All Forum Posts by: Matthew Rembish

@Todd Dexheimer Thanks for the response, Todd. Just wondering, what kind of resources do you typically utilize to research market environment. Do you typically use sites like citydata or do you read more streamlined data like say from M&M?

@Evan Polaski Thanks, Evan! That's a lot to digest there but I'm going to dig into all of that some more. Just out of curiosity, are there any books/resources you would point someone to, to familiarize themselves with these terms some more? I've read a dozen or so books on commercial and multi-family investing and while they always hammer home the main concepts, few go into the detail that you just replied with. Thanks again!

@Charles Seaman Thanks for your input, Charles. That seems to be what many of my other colleagues are looking for. I guess it would only make sense that it would be an even trade-off, in terms of risk vs. reward, going from a C-Class multi to say a triple net commercial property. I've underwritten as many deals that I could find on Loopnet but primarily just for practice. I have yet to pull the trigger on anything but that's primarily because:

A: I'm still trying to educate myself and...

B. No deal seemed to have returns worth pursuing. 

So I've been in real estate for a while now, but I've primarily flipped homes and invested in single-family rentals. Over the last year, I've been educating myself a lot more on apartment buildings and although I feel I have a much better grasp on them, I still feel as though I wouldn't know a good deal if it personally reached out to me. I'm good with most of the return metrics such as COC and DSCR but when it comes to IRR, what are most people out there typically looking for? I know that is a subjective question and geographically specific but for those of you investing in the New Jersey or Florida areas, what is typically a number for this that you look for and how does that change if you're syndicating a deal. It's my understanding that preferred, realistic numbers are usually in the high 'teens or twenties for IRR (at least in the exit year) but can anyone offer some additional insight into how they look at these kinds of multifamily deals? Thanks!

@Greg Dickerson It’s interesting that you say that because I have definitely been thinking that way. I’m just very nervous to pull the trigger on something like that given the volatility of the market right now. I feel like we’re due for a correction soon and I’m worried about being stuck with a $500k+ home when the music stops. I’ve always stuck to that first-time-home buyer niche and have been scaling it up the last few years. I’d be at 12 a year by now if it wasn’t so competitive out there!

@Seth Lipper Thanks, Seth! I was definitely lucky in that regard. Always helps to run the numbers conservatively for that reason...

In late March of 2019, we purchased our largest flip to date, both in terms of the purchase price and square footage. This was a property that our agent was able to get under contract at auction and later provided to us. With regards to our flipping model, we usually stick to our model of purchasing project houses under $180k but the market had been extremely competitive and supply was limited; it also seemed like a great deal on paper so we ended up closing on it for $212,750 (all in). The house was just under 2,000sf with four bedrooms and one and a half bathrooms. It was also situated in one of the most desirable neighborhoods in Brick, NJ.

Lucky for us, someone had just refinished the hardwood floors so we decided first to cover everything with a protective, high-density cardboard product. Next, we demolished both bathrooms, completely gutted the kitchen and tore off the existing roof. The siding and rear screened patio were in fairly good shape so we decided to keep them but thoroughly cleaned them via power washing. We ended up converting the half bath into a full bath and installed a drain in the rear screened patio after noticing some drainage issues. Our original renovation budget was $40,000 but we ended up coming in closer to $45,000 after some unforeseen electrical and plumbing issues along with other scope changes regarding the large living room off the back of the house. We figured we could later absorb this additional rehab cost with a price bump from the bathroom conversion.

In June of that year, we listed the house for $329,900, confident that it would go quickly given the time of year and the grade of our final product. We were wrong.

It took another five months to sell, along with over $17k worth of price reductions to end up at a final contract price of $312,500. Even with the additional incurred costs, we still made a decent profit because I was extremely conservative with my numbers given the size of the project, however, if I did not account for that additional time on market or those reductions, it would have been a different story. The lesson with this one was the kitchen. At the time, every other flipper out there had been installing white cabinetry but we wanted to separate ourselves from the pack so we went with a darker, pepper-corn color. The cabinets themselves were beautiful but it did not work in that particular kitchen because there was very little natural light. This, coupled with the fact that we did not open up the kitchen wall to the front living room, really limited our buyer pool as everyone nowadays is looking for an open floorplan (which we should have known). Another lesson learned but luckily, we still made out fine with this project.

Check out the pictures below for some before & after shots! If you like what you see, be sure to check out our other documented projects on our Blog on BiggerPockets - Flipping Full-Time in NJ.

Back in June of last year, we got our eighth flip under contract in my hometown of Toms River, NJ. This was a property that I did not think we had a chance in grabbing as the first thing the neighbor said when we pulled up was: “Are they giving away free cars at that house? There’s been a ton of activity there!” After hearing that, I had little faith that we’d be able to tie the property up but that’s never discouraged us enough to quit before, so I decided to throw in a number. The house was listed for $142,500 so we put down a full price offer (after running our numbers and deciding we could make that work).

About a week later we found out that the house was listed for the wrong price and should really have hit the market at $164,900. There was no way we could possibly make that figure work so we decided to move on, however, our agent wasn’t as forgiving and continued correspondence with the seller for about a week or two afterward. After much discussion and to our surprise, they accepted our offer and we were back in the game! I scheduled the demolition of the interior finishes for the following Monday.

We were met with a nasty surprise that Monday afternoon. When our demolition team had finished demolishing the inside, they mistakenly left a water valve on in the upstairs bathroom. This, coincidentally, was also the day that the power company decided to turn on our electric, engaging the well pump in the crawlspace after the demo guys left and proceeding to completely soak the entire upstairs. We got there around lunchtime to grab some measurements when I heard water blasting from outside the house. I bolted into the front door to see a waterfall coming down the stairs. After quickly turning off the valve, we assessed the damages. We estimated that about $2,500 worth of damage was done but luckily, the demo team made good on it and came back to perform all of the repair work. This was not the only surprise though…

We later found out after running the boiler that the house was not winterized properly (which was a chance we took after a failed pressure test during our inspection). The chance we took did not pay off as there were more than a half-dozen broken copper lines hidden in many of the walls and floor joist cavities. Lesson learned.

All in all, we put roughly $45,000 into the house and it came out fantastic! My sister and her fiancée were looking at houses at the time and weren’t having much luck so after seeing our final product, they decided to purchase it from us (at a nice discount, of course). This project came with a lot of lessons regarding the plumbing, but we will definitely not be making the same kinds of mistakes on the next house. You can be sure of that.

Check out the pictures below for some renovation shots. Unfortunately, the “after” pictures were deleted by accident so I’m hoping my sister can send me some updated shots at a later date (which I will upload). For now, here are some of the repair shots, including the aftermath of that second story bathroom flood, courtesy of our demolition team : )

Thanks for all of the feedback everyone. I’ve started the eviction process as of yesterday so we’ll see how that goes. Lesson learned...

Looking for a little advice with this...

I've had a tenant for about 10 months now who I've constantly had payment issues with but who has always made the effort to try and pay. He was almost fully paid up and then fell behind again. At the moment, he is a month and a half behind and has just informed me that he can't pay me anymore. Apparently he's "lent" money to family and they have not paid him back. Currently, we are about a month and a half away from the end of his lease so what I'm wondering is, should I get everything prepared for an eviction, wait for the end of the lease, or try to get him out another way (say cash for keys). As you can probably tell, this is one of my first rentals and the first time I' running into this so I just wanted to get the community's thoughts on this. It's also probably worth mentioning that I live in NJ, which is VERY pro-tenant.

Any feedback is much appreciated!