All Forum Posts by: Justin Hammerle

In MA Class B-C - highest natural rent growth due to inventory and less competition.  Unless subsidized you really can't build affordable rentals.

1. Always best to have a pre-approval or relationship with a commercial/private lender prior to putting in an offer.

2. Including a contingency/allowance is always a good practice.  Taking that a step further if its continually killing deals you may want to consider qualitatively if it makes sense. 

3. I would recommend establishing a strategy that is not fully dependent on market timing.  You could establish and implement both strategies in some form protecting you long term.

The single family rental asset class has been a favorite with institutional buyers as of recent.  Generally these investments are happening in the sunbelt versus the northeast.  However, a lot of positives to consider like a large renter pool, reliability of the tenant and overall less turnover.  

Home affordability in MA is a huge problem.  I don't see it necessarily as an issue of if you can rent, you can buy in MA; the down payment is likely taking a lot of buyers out because of how costly homes are around Boston Metro.

@Fernando Gomez

Using a GC is tough because you are looking at anywhere from a 10-20% markup on the costs.  Of course you will always save money in subing out the work yourself.  Understanding there is significant risk in doing this with no experience, try to focus on contractors who can do most of the work themselves like kitchen/bath renos and limit how much they sub; I suspect this should help expand your margins a bit.

@Kristian Kotov

Based on what I've read I think your best bet is going to be a private asset based loan. There are various products under this space which can include construction to perm, short term acquisition and construction, or long-term acquisition only.  Depending on what your looking for, the most important factors will be your cash position and the merits of the deal you are proposing.

I know a few lenders in this space and one in particular that I think would be a good fit for Fall River.  Glad to talk more and make the connection.

Points are interest typically paid on the entire amount borrowed, so if its 3pts than 3% on the $130k or $3,900.  

4.59% and no amortization seems suspect to me so I would have (if you have not already) your own attorney review and advise you on what exactly you are liable for.  Make sure its your own attorney not the one the lender is using.

Hi @Julien S.

Getting to your rehab costs is difficult with value add properties based on pictures.  You could use a general budget based on overall condition on a cost per/sqft basis; but until you have an opportunity to walk the property with a contractor there will always be significant risk for allowances/contingencies.  Some would argue even after starting a project that risk is still very much there lol.

Property assessment data online can sometimes give you a little more info on the home versus what a listing is showing to maybe help you back into a more accurate utility number.  below is a link to the assessment data on Quincy:

https://gis.vgsi.com/quincyma/...

Hi @Rahul Munot

My first thought here is there are much more attractive financing options for owner occupied investment properties versus unoccupied and from what I am hearing we may be losing some of these government sponsored owner occupied programs fairly soon. Although it may be difficult to leave Quincy, which I wouldn't blame you for!! Your best financially sound option may be to house hack and leverage those low down payment programs.

Hi @Alexandre Mota,

You already have a massive asset on your hands, I believe this best way to leverage it given your circumstance is getting the cash out tax free whether a refi or HELOC and use the funds to invest in other properties rather than investing it back into the property. In that way, you don't need to worry about losing your existing rental income and you could easily float another project. With the equity you already have in that property you could easily scoop up multiple units without even having to finance them if you prefer not to for cash flow purposes.

I suspect in taking this strategy, you may get to a point down the road where you are in a much better financial position to be able to build on your existing property for highest and best use.

Hi @Shalaye Camillo, If I was in your position I would go ahead and add the second bath assuming using the cash to do it did not jeopardize my liquidity position.  Given your long-term strategy of holding the property, the cost to make the renovations would pay you back in less than 5 years.  This does not include added value appreciation from the renovations and natural rental growth from stronger demand for 3bed/2bath units.