All Forum Posts by: Len Roche

I wouldn't delay. Start the conversation going. If you have a hard time figuring out how you would like to phrase, be straightforward. If the property isn't rented then they must be eager to get rid of it. You could be doing them a favor. If you knew your neighbor well then you already have an in with the new owners. If not build rapport with them. Understand their needs and see if you can offer some help. It may not guarantee you a discounted price on the property but at least first dibs on a potential sale. 

Use the BP calculator to arrive at a price that makes sense to you and make an offer if they seem the slightest bit interested. Often times putting in an offer before the potential seller has decided to sell, makes your offer very very attractive. 

Jump right in an introduce yourself. Good luck!

Congratulations! and good luck on your solo endeavor. How long do you forecast the rehab and final sale to take?

@Patrice Boenzi, thank you for your responses. I forgot to tag you in my response to your posts. Please see above.

Sincerely,

Cassie Roche (Len's wife)

Patrice & KC, thank you for your responses. 

Our rental target is families. We were not intending to enter the university real estate market. The Hillcrest property is far enough away that we do not expect any students (or undergrads at least) to live there (~1.3 miles away). We would prefer families, but if older college students have a good rental history, we may consider them. The Pebblewood property is probably 5+ miles from the university, so college student renters are even less likely. (Rent based per room...$400 maybe??)

The rental history on both properties appears solid. Both properties are filled with families. Pebblewood has the same tenants for 3+ years & Hillcrest just had one family renew their lease at the end of November 2016.

The rent rates are pretty similar for the two towns:

1 bed - $400

2 bed - $800

3 bed - $1100 to $1200

4+ bed - $1500

One of the benefits associated with the Pebblewood property is that there is a neighborhood pool and recreation center nearby. We considered this a useful tool for retaining renters. There is an HOA fee for every property to cover those costs. The Hillcrest property does not have HOA fees.

For the mortgage, we need to put 25% down since we will not be making this property our permanent residence. Part of it may also be that we a currently first-time home buyers.

Any other advice/suggestions you can think of?

Thank you,

Cassie Roche

Hi BP Community,

My wife and I are looking for buy and hold properties in DeKalb IL and the surrounding area. We are considering duplexes and are looking for both cash flow and equity buildup. We are also not opposed to doing rehab work so long as it is done profitably.

We have narrowed it down to two properties based on location, desirability, property type, cash flow, and price.

423 E Hillcrest Dr, DeKalb, Illinois 60115 (C in B/C neighborhood)

Listing

Property Photos

1505 Pebblewood Dr, Sycamore, Illinois 60178 (D/ C in B neighborhood)

Listing

Property Photos

Both are two unit duplexes with three bedrooms a side.

Both properties cash flow, but Hillcrest has less capital investment. On the flipside Pebblewood is a more desirable location and has the potential to be forced appreciated. It is a C- house in a B Neighborhood.

I have run the numbers on an attached spreadsheet. I used BP’s calculators and J. Scott’s Books to help make it. The spreadsheet has an economic analysis for both properties and a comparison of both with repair costs.

Economic Analysis Calculator

I created this spreadsheet because we wanted to understand where the numbers came from in the BP calculator. You’re welcome to use it for your own personal use, but be warned of any errors in the spreadsheet.

Disclaimer on the numbers used. Wherever possible I have tried to be conservative with my numbers. I do not intend on getting property management, but may need it down the road. Repair costs are +/- 50% estimates. I will need to bid out the work to get a better sense of the costs involved. My goal was to apply the same methodology to both properties to help with making a fair decision. I have been having a hard time getting ARVs on these properties so my estimates are could be way off.

This will be the first property we buy, so any help would be greatly appreciated in making this decision. Cassie and I are both leaning towards Pebblewood despite the added rehab costs and HOA fees because of forced appreciation and location.

How do you make these decisions?

Have we missed anything big?

What recommendations can you provide to estimate ARV for each property?

Which property would you select and why?

If you would invest in either of these properties, how would you do so (BRRRR, flip, buy and hold)?

Thank you for your time and advice.

Yours sincerely,

Len Roche

We are currently going through similar questions as we evaluate our first rental. To help, we were advised to look at the Book on Estimating Rehab Costs (by Jay Scott). This book was very helpful in giving us a sense of what work costs $XX. We also used the rehab calculator that is associated with the book (I will post the link when I find it.) This helped us estimate a ballpark figure for costs (+-50%). 

