All Forum Posts by: Joshua Schmidt

I have been watching a property since June of 2020 and it is an auction property. The auction has been postponed about 5 times and I wanted to see what my options are or if anyone here may have any insight. I want this property, it was listed in Sep of 2019 (before I knew about it) for 115k. By my calculations, they owe about 88k on it. It has definitely went through the foreclosure process which I pulled from public record. I have the mortgage lenders number and the lawyer overseeing the auction. Is it possible to contact them before the auction and buy this property outright before it goes to auction? The house is vacant, so I'm not sure if the owners are still involved at this point or not. Looking forward to any input, thanks!

1 Vote

@Damon Cluck Yes Sir, we started with a conventional, 30 year, then after rehab, we refinanced and pulled our cash out with another 30 year conventional loan. Not the most efficient way to do it, but it worked for us at the time.

1 Vote

@Alex Clifton the auction was online, and it disclosed that financing was available on the property. Type of financing was a traditional conventional loan.

0 Votes

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $150,000
Cash invested: $55,000

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

Bigger Pockets Podcast

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

Auction

How did you finance this deal?

Traditional Financing

How did you add value to the deal?

Almost a complete gut job....new roof, floors, paint, countertops, expanded master closets, new lighting and fixtures, white washed chimney inside house as well as another brick wall. House turned out beautifully!

What was the outcome?

Bought this house at an auction with traditional financing. We (my partners and I) put 20% down, which means we financed $120,000.00. We put 30k down and rehab was 25k. We will be all in for about 180k. Absolute homerun! Purchase price 150k, remodel around 30kish, ARV 250k, refi 175k. Left 5k in the deal. Mortgage is $1070, rents for $1600.

Lessons learned? Challenges?

I was deployed to Afghanistan when I bought this property. I had a great team in place to helped make this go smoothly!

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

I am an agent and worked with a FANTASTIC lender. She was absolutely a rockstar!

5 Votes

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $150,000
Cash invested: $55,000

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

Bigger Pockets Podcast

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

Auction

How did you finance this deal?

Traditional Financing

How did you add value to the deal?

What was the outcome?

Bought this house at an auction with traditional financing. We (my partners and I) put 20% down, which means we financed $120,000.00. We put 30k down and rehab was 25k. We will be all in for about 180k. Absolute homerun! Purchase price 150k, remodel around 30kish, ARV 250k, refi 175k. Left 5k in the deal. Mortgage is $1070, rents for $1600.

Lessons learned? Challenges?

I was deployed to Afghanistan when I bought this property. I had a great team in place to helped make this go smoothly!

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

I am an agent and worked with a FANTASTIC lender. She was absolutely a rockstar!

0 Votes

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $150,000
Cash invested: $55,000

Bought this house at an auction with traditional financing. We (my partners and I) put 20% down, which means we financed $120,000.00. We put 30k down and rehab was 25k. We will be all in for about 180k. Our plan is to rent it (contract already signed) for $1600 a month and refinance to pull our cash out. A little about the house, it is a 4 bd, 3 bath, 3000 sq ft, built in early 70s and is built in traditional style. We replaced roof, improved master suite with walk in closets, ripped all the paneling down, replaced with drywall, painted the whole inside of the house, white washed the brick fireplace, placed LVP flooring throughout the house, replaced counter-tops in kitchen and replaced vanities in bathrooms. Along with a lot more little details, this was a great first BRRRR and I think we will do many more! ARV came out to be 250K! Like stated earlier we were all in for 180K. Thats 70K in equity and we refinanced and pulled all but 5k out of the deal. Around Sep 2021 we will have all of our money out of the deal and reserves completely built from the returns on this property. This was a homerun in my book!

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

Bigger Pockets Podcast

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

Auction

How did you finance this deal?

Traditional Financing

How did you add value to the deal?

What was the outcome?

Absolute homerun! Purchase price 150k, remodel around 30kish, ARV 250k, refi 175k. Left 5k in the deal. Mortgage is $1070, rents for $1600.

Lessons learned? Challenges?

I was deployed to Afghanistan when I bought this property. I had a great team in place to helped make this go smoothly!

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

I am an agent and worked with a FANTASTIC lender. She was absolutely a rockstar!

0 Votes

Always looking to network with someone that is in the commercial arena of Real Estate. We are located here in Central Arkansas and have primarily dealt with SFR, however, we are wanting to grow into commercial properties sooner rather than later.

0 Votes

I think any crash is going to affect the lending market, however, most hard money lenders like to see more than one exit strategy. If you have your numbers right, and they verify those numbers, I believe they would still lend. The problem may be on the back end when you try to refinance. Still, if you buy right and the numbers make sense, I don't think it will affect hard money as much as other methods of lending.

1 Vote

I am trying to use the Network/Find Contractors function here on bigger pockets, but after I put in my information, it just keeps spinning and I never receive an email nor does it ever populate any contractors. Has been this way all day. Anyone else having any problems or just me? Thanks!

0 Votes

Originally posted by @Greg Dickerson:

Originally posted by @Joshua Schmidt:

Well, we are at a good/fun point in the business as it is decision time on what to do next and how to do it. We currently have used the BRRRR strategy and I would like to stick with that strategy in some shape, form or fashion. Below are the options we are looking at to move forward and I'd like to ask everyone's opinion on what our next steps should be. First, I would like to tell you a little bit about our goals, our situations, and how we blend them to make the team that we currently have.

