All Forum Posts by: Marty Sheehan

Investment Info:

Single-family residence buy & hold investment in Norfolk.

Purchase price: $300,000
Cash invested: $2,300

Used a VA loan to acquire a rental property close to military bases and the local university. Lived in the property for two years before renting it out.

What made you interested in investing in this type of deal?

low starting costs and multiple outs if something were to go wrong.

How did you find this deal and how did you negotiate it?

MLS through an agent since I was currently living overseas

How did you finance this deal?

Personal funds

How did you add value to the deal?

Personal mortgage to acquire at a lower interest rate then rented to multiple tenants who could afford higher rents when living together.

What was the outcome?

So far, a cash flowing property (even after a lot of maintenance) and some equity to be able to take a HELOC out on.

Lessons learned? Challenges?

I'm glad I overestimated CapEX in my analysis because I have had some maintenance expenses. Also, I did not account for increases in property taxes ($200/mo increase!) but luckily my conservative approach to other expenses covered it.

Joel Owens thank you for the insight! I’ll have to incorporate that into my future offers

@Henri Meli I currently live in Virginia. The property is <10mins from my primary residence. 

Mike M. It was understood that we could get out of it at home inspection if I didn’t like what was found. From what my agent is telling me, this is usually the case and understood in VA. Apologies for all the WA peeps who thought the deal was in the GNW.

@Account Closed Fortunately for me, the new contract says for them to repair it within moisture inspection standards, so I’ll give them a couple days (Wed) to take the deal with repairing it to pass an inspection or walk and keep looking. I’ll post an update when I have one. Thanks for the great input. 

@Cara Lonsdale Thanks a lot! I will look into this. 

@Russell Brazil , I appreciate the motivation. The advice is reminiscent of what Yoda told Luke.  I’ll plan on keeping my terms and give them a deadline so I don’t keep waisting everyone’s time. Thanks for the help!

@Brent Coombs , I was told that wouldn't lower the amount they would need to bring to the table since they owe more than they are getting for the property and are bringing $2356.

I'm in a bit of a pickle on closing right now.  

I was under contract for a duplex for $165K "as-is, where-is" but on the home inspection, we discovered a leaking pipe in the bathroom which was flooding the bathroom/adjacent bedroom when the shower was running.  The inspector estimated it could cost anywhere from 2k-10k to fix depending on the moisture damage.  With this new info, my agent changed the PICRA to include repairing all moisture damage, including but not limited to the bathroom the leak was in and then gave them the option to just cover $5k of the closing costs, thus allowing me to take care of the issue myself.  I liked the latter better since I would have control over the issue and would know it was taken care of properly.  

They got back to me the same day through their agent to mine saying they would take the "$5k of closing costs" option but had to check their accounts to make sure they had enough cash to do so.  Since then a week went by with my agent calling theirs every day and going straight o voicemail, being told she had phone problems, and other excuses.  Today, my agent was told that the seller is already bringing $2,356 to the table at closing (they bought it in 2005 for $199K) and simply doesn't have enough money to cover the $5k of closing costs on top of this.  

This is more of the seller's problem, but I want this deal to go through so I can get in the game.  The numbers are mediocre to start and taking on a project with the potential to cost $10K without getting any help from the seller would be too much of a risk for me, I think.

Any of you veteran hustlers have ideas on how to help the seller pony up with the ~$5k or a way for me to work it into the deal for a delayed payment or something that will make this deal work?       

Numbers below: Cap rate should read ~6%. ARV would be around $180K.

@Derek Kirkwood  

Thanks for the once over. I'll bump up my maint expenses. Hadn't been using the cap rate lately, but I had the formula accidentally locked on cash flow. it's changed to NOI now and calculates 6%. Thank you for pointing that out. I think market cap rates are around 5% so pretty close.

I'm hoping I can raise rents to $900 and $925 since $900 seems to be the average in the area.  Any reason you recommend tenant turnover in the summer?