All Forum Posts by: Mike Bonadies

@Jack Liberi Jr.

My partner and I are new to the scene but we are looking to invest in SJ (Glassboro/Turnersville/Exit 3) area using the BRRRR. Are you looking for hard money lenders or refinancing lenders?

-MB

Thanks @Russ Smith and @Beth L.

Like you said, its was the returns of the application fees that seems like it could be one hell of a headache. Also what you mention about big cities versus suburbs is also very true. DC is much more competitive from a demand perspective than South Jersey. 

Hi Bigger Pockets Community and Property Managers -

I've got a question regarding when you your prospective tenants fill out an application form and pay their application fee. I am starting a RE Investment company that is using the BRRRR in South Jersey so I am a rookie. My research tells me that property managers typically have an initial screening call and a property walk before they have their tenant fill out an application, but recently I came across a few companies in Washington DC that were doing things a little differently. The companies in Washington DC were asking people who were interested in the property to fill out an application first and pay the application fee before they walk the property or have the initial screening call. That seems great to me as it weeds out the people who really want the place but it also seems to me, how do I say this....scummy and would create a bad rep for your properties not to mention unwanted inquires with fair housing laws. Here are my reservations:

What happens if the company accepts multiple applications but issues the house to the first application?
What if you walk the property and the pictures are completely misleading to the actual look of the property?
Do you have to give each application a look before you can issue the rental?

Maybe I'm overthinking this a bit. Anyone have experience executing this or any knowledge?

-MB

@John Leavelle - Thanks for the input. I'll certainly do more research into the closing costs. Also, the refinancing LTV is 70% of the ARV which should be north of $220k.

Also I would love to find a bank in SJ that would offer a conventional 30 year loan to refinance, but I haven't found a bank in the area that will offer it if the property is not owner occupied.

-MB

Thanks @John Leavelle for the critique. Let me comment on your questions. I'm a rookie investor so I appreciate the help.  

1) Utilities - I missed this one. Thanks for the catch  That added expense will be ~$650 over the rehab period. Small and within the refin value but still important.

2) Closing Costs -  I overstated the closing costs for the acquisition to compensate for any additional closing expenses I didn't foresee. I didn't realize refinancing would inquire additional closing costs. Do you think if I reached out to the bank I working with they would give an estimation of those costs? Actual closing cost of acquisition should be around $4k so I had a $2k buffer built in.

3) Tax Assessment/ARV - The area in SJ I am investing has very few MFHs. They are almost exclusively SFHs or apartments. When speaking with our RE they stated that there isn't strong comp info for MFHs in the area. When looking at SFH 4/1s and 4/2s in the area the comps start at ~198k and go upwards (Avg sitting around the 230k number). I went with the Tax Assessment number as it seemed more conservative verses the SFH comps. Additionally, I spoke with a local contractor who does rentals and he told me the value could easily be in lower-mid 200ks if fixed up. In a situation where there is little comp info what do you suggest I do?

4) Private Lender Terms -  Private lender is financing the purchase and all of the rehab. Its a 6th month term with interest paid upfront at the start of the loan by our business (to show we have skin in the game) and the principle bubbles at the end of the term. Private lender gets first lien and the loan shifts to daily interest accrual if we fail to pay on time.

5) Refin Value - 20 year 5/1 ARM @ 4.99%

6) BRRR Calculator - I'll check into it. Thanks for letting me know.

Hi Bigger Pocket Community,

I am looking for some input on a deal I am presenting to a potential private money lender. To provide context my partner and I invest in rehab to rent using the BRRR strategy in the South Jersey area. I've got a private lender who is interested in funding the short-term purchase in rehab (6 month period) but would like to be walked through the financials. I walk the private lender through our process in the previous slides but I'd like BP's thoughts on the deal and how I present the analysis. I'll also have to use this to garner Refinancing from the bank when it comes time. Thoughts?

Private Lender's Analysis:

Bank's Cashflow Analysis:

Best,

Mike

Hi Bigger Pocket Community,

I am a new rehab-to-rent investor jumping into my first rental with a property located in South Jersey and I'm in the process defining our lease agreement before we tackle finding a resident. I wanted to know what experienced property managers charge as a late fee? Do you base it off as a % of the rent or do you base it off what the regional norm? If its the norm, any South Jersey PMs out there that can lend a hand?

Best,
Mike

@Ned Carey, @Russell Brazil,  @Ian Smith, @Dan Bernstein, @Mike Cumbie, @Sonya Stovall - Thank you all for your responses and pointers. I'll take this all into consideration. You certainly have taught me something today.

Hi fellow BiggerPocket colleagues! 

I'm very new to real-estate investing and I have a question about Real-Estate Agents and "Exclusive Right to Work-With Agreements."

The other day I met with a Real-Estate broker in Baltimore to discuss possible working with them to help me find a Multi-family house for me to personally live in and rent out the other unit. Right off the bat they bought up that I would need to sign an "Exclusive Right to Work-With Agreement" and pay a broker fee of $345 before they could get me any "in-depth" information about potential houses. I said I would think about it but I still wanted to know more about them before proceeding. They gave me a decent run down, but I wasn't 100% sold on their enthusiasm. They sent me an email with the agreement in it and in this agreement it essentially outlines that I am giving the broker the exclusive right to work with me for one year.

This all seemed a little off because I have been working real estate agents in NJ and I haven't been asked to sign any agreements or pay any brokers fee's up front - but at the same time I had built relationships with all of the agents.

Are Exclusive Right to Work-with agreement common?

If I sign it am I unable to work with any other real-estate professionals?

If I sign it and it bars me from working with others will it also bar my LLC as well?

In the DMV tri-state area what is the market rate brokers fee I should be prepared to pay?

Are these agreements only good for one state or do they have a larger reach?

I welcome any professionals help!

Best,

Mike Bonadies

@Chris K. - These are some great points. Thanks for sharing!