All Forum Posts by: Matt Leber

@Frank Nabors All of those areas, with the exception of maybe Winter Garden, are going to be a bit cheaper than the Orlando urban core. I would recommend using Zillow and turn on the filters for “for sale” and “for rent” at the same time. Turn on map view and check out a few of those areas you mentioned to see if you can see any where on the map where rent prices are around 1% of sale prices for similar properties. The 1% rule generally gives me a good funnel of what’s on the mls that MIGHT work as a single family rental. Obviously there is other due diligence to do when running your numbers but it may help you zero in on a few zip codes that may be more favorable than others.

Also, get a realtor to set you up with automatic listings as they come on the mls. It’s free and easy and you can set criteria for what type of properties you are looking for.

You’ll likely be analyzing many properties before you find one, but that’s normal. And you’ll get better at spotting the deals and deal areas.

@Frank Nabors you are correct that it is difficult right now in the Orlando market to find small multi family properties, as inventory is low and competition is very high. We know a few people that have gone the single family househack route and it can definitely work in this area. Most of them are single professionals who buy a house below market value in a B type neighborhood and rent out the rooms to other single co-workers. They do it successfully and live for free. My wife and I are sort of house hacking our own primary home in Lake Nona, renting out our spare bedroom to a friend of mine to help reduce our mortgage expenses. We are pretty low maintenance so we don’t mind sharing the space.

If you are fairly rooted in Orlando for a good amount of time, it makes sense to buy something where the numbers work as a buy and hold rental and where you wouldn’t mind living for the long haul. That way you can cover your expenses with the househack, or if you decide to move out you have a good performing rental property. The key is to keep your lifestyle inflation to a minimum and not buy too expensive of a property.

I would think BRRR would be more attractive in surrounding counties (Polk, Brevard, Osceola), where you can find more below market properties and there is less competition. Although, I'm sure there are plenty of investors actively BRRRing in Orange County as well. Just have to have a good system in place to find deals and make offers, with a financing plan in mind.

@David Waddleton I don’t hate the deal, especially if it’s your first one and considering our point in the market. I just did a similar deal in Jacksonville FL, although I scooped up 2 duplexes @ $80k each. From my experience with our duplexes, I would expect that you’re going to take some vacancy costs on the chin up front if you’re raising the rent and switching the existing tenants onto prop Mgmt. We did the same with the tenants we inherited and 3/4 left over the Christmas season when it’s harder to fill units. Yeah, it sucks to get hit with some costs up front but if your goal is to increase your monthly passive cash flow it’s not the worst move if you have the reserves to handle it for a short time. Also, if your Mgmt company is suddenly saying the market rents for the units are $50 higher, be prepared for the units to take slightly longer to fill. We also observed this in our deal.

Overall, it’s a solid first deal if you can achieve your $100+ per door goal and you will gain a ton of valuable education from it. Importantly, you will learn the skill of working with a management company from a distance, which will allow you to expand the markets you are able to buy in. Glad to see you’re making moves!

@Samantha A. It’s not super new, it’s a 1978 build. I’ve noticed a lot of the homes that are not new builds (2000+) seem to be 1960s-1970s in West Melbourne.

@Jorge Roman thanks Jorge!

@Mitchlyn D. The property management has been good, especially because they handle everything: maintenance calls, weekly and monthly reports, marketing and filling vacancies, leasing, collecting rent, evictions, etc. if I wanted to have them run the show, I could. But being used to self managing, I like to have input on the decisions. Which they are fine with. However, the 9% of collected rents that they charge me is probably not what I would run my numbers based on if I could go back in time. Its probably closer to 12% after all the leasing and admin fees etc. That being said, the units still make a healthy cash flow, with 2 units basically covering 100% of my costs on the whole 2 duplex package (4 units). The rents from the other two units are basically goodness. They are on the Westside of Jax.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Jacksonville.

Purchase price: $80,000
Cash invested: $25,000

We eventually made a deal for this duplex and the adjacent duplex next door at $80K each. Less than a couple months later, we have seen identical properties in the neighborhood selling for $100-105K. These units earn over 1.5% rent to purchase price.

