All Forum Posts by: Kevin Olson

BP, 

I have an 4 family under agreement in a affluent town north of Boston, very low vacancy rates and majority single family higher priced homes in the area. Property is located in a great  location with ample parking (commodity that proj. will give me additional $300-500/mo income).

Have had an inspection,  the house is old and in need of renovations for sure, to get it to rental quality my partner and I are estimating $55k in repairs, which we have into our 10 yr. construction loan mortgage (interest only for 1 yr.)

With that being said, if we use the total construction costs, or debt service on mortgage + RE taxes and water/sewer = $2,100/mo or 24,800 annually

Conservatively projected gross income= $4,050/mo or $48,600 annually

Tenant pays on electric which is heat and lights/plugs.

I understand with the 50% rule on expenses this would not cash flow ideally how I would like, however approx. $300-400/month of the income is parking which shouldn't need too much upkeep, and is 50% accurate for 4,000/mo property in income?

 Any thoughts if this property is worth it, long term or more of a shorter term fix, rent out and sell as a fully performing asset? 

Purchase price: $351,000

Gross income: $48,600

Mortgage/Taxes/water&sewer(paying on mort. at $405,000): $24,800

Fully performing (4 tenants) After Repair Value: $475,000-$500,000

I have taken into account costs associated such as cap ex, prop, management, vacancy,etc..  any advice would be great thanks!

Hi @Zach Keenan,

Welcome, I'm a north shore Mass guy as well and have just gotten started on this site. Its a great source for RE information and networking.

Personally I have been a RE broker on the north shore and Boston and am currently on the Commercial RE side of brokerage in Danvers. However, I am actively looking to invest in Residential and Commercial and build a portfolio in this area.

Look forward to hearing from you and networking in the future, Good luck!

@Paul Timmins Thanks for the info and suggestions! I have read/listened to all the podcasts and articles you mentioned other than J Scotts flipping book I'll definitely take a look at that.

I agree I think a HUD home could be a perfect place to get started and in the front door, look forward to speaking with you on the forums as I need to get more involved! Seeing that I am a Commercial RE Broker, and looking to really jumpstart my investing career.

Thanks again, be in touch.

-Kevin

Thanks guys I appreciate the input and feedback! These two properties were really good for me to analyze the nuts and bolts of the deal and with the help of your input I feel much better about how I'm looking at/for these deals.

I ended up passing on the 3 family, as each unit needed work to be done, (two a little more than just paint&carpet) and the owner ended up going with a different offer at least $20k higher than I felt comfortable with.

As for the large single fam, property has gone under agreement after I initially offered on it, I believe it went for $285k range which is a fair price, (ARV conservatively $430k) however with my lack of experience in flips and the property needing a complete renovation (near $100k estimated) I was not comfortable in taking on the project.

For now I would like to get into a owner occupied 3+ family, for favorable loan terms (1st time home buyer) and cash flow of tenants. Nonetheless I am always looking for a deal, but this seems the most logical and attractive at my beginner investing level.

Thanks again! Look forward to working with you in the future

BP ,

I am in discussions w/ two potential deals that I am looking to get a little feedback on if they make sense or are too thin. The deals are actually quite different in that one property is a 3 family (looking to buy n hold most likely) and the other is a Single Fam (add-value opp. rehab/flip or refinance cash out). They both in the same city but opposite ends of the city, know the neighborhoods well, and am comfortable with them and the values they demand.

An advantage I have in this transaction is that I will more than likely use a first time home buyer rate and only 5% down payment incentive program. Disadvantage, it will be my first home that I OWN..

The meat - 3 family - 2462 SF - Purchase price $300,000 (in discussion w/owner)

Unit 1- 3bdrm plus art gallery - $1400/Mo

Unit 2 - 2bd - $1100/Mo

Unit 3 - 1bd - $900/Mo

Total (conservative rents) = $3400/Mo

Property is recently vacant, in decent shape (out-dated) nothing major needed ASAP, I would look to do minor cosmetic upgrades to be a "higher standard" rental unit at competitive market rate.

2nd Property - Single Family 3,000 SF 5 bdrms - 2 kitchens (possible multi conversion) - Purchase Price $280,000 (in discussion w/owner)

Quiet Dead end street in nice neighborhood, large backyard w/greenhouse-

ARV - $425-$450,000

Assessed $440,000..