Let me start by giving you the make-up of our team so far. There are four of us that have got together and formed an LLC. We have known each other for almost 20 years and we all have unique qualities that we bring to the team. We have one guy that handles the remodels/flips and everything that goes with the rehab of the properties. From dealing with contractors to doing some/all of the work himself on some projects, he is the go to guy. We have one guy that manages the properties, from fielding calls about clogged toilets, to ensuring tenants are taking care of the property, to scheduling the lawn to be mowed, he is the go to guy. We have one guy that is the legal guy (he is actually a lawyer). He ensures our contracts are rock solid for us and for our tenants. He also has a hand in finances and dealing with banks, etc. Finally, there is me, I'm a Realtor and the deal finder. I also have a hand in the finances, working with investors and how we finance our deals. We all owned Real Estate investments before we formed our LLC, but have taken our combined experience to try and grow as fast and as big as we can, but do it at a rate we can all handle. We also have an accountant that we work with frequently and have formed a few good connections with investors and some local banks. We all four are still in the Military (I'm retiring in November this year...YAY) and have full time government careers. However, we don't want to all stay in the rat race forever and even though I am retiring from the Military, I will still be keeping my full time job as the Airfield Manager. We are a very busy group, but I have no doubts that we can grow the business to the level that we will all be happy with.

GOALS:

First off, we want to build a business big enough that in the next 5 years, it can replace the income of all of our day jobs. This roughly looks like 500k a year or about $42,000 per month between the four of us. That will allow 100K a piece per year, plus 100K back into the business every year. That is very doable, especially once you start breaking it down into doors needed to do so. At $200 dollars a door, that is 210 units needed in the next 5 years. That sounds daunting at first until you break it down into units needed per month to be on track for this which is roughly 3.5 units per month or 42 units a year. Yes, I know, that is a BIG HAIRY AUDACIOUS GOAL, but I fully believe we are capable of doing it with this team. Also, if it takes us 10 years to get to this point, that isn't a problem at all for any of the four of us, we just WANT to get to this point in 5 years.

PLAN:

As I mentioned earlier we have been utilizing a form of the BRRRR strategy to start our journey. We want to build a foundation on Single Family Residential that will be a base to fund the daily operations as we grow. We plan to flip some properties to build our capital while also doing buy and holds to ensure we have a passive income stream being built. Once we get to a certain point (not sure what this point is yet), we will switch over to growing the portfolio through acquiring small to medium sized multi-family housing, storage units and mobile home parks. These are all part of the expanding process in our minds, however we may niche down on one or two of them until they are built to a point we are comfortable with. So now that the goals and mid-long term plans have been discussed, I want to ask your opinions on what we should do moving forward to finance these plans.

FINANCING: Right now, we are days away from finishing up the refinance part of a BRRRR strategy house. After this refinance, we will have about 65k in the operating/reserve accounts. We have commitments from investors of about 35k and we are currently working with a bank that could possibly offer us a commercial line of credit. We are also open to hard money lending as I know that line of financing gives us many options to choose from. Right now, the plan is to look for 3 bd, 2 bth, single family houses that we can purchase for 100k or less, rehab for 50k or less and have an after repair value of 200K or more. They are plentiful around here! We are focusing on auction, foreclosure and pre-foreclosure deals. Here is where my question comes in, if you were in this situation, what would be your next move? I'd like to get to the point where we are working on 1-2 buy and hold properties while simultaneously working on 1-2 flips so we can raise the amount of capital we have on hand to eventually be able to phase out hard money/banks (at least in reference to the SFH purchases).

Our options look kind of like this: 1. Use existing funds, paired with investor funds to do next flip/buy and hold. 2. Use hard money and investor funds for next flip/buy and hold. 3. Use Investor funds and bank line of credit for next flip/buy and hold. 4. Use funds on hand and hard money for next flip/buy and hold.

What are your thoughts on moving forward? What would you do? Are there options that I am missing? If I have left out some details, please feel free to ask, thanks!

If you really have plenty of houses you can buy and renovate all in for $150k and sell for $200k then your best option is to flip all the properties you can find and reinvest in commercial and multifamily as Brrrr is too slow and no cashflow after refi to get you where you want to go. One or two of the right commercial properties can provide the income you're looking to replace and based on the description and talents of your team you could easily get there in a year or less.

Greg, that is definitely the direction we want to move in, but were kind of thinking of building a foundation in SFH first. I'm definitely not opposed to going multi-family earlier than later, but I also don't want to get caught holding to many flips at one time with the market in a state of unrest right now. I do like the idea of raising our capital through flips and doing multi-family/commercial property deals as that is the ultimate goal of this whole venture.

0 Votes

All Forum Posts by: Joshua Schmidt

Joshua Schmidt has started 19 posts and replied 105 times.

Post: Can I buy a house that is scheduled for auction, b/f the auction?

Post: First BRRRR in Central Arkansas

Post: First BRRRR in Central Arkansas

Post: First BRRRR in Central Arkansas

Post: First BRRRR in Central Arkansas

Post: First BRRRR in Central Arkansas

Post: Arkansas Commercial Investing

Post: Hard Money Loans Affected by Potential Market Crash

Post: Contractors and Networking function

Post: Growing the Business