All Forum Posts by: Michael Roetzel

Thanks, Gretchen! I have a few agents who I've worked with before, I'll reach out to one. 

Because I am such an avid DIY'er, I did spend some time getting a little more thorough with my comps. I went through the sold properties in the immediate neighborhood, and looked not just at $ and square footage, but, using the photos on Zillow, ballparked the property's visual appeal. It was a very quick and dirty process, so I'll take my own results with a grain of salt. Then I made a chart using 21 comps. 

First, if you see those prices per square foot and think, "that's not upper middle class!"...well, this is Little Rock. :) 

Second...there's not much slope to those scatter plots. There is a some slope, but It would take an awful lot more money to bring this property to what I'd consider a 10/10. I don't think I see much return in that. Given that the houses in the neighborhood are were originally well-designed and built, an "8" is what I consider pleasant, no defects in design, and decent quality finishes. Below 8, and there are some noticeable problems in design and/or finishes. 

Currently the property I'm holding...I think once all the problems are addressed, it's still going to be just at about a 6.5. The question is going to be whether it's worth upgrading from that. 

I forgot to add...one reason this is a new territory for me, as my previous experience has been in working-class neighborhoods. This property is in an upper-middle class neighborhood. A completely different level of expected finish. 

Hello Bigger-Pocketers!

So I'm a somewhat experienced BRRR investor, doing my first flip! And I'm finding myself a bit lost.

I bought this house off-market. It needed a lot of repairs. I'm close to finishing those, and thinking about what to do next.

I've run comps, and I know what this house COULD sell for. But, aside from all the broken things, I think the house an landscape design really needs to be looked at. What I really want to know is:

1. How much is this house worth RIGHT NOW?
2. What needs to change to bring it to it's potential price? 

And once I can answer those questions, it'll be up to me to determine which, if any, of the renovations and upgrades are worth it. 

And these aren't questions I've had to face before on my rentals. I build them to be sturdy and to last, not for re-sale. 

So, how do I go about this? Are there consultants available? 

I'm doing a rehab on a small house... I've done a lot of basic repairs myself, hired contractors for some of the bigger stuff. One of those items (gas lines) needed permitted and inspected. All fine, but now the inspector is asking me lots of questions about all the other work and saying it had to be done by a licensed pro, permitted, and inspected! He's giving me heartburn.

Now, my state law (Arkansas) says a rental is the same as a primary residence, so I can do anything I want. But municipal law can be different.

How do y'all handle this?

@Wyatt FrantaI forgot to address your question about property taxes...I was also surprised by how low they were. It must be because it's county, and there are less services available. I don't know their average growth rate. But given how close this property was to city limits, I would suspect there's a real possibility of annexation in the future. Then property taxes would go way up. 

@Wyatt Franta Thanks for the advice! And I agree, I was probably too low on CapEx in the initial estimate.

@Jimmy Lieu I talked to a septic tank contractor and they pointed me to the right department for permits (Dept of Health, Wastewater where I am) Ended up talking to the person in charge of them at the Dept of Health for awhile, and learned a lot about septic in the process. He was able to personally confirm there was no permit on record. As this building was outside city limits, that's unfortunately not unusual. 

Ha, yes, so I let this one pass, and Covid worry was definitely part of it. We also hit a roadblock on the apartment's septic system. It was upgraded some time in the past, but there was no permit pulled for the work. The septic system probably wasn't sized for the apartments because the building used to be a place of business. And the lot is small, which is a worry for proper drainage, so I wanted a complete inspection. I made an initial offer, they countered asking for more, I said fine but you pay for a full septic inspection to find out what's there. They balked, and that was it. Too much risk. 

Looking at offering $400k on nice 5plex, remodeled 2017. There are a few relatively minor fixes, but not expecting anything major. It could use some better landscaping; if I wanted to do that, that would be the major remodeling cost.

Currently units are occupied, renting at $650 x4 and one at $850. Landlord is paying water/trash, at $90 each/month. Tenants in the $850 unit, which is 1650 square feet, are moving out soon. So current rents are $41,400/year. 

Taxes - $2,000

Mortgage - $20k/year

Insurance - $3,750/year

Maintenance & Capex = Estimate at $2,500

And last, it's on septic. So I'm putting in $400/year for septic maintenance.

So, with 20% down, I'm showing  a cap rate of 10.2%. The kicker is those rents are below market. The place is very nice, located just outside the city in a desirable area (high-end custom home area), and just a couple minutes drive to the nearest Walmart or school. If the rents go up $100 on each of the 4 smaller units and $250 on the larger unit (and this still may be below market), then the cap rate is 19.95%. 

So...pick me apart, please. This looks like a good deal. What do you think?

Hello all,

I own 2 properties in a working class neighborhood. One house (900ft2) is $500/month, and I'll be asking $750/month for a 1250 ft2 when the rehab is finished. 

Homes in this neighborhood are mostly early 20th century, of modest size, and many not well maintained. $35-50k will buy you a rehab project, ones in better condition will go from $70-$90k.

There are now 2 abandoned properties on my street, adjoining each other. One house has been abandoned for some time. It was purchased as an investment/rehab project, but there was a personal tragedy, and now it's just waiting to be auctioned off by the state. The house next door to it recently had a housefire, and the building is all but destroyed.

These two lots and houses could be purchased and cleared for not a lot of outlay. But then what? Is there get an inhabitable structure on these lots which would turn a profit given the modest rents? 
 

Hi All,

I know of a house that will be coming up for sale, and it's something of a historic home - the architect was, if not famous, locally known and respected. The problem is I don't actually know the NAME of said architect. Besides this custom-built house, I know one other commercial building he designed. Are there old records I could go to, for either of these buildings, to find the architect?