Our realtor also suggested that we could also have a contractor perform a walk through of the property and perform an assessment (get us a quote) at the same time we have the inspection done. We may or may not do that prior to getting the property under contract. We have not yet decided to move forward on this property. 

We're completely new at this, and have very similar questions. We hope this helps provide starting point at least.

Hello. My husband and I (this is Cassie speaking) recently located a small multifamily property that we are interested in as our first buy and hold rental. It is a duplex, and we believe it has positive cash flow potential (based on our analysis). We are already approved for a conventional 25% down loan on the property, but the property requires some TLC to increase the overall value and attract great tenants (the siding on the house needs to be redone to boost the curb appeal & there may or may not be some mold in the basement that will need clearing. We have not yet had the official inspection done on the property). 

Our realtor, who is also an investor on BP, suggests trying to find a loan that would include both the mortgage for the property and the cost of any rehab work all in one loan. When I asked one of the banks who we are pre-approved with (Guaranteed Rate), they said they only provide conventional loans like that for single-family investments. Our other banks are still trying to get back to us on this, so in the meantime, I would like to ask: 

Does anyone know of any banks that have conventional loans that can lump both the mortgage & rehab costs all in one loan?

I know there are other means of creative financing (e.g. hard money lenders). However, this is not our first choice. We are able to save up the money for rehab work if necessary (we both have well-paying jobs). The loan would simply help us not put more of "our" money into the property.

We are open to any other advice you are willing to give. 

Thank you,

Cassie Roche

Hi Alex,

I've never visited the OSU campus, but recently graduated from UF last May. Gainesville is definitely a nicer college town than most: The downtown is lively, and the midtown near campus has a lot of good bars and restaurants. Though the housing on that side of campus is more "lively."  I would suggest the south west side of campus. It is generally quieter with more graduates, young professionals, and international students, though further away from the heart of campus. The south west has better amenities than the north east side of campus; it is near Archer Road which is the city's major shopping area, it also next to I-75 for the young professionals. You will find every chain restaurant you can imagine there. No Joke. It also has great grocery and mall shopping: Walmart, Publix, Lowes, Ross, etc...

For Gainesville as a whole: You'll have great weather. There are lots of wildlife sanctuaries, check out Payne's Prairie for up-close and personal gator interaction. Traffic is pain at rush hour for a town of this size. The town is very well situated geographically; 1-2 from Orlando, Jacksonville, St Augustine Beaches, and Tampa Bay. So there is a lot to offer for young professionals.

Good Luck, if you need help with the different areas let me know.

Yours sincerely,

Len Roche

HI all,

Just started reading the Millionaire Real estate Investor, and came across the concept of the 80/20 Rule: Where 80% of your results are determined by only 20% of your actions.

I personally I can see this being applied both in the  personal and the real estate world, by focusing on activities that deal with my strengths, while outsourcing tasks that I am weak in to some who excels in that area. Thus I can free my time up to work on the most important aspects of the business.

My questions for the community is: 

How do you harness the power of the 80/20 in your business/personal life?

What have been the results from applying this rule?

If you haven't applied the rule; in what aspects of you business/personal life do you see the 80/20 rule at work?

Thanks,

Len

Hi Ryan,

This is pretty tough situation you're in. It is never fun having to break the bad news to someone that they may lose their long term home.  I understand your feelings in wanting to help your tennents during their rough patch, but the other folks on the thread are correct. You shouldn't follow through with your lowered rent for 36 months. With that being said, if they are good tennents, you should go ahead and work wth them to an agreeable "win-win" solution. I suggest offering a  smaller rent decrease for 4 to 6 months, with the agreement that the tennent find a solution to their income problem. If they cannot, this should provide them with enough time to look for a more affordable dwelling. 

Yes you should treat this like a business,  but that should not stop you from helping out others within reason. The only stipulation here is that you do no overcommit, be genouros but firm. Otherwise you will end up hurting yourself and your tennents more if the problem persists. You will not be doing them a favor by making them believe they can afford a place like your yours, only to rip the rug from underneath them a year down the road. 

Good Luck,

Len Roche