents for $1,600/mo

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

Home owners called me directly. Wanted to move and took a cash offer

Investment Info:

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

Purchase price: $235,000
Cash invested: $400,000

Commercial Multifamily BRRRR. 15,000sqft of reno. $635K invested. Appraisal coming back next month, looks to be over 1M. Cash out refi 80%LTV with local credit union. Cash flow after expenses predicted $6,700/mo.

How did you finance this deal?

Cash for purchase and rehab, then cash out Refi

@Steven Hershey

A good deal is the one that you do! Nice work on the Lebanon pickup. I love Palmyra for rentals. Just yesterday I had a duplex appraisal come back after I bought in Jan 20 for 98k (and then about 35k in Reno) for $250k. There’s money to be had in these smaller towns, you just have to know where to look and what max rents are after rehab. Palmyra’s taxes are also a little higher than the surrounding area, excluding Hershey, but I’ve found it holds an excellent rental base.

No doubt, competition has heated up across the country and what has always been undervalued property, in my opinion, in the Lebanon Valley is now catching up regionally to where values should be. Although, what I’ve seen to counteract the increase in prices is increased rents.

@Kaylee Walterbach

Build relationships with financial institutions as quickly as you build your portfolio. There needs to be a correlation between scaling your portfolio and scaling your financial relationships and track record with local lenders. If both are done congruently, there is no ceiling for growth. I spend as much time talking with banks as I do underwriting deals.