All Forum Posts by: Marc Latreille

So I am finally looking for my first buy. Looked a long time at wholesaling, raising money and all, looking for a 'perfect' solution.

But now that my other business is doing well, there are some deals I can now do by myself, without raising money or anything.

Being from Canada, where RE prices are just waaaay too high, and winter is pretty cold, I am looking for a place to spend some time in the winter months. Florida is a state I like, low taxes, business-friendly, not so expensive, warm.

I am looking at doing a BRRR on a SFR or duplex, anywhere in Florida. I have looked mainly at the Tampa and Orlando markets. I am looking for a B- area or so, block construction. As my play is a BRRR, I am looking for a fixer-upper, but not a major remodel. I am a contractor myself and will do this with my partner, an electrician, so would most likely pay (almost) only for materials.

We have roughly 30k to invest, figuring an owner-financed or other kind of low money deal (counting 10k down payment, 20k repairs) and would also have some spare change for closing and holding costs.

Ideal numbers would be around 45k purchase price, 20k repairs, refi for 65-70k, rent 1000$/month... is that realistic? 

Now, here are my questions

-Any areas/neighbourhoods to suggest/avoid

-What is realistic to pay in these places?

-What about my numbers?

-Is section8 recommended?

-Any market you feel is better than Florida (I am independent of location)

-What should be my first step?

-Should I Direct Mail, buy from a wholesaler, an agent, FSBO?

-What is a realistic timeline from Purchase to Refi?

-Or anything I am missing?

Thanks all in advance for your replies

Hi Eric,

thanks for bringing that new perspective. I think you figured how I view it... cashflow is my main goal, appreciation would be a nice side of gravy.

And yes, these numbers seem very good to me, at least compared to big cities, or to anywhere in Canada.10% gross cap is considered 'good' in smaller places here and 6 gross cap is 'good' in the cities. I calculated the first one having 45-50k NOI, for 620k... would probably pay 10-12% less than that at least, so 8-10ish cap (45-50k/550-560k)

So if I get your play right, you would get it for 550k, put 150-200k in it, make it nice. Then rent it an squeeze as much cashflow out, minimal repairs, tough it until it looks like **** again, or suddenly appreciates a lot and get rid of it?

Neglecting repairs is never something I thought of, but as I am looking for cashflow, just squeezing the lemon and dumping it might be a good idea.

Also, in that perspective, smaller buildings (1-2-3 units) down in Tampa look like a sweet cash on cash. And a much better place to spend winter

Hi all

Thanks very much for taking the time to answer so thoroughly

I am looking to buy something, on the cheaper side of course. Using the BRRR method. I am a contractor here, in Canada, so repairs are not scary.

From your answers, Chiacgo doesn't seem like the place to go. The other market I like is Tampa... maybe you know something about it?

Anyways, back to Chicago, I have been there a few times, although mostly d-town and north-bound (Wrigley field area)... to me it is world-class, beautiful, clean, rich, affluent, safe... but I am aware of 'what they say about the South'

Yes, I am from Canada, and no, I do not 'understand' what a rough area is... a random mugging, kidnapping or murder here is simply unheard of... in a 4million ppl city.Social net is much higher, you will never go hungry here, guns are pretty much inexistant. The city has roughly 20-25 murders per YEAR, mostly linked to organized crime, so 'normal' people have nothing to worry about

As for numbers, I understand some of these tenants might simply never pay, and Chicago is a tenant friendly place (that, I understand, Montreal is socialist champion of North America)here in Montreal, 2% cap is considered good, in okay areas... nice areas have negative cashflow, are trading roughly at 4% GROSS cap, so I am looking elsewhere. 

I understand Chicago has a big problem with crime and safety, but this is Chi-town, not some small *** town in the middle of nowhere. These areas are next to d-town? Any gentrification in sight? Just a simple correction, to bring either cap or price on par with a world class city... would mean values 3-4x higher... so to follow up, here are the 3 that seem like the 'best' deals I found, with my reasoning, would love to discuss it further

I did not take the absolute 'steals' as I understand these areas of town are ****. These seem like decent buildings to me, please tell me how I am wrong,

I understand that your knowledge is far better than mine

https://www.loopnet.com/Listing/8041-S-Manistee-Ave-Chicago-IL/17653858/these are large units, I tend to value a 3-4BR more than a 1BR for the same cap rate. nice numbers, according to my Google search, seems not so bad of a neighborhood

https://www.loopnet.com/Listing/Chicago-IL/17481592/again, large units, seem updated, seems out of the war zone (might be wrong here?)

https://www.loopnet.com/Listing/7748-S-Essex-Ave-Chicago-IL/16719454/And here, something more typical with mix of 1-2-3 bed units, much lower priced, close to the lake, which I figure is nicer?

They of course, all need some updating, all have some risk to vacancy. From what I understood in my research, Chicago did not reassess buildings for years, so tax numbers are too low, they have to shoot up.Ran pro-formas with 25% vacancy, 2x actual taxes and it still makes sense.BUT... a good deal is sold. Some of these have sky-high caps (in theory) and been listed some for over a year, I get it... but can't wrap my mind around the fact that at such a low price, still would not make sense.

Thanks again for your time

Marc

So I am browsing properties all over the country, lately realizing that Chicago has ridiculous deals... I know it is a city with a lot of crime, that most of these areas are really rough...

But how bad can it be? Buildings are literally money-printing machines, even counting a 15% vacancy/unpaid rents. They have 15% net caps, which is at least twice as good as a 'good deal'

There are dozens for sale, some have been listed for a long time. Obviously, I know something is up, but how bad can it be?  This seems to me like the lowest hanging fruit... ever

I feel like more people will realize this and prices will go up... and even if they don't, the ROI is still absolutely great

On the flipside, I have been looking at REI for a long time and am not dumb ... I know if they ain't selling, there is a reason, but I feel like this could be the beginning of a great investment

We had a bad area here in Montreal, two areas actually. Among the worst in the country for decades... until people figured they were both right next to downtown, one to the south, one to the east... since then, they have gotten nicer, safer and so expensive

I see this as a huge opportunity, as crime is going down, house prices are going up... I understand these areas (Englewood, South Shore) are not the best, but I feel like it is changing. It is so close to downtown, how can it not appreciate? We are talking about Chicago, after all, one of the largest cities in the whole world, a true A-class city.

Would you buy these things? Do you see that market changing? 

Comments are very welcomed!

Thanks

Marc

Hi folks,

So my partner and I are getting started in Real Estate, got wholesaling experience, but now want to build our own portfolio

We are looking at deals in which we do not put our own money. We will be raising capital, offering 8-12% returns to investors, but we first need a track record, so we chose to find deals and finance them via Seller Financing, combined with Hard Money

Problem is, no one wants to be in 2nd position for a mortgage, and all lenders ask for cash of our own up front (several hundred thousands, which we of course, do not have)

Any suggestions? Anyone has experience in starting out without money? We are in this for the long run, and figure that when we have financing figured out, sky is the limit.

I am sure there is a way around these issues, can anyone help?

Thanks in advance

Marc