All Forum Posts by: Joseph Back

Investment Info:

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

Purchase price: $35,000
Cash invested: $37,500

Brought this duplex back to life and BRRRed my way to another $250 per month in cash flow. When I purchased the property one unit was condemned and needed extensive renovation. I went in and replaced the roof and windows while also doing a gut cosmetic rehab on one of the units. After renovation was able to rent both 2bd/1ba units out for $625 per month and refinanced my entire $72,500 back out of the property and into my pocket.

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

I was looking for BRRR opportunities and knew I could bring this neglected property back to life while also creating another monthly cash flow stream.

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

I was specifically looking for more multifamily properties in my market and was cold calling owners of 2-4 unit properties in my market that had owned their property for at least 10 years. The lady who owned it had a nightmare tenant in one of the units who wasn't paying rent and tearing the property up so bad that it got condemned. I offered to buy it quickly and for cash and she jumped at the opportunity to get rid of this problem.

How did you finance this deal?

Used a HELOC on my father's personal residence to pay for the purchase price and all renovations.

How did you add value to the deal?

First thing we did was evict the problem tenant, luckily we were able to offer her cash for keys to speed up the process. Once she was moved out we replaced the roof and all windows on the property. After that we did a full gut job rehab on the condemned unit including new cabinets, counter tops, appliances, shower, vanity, toilet, light fixtures, plumbing fixtures, refinished the hardwood and put LVP in bathroom/kitchen and finished it up with a fresh coat of paint.

What was the outcome?

We were able to get the property fully rented at $625 per month per unit ($1,250 per month total). After getting it rented we got a cash out refinance loan from a local bank for $75,000 to pay ourselves back. Terms were a 5/1 ARM loan with a 20 year amortization at a 5.25% interest rate.

Lessons learned? Challenges?

Learned to always try cash for keys instead of an eviction because it is usually cheaper and definitely quicker.

@Julian Sanchez There is one tomorrow evening actually. It is at Frazer United Methodist Church at 6pm central. 6000 Atlanta Hwy, Montgomery, AL 36117

@Jimmy Epolito It is great in ways and sucks in others. Finding properties that work for the BRRR isn't too hard, a lot of B-class 3bd/2ba brick ranches you can pick up for $50k-$65k that rent for $800-$900 and appraise for $75k-$85k. The problem is the local banks here are not very aggressive and have terrible terms, probably because of the high rate of foreclosures in the city. Best I have found so far is Troy Bank & Trust, but their terms are still much worse than what is typical in other markets.

@Jimmy Epolito Sorry to hear about your not so great agent in Montgomery. I am an investor here and love it for all great the cash flow is. You should reach out to @Michael Atkins he is a great investor friendly agent here in Montgomery.

@Ashley Wynn I would recommend Troy Bank & Trust for a local bank, only one I have found locally that does not have seasoning requirements. Terms they quote me were 80% LTV 5/1 ARM with 20yr amortization at 5.95%.

The local banks in Montgomery in general are not very aggressive so I would also look at Lima One Capital. They are nationwide but lend to LLCs and only have 3 month seasoning. They can do 30yr fixed loans at 75% LTV at 6.5%

@Matt Bailey PM me and I can add you.

@Matt Bailey I used Real Estate Express and would recommend them. It is an all online course and was only like $300.

@Sean Harris I am not a broker but am a Lexington investor and would love to connect. Wholesale firm in Lexington, Rebuilt Investments, actually just posted a 48-lot mobile home park in Midway, KY for sale off-market. PM me for more details.

@Katie B., I live in Auburn currently and have to agree with @Jody Schnurrenberger that prices have gotten to high to buy anything cash flow positive here. What I have been doing is investing in rental in Montgomery, AL. It is 45 minutes from Auburn and it probably one of the best markets in the country for cash flow. I will say Montgomery has higher crime and you should not expect any appreciation but you can buy cash flowing BRRR deals all day long. PM me and I would love to connect.

@Harry Standafer Yeah it was definitely scary, especially because he had 5 full grown pitbulls living in the house and was rumored to be a drug dealer as his profession. Luckily though I knew worst case I would just have to evict him and it would take about 45 days and ~$250, which is what ultimately happened.