All Forum Posts by: Justin Pumpr

 Thanks @Jordan Moorhead. That's an option, but we'd like someone a bit more business savvy to see our business plan through 

Can anybody recommend a PM for mobile home parks in the Kansas City MSA (on the MO side).

Cheers!

@Samuel Diouf It's in southern sourthern orchards. On E Gates street, east of Parsons. I don't really want to seller finance it, but I figure that opens up my buyer's pool a bit. It was listed on the MLS previously as a traditional sale and didn't sell

Hey all,

What would you suggest for this property?

It appraised last week for $388k. I'd be happy to sell it on a lease option or seller finance (wrap) for $350,000.

If I seller finance I need to charge at least a 7% interest rate as that is what my rate on the property will be. I'd be able to make a couple of hundred a month that way, but I lose a lot of tax benefits.

My preference is a lease option, but I'm struggling to price this out. My break even without putting anything away for cap ex, vacancy, or maintenance is $2,395. Market rent in the area is around $1,800-$2,000, although working market rent out is hard as there's nothing of this size, or condition available in this pocket of the Columbus. 

Any thoughts on what the ideal way to structure the lease option is since my breakeven is quite far above market? I could add the "rent credit" on top of the market rent, but then that's a $400-$600/month premium on top of the rent that's supposed to go towards the purchase price. Over a 2 year lease that's almost $15k which is pretty significant. I don't know of any mortgage where you can reduce your principle down by that much over 2 years!

Also, STR and MTR don't work on this property. I also don't want to have to pay to furnish a 2,000sq ft home for those, or for a padsplit.

All help appreciated!

@Jason Wray I actually already work with the Federal Savings bank and am currently refinancing one of my properties with you. Almost all my portfolio is in Columbus OH. In fact all of my problem properties have been in OH. I only have one investment property in CA and that's been the most stable and best performing asset out of all of them

@Wale Lawal Once this flip gone wrong is taken care of my portfolio will actually be pretty stable. Not including the 13 unit that is. Who knows if/when that will be finished. I'm mostly a silent investor on that one, so I don't have much control over it. We tried selling it at auction and didn't get any bids, so we have to get it finished

Hey all,

I'm seeking some advice/input to help me work out what's next for me. Some background:

I got into REI to earn enough income from rentals to replace my W2. That journey started in 2016 when I bought a duplex to house hack. Using the equity I built up in that property I got a HELOC and started investing remotely out of state. My first property was a SFR that I BRRRR'd. This seemed to go well and I got it rented and cash flowing pretty well. I then bought another SFR, a couple of duplexes, a 4-plex and invested as a partner in a 13 unit. After that I bought another SFR to BRRRR and then is when things started to go wrong.

- The SFR had huge foundation issues. What was supposed to be a $30k rehab, turned into a $75k one. I had to sell this because it wouldn't cashflow. I took a $40k loss on this.

- To make up for that loss I bought a property to flip. That property was also supposed to be a few month flip, but I had to fire my contractor who I'd been working with on all my properties. I finally got the work done, but didn't get any offers until recently. I got it into contract and then had a huge plumbing failure during the home inspection. That property is now looking like a $100k loss. 

- The 13 unit I went in on has been almost 2 years and still hasn't had the framing inspection passed

- All my taxes doubled on my rentals, so now my cash flow has plummeted. 

- I've had multiple vacancies, including one where the tenant left after a year and cost me $6k in turn costs. This was only cashflowing $250/month

- I ended up selling the 4 unit for breakeven because that was a money pit

- I've also spent the last year underwriting larger multifamily properties. I've underwritten hundreds of deals, submitted tens of LOIs and not had a single one accepted

- The BRRRRs I did do weren't true BRRRRs because of low appraisals, or not accounting for all costs properly and I ended up leaving around $10k for each one in the deal. Multiply that by 8 properties and that adds up quickly

At this point I've amassed around $150k in debt, I'm spending hours a day trying to find large multifamily properties with nothing to show for it and the whole passive income dream I was sold seems to be a huge lie. My wife and I earn over $350k a year in our jobs and all of that is now going to pay down debt.

We have the option to increase our HELOC to unlock some more capital which I'm considering doing to try and get a good return on my money and pay down the debt faster, but given past experiences I'm not convinced it won't end up with more debt.

What would you do at this point? Sell it all and start over? Sell it all and give up on REI altogether? Keep going and learn from my mistakes?

Any advice and input welcome!

Thanks for the responses. To confirm, I'm looking at large apartment buildings. For my single families I follow similar rules that you mentioned, but my understanding is for apartment buildings that a cost per unit is usually used. Are you both using your methods for 20+ unit apartments too?

Hey all,

What numbers do you use when projecting repairs and maintenance costs for apartment buildings?

My rules of thumb have been:

- $650/unit for 2000s or newer and $250 for cap ex

- $750/unit for 1980s-2000s and $275 for cap ex

- $850/unit for 1960s-1980s and $300 for cap ex

There is definitely some nuance here, but let's assume these properties have had "cosmetic updates" throughout, but have never been full guts. I'm looking at C/B class properties in C/B class neighborhoods in the midwest.

Do these numbers look about right? Are there other factors that should be taken into consideration? Is this model completely wrong?

Cheers!

Hey all,

I’m trying to find a way to make seller financing more palatable for owners, as every deal I propose it on gets shot down. Granted the terms I offer a lot of the time aren’t amazing (they have very low interest rates), but that’s the only way I can make deals work. The seller financing portion could be for the full amount, or for a portion of the down payment.

I am wondering if anybody has kept the seller in the deal as a JV/Limited partner to help offset their concerns?

e.g purchase price is $2m with a down payment of $500k. Call it $600k with closing costs and reserves, so a $600k raise. If the seller were to carry the $500k down, could I give them the majority of the LP pool on top of whatever terms I negotiated with them? I.e they get 0% interest on the 500k, but they get some of the cash flow and some of the profits when we sell? 

@Jordan Moorhead 450 units