All Forum Posts by: Kimberly Smith

I am a relative newbie here, but will throw in my 2 cents for what its worth. I would never do anything that knowingly had a negative cash flow. What if a downturn hits, or all of a sudden those other duplexes come on the market and now you have a situation with too much supply and not enough demand and it starts driving rents down? 

I have found that the tax assessments of properties aren't really all that accurate. They don't go inside the property when doing those assessments. You could go the route of getting an appraisal on the property to allow for a robust option 3. I want to say they would look at "price per bedroom" or "price per square foot" as a way to create level playing field between you and the not so comparable comps.

Have you run the numbers (including the rehab) through the BP calculators? There are ones they use a lot in the webinars that could put together a report you could use to show the seller that her property (which she doesn't want) isn't worth as much as the thinks it is when it comes to being worth your time/effort.

One other note, as far as the basement is concerned, there should be a county/city website that outlines the requirements of making the space in the basement legal square footage. Things like egress windows in the bedrooms and a certain ceiling height are probably required.

Good luck!

@Eli M. aah my apologies. I replied to the lender when the low appraisal came back and provided data that showed the improvements made to the property, and asked for permission to have my realtor pull comps too. They agreed to go back to the appraiser with our rebuttal, and to include my realtors comps. The lender was hesitant to “push” the appraiser for a response once all information was sent over, so we waited about 2 months before the appraiser got back to the lender and stuck with their original assessment. That’s when we started shopping around. Frankly should have done it soon to get out of the hard money land an, but it was our first brrr and we didn’t know any better

@Eli M. Zillow! Nothing fancy here.

@Pete Abilla upstate NY

Bummer! I will be in NYC next week for my day job! Will definitely be there for the next one! 

@Jim Haney same thing happened to us a couple months ago. I fought the low appraisal and it took them a solid 2 months to come back and hold their ground (the appraisal the lender chose was in a different county and was way off on the assessment). Our solution: went with a different lender. The new lender, which happened to be the same we did the fix n flip through, used an appraiser that better understood the local market, and actually did the appraisal for the purchase too! This worked in our favor because the appraiser remembered what the property looked like before and could make a fair assessment of the work we did to it. The 2nd appraiser (or the original from the initial purchase) came back $40K HIGHER than the that low assessment! So, we cancelled the app with the first, and refi'ed into a 30 year fixed with the same company that did the fix n flip to begin with.

Quick update for anyone wondering whatever happened with our poor appraisal. I ended up going back to the hard money lender that we have our current loan with, and they have a 30 year fixed option, so we are in the process of refinancing through them. Appraisal came back today at $140,000 (same appraiser as the one used when we purchased the property originally)!! I am glad I didn't take that $100k without a fight! Much better with $140! Some extra stress, time, and effort, but it looks like it's working out in the end! One unit is rented and the other has had some traffic but no takers just yet. The property is 10 minutes from an army base, which just had their "largest deployment since 2003" from what the local newspaper said, so we are seeing a lot of competition in the market right now. I am sure it will work out.

This response does't tell me anything. Why? Please elaborate. 

NOTE: this is our first BRRR!!!

Purchase details: 

Duplex in Jefferson County NY, originally listed as 3 bed/1 bath on each side. 1 side was rehabbed and occupied by previous owner, 2nd side was essentially gutted (with one of the bedrooms removed), didn't have any plumbing and was down to the sub floor in most places. Purchase price: $68k. Funding: "Fix n Flip" hard money loan with a $20k rehab baked into the loan. 12% APR with the payment being 1% of the loan each month. Closed 12/21/18, 13 month loan term. Closing costs + downpayment was about $17k (funded by a HELOC on our primary), loan amount $78k. LTV 70%, ARV expected $110K (with the scope of work identified as only inside the property). We purchased through an LLC.

Rehab details:

Created a kitchen on the unfinished side: new flooring, new appliances, new cabinets, new plumbing, new electrical, new countertops. Created a bathroom: built walls, new flooring, new plumbing, installed a bathtub w shower, toilet, vanity. Reconfigured bedroom layout so each was accessible from a hallway (had to enter the master through another bedroom when we purchased the property), laid new carpet throughout bedrooms and hallway, created walk in closet in master. Replaced a few windows. Replaced all the siding on the entire property. Painted numerous rooms. Total rehab about $27k. New configuration - Apartment A: 2 bed 1 bath, Apartment B: 3 bed 2 bath. 

Refinance:

Starting the refinance process. Assessment just came back today at $100k. We were expecting at least $130k. Comps used didn't have any improvements. LTV of refi loan 80%.

My question: 

What are our options? Not likely to be able to sell by end of year. Trying to figure out what to do here. Do we continue with the refi, pay off the fix n flip loan and simply not pay myself back for the downpayment etc? Apartments are currently listed for rent but both sides are vacant. Expecting $2100 in monthly rental income (assessment estimated more like $1600 based on the comps they used). 

We are newbies and this is our first deal, looking for any advise you can offer. Many thanks!

NOTE: this is our first BRRR!!!

Purchase details: 

Duplex in Jefferson County NY, originally listed as 3 bed/1 bath on each side. 1 side was rehabbed and occupied by previous owner, 2nd side was essentially gutted (with one of the bedrooms removed), didn't have any plumbing and was down to the sub floor in most places. Purchase price: $68k. Funding: "Fix n Flip" hard money loan with a $20k rehab baked into the loan. 12% APR with the payment being 1% of the loan each month. Closed 12/21/18, 13 month loan term. Closing costs + downpayment was about $17k (funded by a HELOC on our primary), loan amount $78k. LTV 70%, ARV expected $110K (with the scope of work identified as only inside the property). We purchased through an LLC.

Rehab details:

Created a kitchen on the unfinished side: new flooring, new appliances, new cabinets, new plumbing, new electrical, new countertops. Created a bathroom: built walls, new flooring, new plumbing, installed a bathtub w shower, toilet, vanity. Reconfigured bedroom layout so each was accessible from a hallway (had to enter the master through another bedroom when we purchased the property), laid new carpet throughout bedrooms and hallway, created walk in closet in master. Replaced a few windows. Replaced all the siding on the entire property. Painted numerous rooms. Total rehab about $27k. New configuration - Apartment A: 2 bed 1 bath, Apartment B: 3 bed 2 bath. 

Refinance:

Starting the refinance process. Assessment just came back today at $100k. We were expecting at least $130k. Comps used didn't have any improvements. LTV of refi loan 80%.

My question: 

What are our options? Not likely to be able to sell by end of year. Trying to figure out what to do here. Do we continue with the refi, pay off the fix n flip loan and simply not pay myself back for the downpayment etc? Apartments are currently listed for rent but both sides are vacant. Expecting $2100 in monthly rental income (assessment estimated more like $1600 based on the comps they used). 

We are newbies and this is our first deal, looking for any advise you can offer. Many thanks!