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

Off-market deal that was priced low and brought in a good rent ratio. This was a long distance deal and we couldn't find anything this cheap that rents for this amount in our home market.

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

Off-market

How did you finance this deal?

25% conventional financing

How did you add value to the deal?

New tenants = higher rents. The tenants in the property when we purchased it were under-market and paying late. Their leases were month-to-month so we ended their tenancies and increased the rent over $100 per unit.

What was the outcome?

After a few months of switching tenancies and doing some light repairs and marketing, we have the units rented at $725 each.

Lessons learned? Challenges?

Mom and pop tenants didn't like it when we implemented property management. This was our first long distance investment, so it was the first time we have not been able to self manage. We are learning a lot about property management, but it will make us better in the long run as we have been able to expand the markets we buy in.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Jacksonville.

Purchase price: $80,000
Cash invested: $25,000

We bought our first small multi-family duplex in late 2018. We met heard about some off-market properties at a family birthday party and connected with the owner. We eventually made a deal for this duplex and the adjacent duplex next door at $80K each. Less than a couple months later, we have seen identical properties in the neighborhood selling for $100-105K. These units earn over 1.5% rent to purchase price.

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

Off-market deal that was priced low and brought in a good rent ratio. This was a long distance deal and we couldn't find anything this cheap that rents for this amount in our home market.

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

Off-market

How did you finance this deal?

25% conventional financing

How did you add value to the deal?

New tenants = higher rents. The tenants in the property when we purchased it were under-market and paying late. Their leases were month-to-month so we ended their tenancies and increased the rent over $100 per unit.

What was the outcome?

After a few months of switching tenancies and doing some light repairs and marketing, we have the units rented at $725 each.

Lessons learned? Challenges?

Mom and pop tenants didn't like it when we implemented property management. This was our first long distance investment, so it was the first time we have not been able to self manage. We are learning a lot about property management, but it will make us better in the long run as we have been able to expand the markets we buy in.

Investment Info:

Single-family residence buy & hold investment in Melbourne.

Purchase price: $145,000
Cash invested: $35,000

This is our second buy and hold rental property. I knew it was a deal when I first saw it. It was listed as a 3/2 ~1600 sq feet. Upon walking the property, we noticed there were actually 4 bedrooms. This resulted in an immediate couple extra hundred dollars we could charge in rent, because 4/2s are rare in the neighborhood. Not to mention its in a quiet neighborhood in a great, growing part of West Melbourne!

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

I knew it was close to a 1% rent to purchase price when I first saw it listed. The surprise 4th bedroom further increased our cash flow projections. This was our second deal at the age of 24.

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

MLS. We had to see it and make an offer the first day because it was a hot property. We went in with our highest and best right away because we knew competition would be stiff.

How did you finance this deal?

Conventional 20% down

How did you add value to the deal?

Upon closing, we refinished the kitchen cabinets, added new appliances, new vanities, and fresh paint on the interior and exterior. We also built a fence in the backyard and learned about and contracted out an electric panel switch and garage door repair. We learned a lot in our second deal.

What was the outcome?

Found a great tenant before our first mortgage payment was due and secured first, last and security. We have since renewed him to a second year lease and make a great cash flow on this one.

Lessons learned? Challenges?

We thought the roof might have been old based on the age of the house. I learned how to contact the city and found out it was only 12 years old! No new roof needed. This was also the first property we had to market and screen tenants for, since our first investment came with tenants in place. We learned a lot about advertising and screening.

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

It was our first deal. Probably not a slam dunk but it was important for us to get the ball rolling by jumping into a deal where the numbers make sense. We are proud that we got started with this deal at only 23 years of age.

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

MLS

How did you finance this deal?

Conventional 20% down

What was the outcome?

Everything has been easy so far. Our same tenants are still in the property and pay early each month. They have never missed a payment and we have a healthy cash flow.

Lessons learned? Challenges?

Great tenants who pay on time (and early) are valuable to your business. Keeping them in place can give you peace of mind while you scale to other properties.