Initial walk through property needs new roof, and may have mold issue. Need to further investigate w/ my contractor and inspection. Rest of house in very good shape, estimating $50,000 in repairs to be conservative, hopefully 1/2 that #.

That is the basics for these two that I am looking into right now, my preference in RE is buy n hold for long term wealth building and possible cash flow. However, if it makes sense I would most definitely get into a project w/ other exit strategies. In my market #'s are fairly high and I found most multi's from a cash flow investing basis do not make sense (which is why I'm looking into investing out of state.) However flips, and single family prices are strong and have been climbing as they are increasingly becoming in demand the past 12 months and I wouldn't mind a lump sum of cash!

Any feedback would be greatly appreciated, please let me know if you dont think these make sense at the current #'s you wont hurt my feelings.. thanks!

@Mike Hurney Thanks that's really helpful and part of my apprehension as far as having time to have my "boots on the ground". It seems like a great opportunity to generate positive cash flow and passive income which is what I'm striving for, but it seems like to even have my first property to function fully I would need systems and staff in place. Do you still invest/own in KC.

@Shaun Reilly I appreciate the feedback and think you are 100% on, if I can find an add-value opportunity close to home I would love to take that on as my 1st investment to get my feet wet. Once I'm more comfortable and have systems perhaps get into better markets for buy n hold opportunities.

Originally posted by @Shaun Reilly:

Hey Kevin welcome to BP.

Always nice to see locals getting involved here.

As for you question about local vs. out of state it does really depend. We have a great market with strong prices and appreciation and high rents. Unfortunately the high rents don't keep pace with the high prices so cash flow can be a lot tougher.

I have some small local rentals that do okay and one that does awesome. That being said I have been focusing my buy and hold stuff more out of state recently to get better cash flow.

There are a lot of challenges to having rentals remotely. I also am giving up the chance for big appreciation scores by going to low end markets. The quality of tenants also seem to be much lower even in the nice areas compared to what I see here (and most of my stuff are small condos in Lowell, so not exactly a "luxury" market here). But my cash flow is about the same on 1/3 the total rent on that stuff vs. my local ones.

@Shaun Reilly Thanks for the feedback! Yeah I'd be a little apprehensive to invest in Lowell,Lawrence but as long as the #'s make sense I agree I'd go anywhere too.

What you say makes a lot of sense, I feel like I have been doing a lot of reading and learning on this site and in general, plus being a broker and younger guy I have some tools to get in the game. I guess I just need to find out the right direction to take those steps at this point in time.

I would love to build a portfolio of cash flowing properties, but at the same time I understand the power of being able to leverage debt and build equity even if the property isn't producing a real strong cash flow at this moment..

Thanks for the advice mike I appreciate it, I agree with you the #'s just don't make sense here for the most part from a cash flow prospective.. naturally I have some apprehension in investing somewhere I do not know!

BP- I am a commercial real estate broker in Eastern mass. I feel I have a knowledge and understanding of the market in this area as I have practiced both residential and commercial RE for a few yrs now. As I live in an affluent area of the country where avg. homes are 300k range I have thought of exploring the option to invest out of state where I can get involved immediately. Originally my plan was to live and own a multi and then build my portfolio from there. Would love some advice as to best way to attack REI from here, looking to buy n hold but would have exit strategies as flipping/wholesaling if the property made sense for that option. Reading and learning as much as possible but I feel I am in a position to start acting! Any feedback would be great thanks!

Hi all,

Wanted to formally introduce and make my first forum post on BP even though I've been a member for a little while. Looking to get out of Brandon Turner's "Analysis Paralysis" coined term and really get going in the RE investing world.

A little about me is I have been a RE broker for over 3 yrs now,(after ending a career in basketball), experience in both residential and most recently past yr. have been with a commercial firm. I am interested in buy n hold as well as flipping, all depends on the exit strategies for that property.

My goal has been to immerse myself in all types of RE, I definitely believe knowledge is power but I need to get more involved then just learning/reading. Hopefully just posting this will give me my kick-start.. look forward to networking and partnering with some savvy investors!