Hello BP Community
Recently participated in one of Brandon Turner 90 Challenge groups on Facebook, and used that as motivation / accountability to acquire my latest property, two unit 1900 era Victorian house near downtown Easton . Use thing blog AS i go through the BRRR process and make this into House have / rental property with the ultimate goal of having it cash flow so live for free while building equity.
Background - Retired military , and last year decided to move back to East cost to be closer to family. Decided on PA, rather then NY/NJ areas due tax/ cost of living reasons, and the Allentown/Bethlehem/Easton (ABER) market made most sense . so looked on and off for 6 months before deciding to pull the trigger on this deal
Deal Deep Dive
1. What kind of property - Small multi family ( 2 unit) in Victorian brick building on main street near downtown Easton , PA. House originally built in 1900. it was a listed as 5/2 and around 3200 sq feet, and recent addition had given it 3rd bathroom and laundry room on first floor
2. How did I find deal - listed on MLS, and also gave local broker my criteria for her to sort through. Looked about 12-18 similar homes in the ABE area
3. How did you negotiate ? - Poperty has been on/off MLS for six months., original asking price was $@40,000, had dropped to 217,000 and it was selling as is- It was an estate sale and property was currently vacant, but still had some old furniture in it. I offered $205,000 , with a VA financing contingency, and closing with 30 days. . Offer was accepted the next day, with the clause that buyer (me) was responsible for any repairs VA mandated.
4. Funding - Funding was an issue. I had VA entitlement and used USAA as lender. put the application in , and USAA processed the paperwork and assigned VA appraiser, said it would take 10 days. bottom line Appriasal didn't come back for 6 weeks, had to extend the closing twice , once because during the home inspections, The addition that had been put on was not permitted, so the seller had to get permits for that. That extended for 15 days, Once the appraisal came back , stated two areas that had to be scraped and painted, (front porch, external detached garage door and window) and loan couldn't proceed without these being done. Since I was on the hook for it, scrambled to find contractors ( my buyers agent that i used turned out to be useless -- lesson learned) first two contractors i used ( through home advisor ) didn't do the proper job , so VA appraisal was still held up. Finally made other arrangements , and cashed some emergency funds , drew funds from HELOC I had set up on previous property, and cash I had saved and allocated for the rehab and paid cash for it.. So total out of pocket to include purchase price , tax and insurance escrow amount and other fees was $213,000
5. Plans - Current status - My plan is to rent out top unit ( 1BD 1 Bath ) to gain some cash flow while doing a live in rehab of bottom 2 floors. End state is have top floor rented, bottom renovated and plan on using 1 to 2 of extra bedrooms (it is 4/2 downstairs as an Air BNB, and a possible third revenue stream by renting out detached garage . My rehab is going to take longer than originally planned because have to spread out the cash outlays. Once it has been re-habeed, plan on doing a cash out re-finance to pull out original ~200K and use towards next investment while apartment and AirBnb pays off note.
Closed on August 30th , and first month or so has been gettinghte electrical and plumbing fixed and updated, approximate cost $ 8k so far. Still have some minor touch up to do on upstairs apartment , with the goal of having it rent ready by 1 November,
Will post pictures and better breakdown of projected re had budget versus actual numbers in later post
