All Forum Posts by: Jordan Northrup

Hey All, 

I need a sanity check on this deal. My property manager brought me an off-market triplex in a town where I invest. It's probably a C-class property. The neighborhood is ok, about 2 blocks from a major hospital. All units are rented around $600 a month with the potential to go higher. Each tenant is single, no kids, elderly, and on disability. My PM already manages this property and loves it. 

The owner is willing to consider seller financing provided the deal is right. He's asking $80k, but I think it's worth in the lower $70k range. The seller wants a 15 yr amortization...no issues there. So it's the rate, price, and downpayment that are flexible. I have $30k saved up to put to work. Maybe a smaller downpayment and higher purchase price? Or a larger downpayment and lower price? The latter would give me more cashflow, but ties up more my capital. The former is the opposite. 

Does anyone see holes in this? What am I missing?

S/f

Jordan

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Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $200,000
Cash invested: $40,000

Beautiful duplex in a highly desired suburb.

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

Off market through my property manager

How did you finance this deal?

Financed with a portfolio loan through a local bank

Ha! you never know with clowns. Maybe I could have sold them to the producers of the movie "IT". In all seriousness, it's a great property. The original tenants moved on. I was able to place a lady with two kids just a few months ago. She's getting assistance from the city...two years of guaranteed income with all utilities covered.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $29,000
Cash invested: $12,000

Found this house in a poorer are of my hometown. They wanted $50,000 for it. It's a 900sqft place. The owner had hundreds of creepy clowns of various sizes all over the yard and inside the property. Walls were this ugly fire red and flat black. The upstairs was an old unfinished attic.

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

Zillow and my property manager.

How did you finance this deal?

Paid cash

How did you add value to the deal?

Most people would see a loser but I saw opportunity, I offered the guy $28,000 cash on the spot. We ended up settling on $29k and him clearing away his clowns. Then I had the trades come in and fix the attic. They wired it as a bedroom, put up insulation and drywall, painted it, and refinished the original hardwood floor.

The downstairs got a complete cosmetic makeover.

What was the outcome?

Awesome property. It's renting for $900 a month and tenants love it.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $34,000
Cash invested: $8,000

BRRRR deal. Picked it up for $34k, sank $8k into it, rents for $1100 a month.

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

Listening to BP Podcast

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

I found it on Zillow and used my property manager/realtor to acquire it.

How did you finance this deal?

Paid cash for acquisition and rehab

How did you add value to the deal?

Complete paint job, new flooring, new trim work.

What was the outcome?

It rents for $1100 a month. Tenants just signed for a second year.

Thanks, I'll check them out.

I've been using Stessa to manage my real estate portfolio for several years now. I've had continuous problems with my account connections breaking...it's happening at least once a day. Now, Stessa just dumped all my transactions going back two years and I have to manually import them and recategorize everything. 

I need something else, but is there another product out there that has the property profile capability?

My local lender is First National Bank of Pandora. They're a small, 5 branch operation. 

Hi Steve, the property is located up in Putnam county. It's to the northwest of Columbus. I run all my Ohio operations through a small, local bank that has 5 branches. They're very flexible and easy to work with. I've discussed financing with the VP of lending there on several occasions. He assures me that I can get the financing no trouble. 

Like you said, even if the additional revenue never pans out because I don't build out the upstairs, I'd still clear $1100 a month. That's not bad for 100% seller financing and no money down!

Greg, thank you very much for your advice and the resources. Let me give you a little more context for this deal. 

I came to know this gentleman about 20 years ago through my church. He's also my financial advisor. His business has exploded and he bought a larger building in town moved his operations into it. The older building was rehabbed and 3 commercial tenants were placed on 15 year leases (they're 2 years into them) with 3% rent increase each month...one is a Chiropractor, a realtor company, and an insurance company. There is one residential apartment over the insurance company that is rented on a yearly basis. The space overtop of the Chiro and realtor is empty...just a large open area of about 2500-3000 sqft. 

My financial advisor is willing to sell the building to me as is for around $350 and he'll give me seller financing. The note on that would run about $1670 a month. The rents of the commercial/residential tenants includes their utilities. The gross rent is $3,598.63. After debt service, taxes, insurance, and utilities, we're looking at a profit of $1,091.49 (less any maintenance or Capex).

Since there would nearly $1100 in profit at the start, my thought is to do the deal and then work with a GC to build out 3 more apartments upstairs. Once tenants are placed, I'm projecting total revenue of $73,183.56, giving me a monthly cashflow of around $3600. Then I can go to my local bank and refi the property to payoff my friend and pull my rehab cash back out, just like how I BRRRR SFH.

Just for background, I have 6 other properties, 3 in Virginia where I live and 3 in Ohio, that I BRRRR'd.

Is my thinking on this sound? Do you see any holes in my planning?