All Forum Posts by: Mike Brown

Update: the husband signed without further issue and the sale is final. Lucky me, lesson learned! 

Thanks for the input! I agree with you JD, I don't think I have a valid contract at all. In my layman's understanding after my expert googling, the property is legally owned by both husband and wife, even if the husband is not on the title. Fortunately, I don't think the husband is the wiser because they just emptied the property in preparation for closing today. I'll know more this afternoon and report back.

For anyone that comes across this thread in the future, the remedy I was looking for and which JD mentioned, is suing for specific performance. If you held up your side of the contract and the seller did not, it's possible the court can force them to sell and can even assign or appoint someone to sign if the seller still refuses.

Hello! I have a property under contract. Property and all parties are in Missouri. Only the wife's name is on the title and the purchase contract is only between me and the wife. I understand that Missouri is a marital property state. The property was, indeed, purchased while the owners were married. They're still married. The husband doesn't like the terms of the contract. My understanding is that he must still sign some type of paperwork for the deal to close. If the husband refuses to sign, is there a legal remedy to force the sale since there's a contract? I'm planning on also asking this question to the attorney tomorrow when I sign the closing docs. Thanks!

Thanks, @Benjamin Seibert It's definitely a good experience. Now to the next one!

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $20,000
Cash invested: $14,400

Detailed deal break down at http://303fleetwood.com.

SFH in Waynesville, MO, purchased from aging relative; purchased at $20k with $36k purchase/rehab loan from small local bank. Invested additional $14.5k cash for all-in amount of $50k; appraised for $102k after rehab. We're refinancing to 30-year fixed at 4.75% with local credit union the week of 20 Dec 2021; will get $44k cash-out, which returns $14k invested and gives about $30k additional. Big home run here!

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

This was purchased from an aging relative and she gave us a great deal on it. At $20k, I knew there was going to be an upside. It appraised in March 2021 based on our planned upgrades at $77k.

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

Our aging relative was already selling and they had a low offer from someone else. We offered $5k lower and she sold it to us instead.

How did you finance this deal?

We used the same small town local bank as our first BRRRR, The Bank of Iberia. They gave us a 6% interest-only purchase and rehab loan for $36k. We put $4k down and paid about $1k in closing costs. I figured it would take about $20k to rehab. I was way off because I didn't get any estimates from contractors. This was a dangerous mistake but it worked out. We paid out of pocket for some materials and did some DIY to make up the difference.

How did you add value to the deal?

We added the 3rd bedroom back as a wall had been taken out decades ago to convert it to a 2-bedroom; added a new metal roof since the carport showed signs of past leaking, new vinyl plank everywhere, new paint, gutted the kitchen, added new appliances and new cabinets, added beadboard panelling to the kitchen and one bedroom to cover up some old wallpaper, new baseboards, replaced all wood windows with vinyl, new carport ceiling, new wheelchair ramp.

What was the outcome?

Thanks to COVID, it appraised for above our initial ARV of $77k. It came in at $102k. We're all-in for about $50k. We'll get an 80% LTV for a 30-year fixed at 4.75% and walk away with about $44k, which returns our $14k invested and gives us an additional $30k to look for another deal!

Lessons learned? Challenges?

I should have had contractors give estimates. It worked out this time, but it could easily have not. My initial interest-only loan from the bank for the purchase and rehab didn't require flood insurance. We knew it was in a flood plain, but by the time I started refinancing out, I forgot about flood insurance or thought it wouldn't be required somehow. Initial quotes were pushing $200/mo, which would kill all cash flow and then some. But my all-star insurance agent found some for $40/mo.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, we used dual-agency with our relative's agent. She was fine and a family friend. Now she's on the lookout for more deals for us.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $20,000
Cash invested: $14,400

Detailed deal break down at http://303fleetwood.com.

SFH in Waynesville, MO, was purchased from an aging relative; purchased at $20k with a $36k purchase and rehab loan from the same small local bank I used for my first BRRRR. Invested an additional $14.5k out-of-pocket for an all-in amount of about $50k. It appraised for $102k after rehab. We're refinancing to a 30-year fixed at 4.75% with my local credit union the week of 20 December 2021; will get about $44k cash-out, which returns our $14k invested and gives us about $30k additional. Big home run here!

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

This was purchased from an aging relative and she gave us a great deal on it. At $20k, I knew there was going to be an upside. It appraised in March 2021 based on our planned upgrades at $77k.

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

Our aging relative was already selling and they had a low offer from someone else. We offered $5k lower and she sold it to us instead.

How did you finance this deal?

We used the same small town local bank as our first BRRRR, The Bank of Iberia. They gave us a 6% interest-only purchase and rehab loan for $36k. We put $4k down and paid about $1k in closing costs. I figured it would take about $20k to rehab. I was way off because I didn't get any estimates from contractors. This was a dangerous mistake but it worked out. We paid out of pocket for some materials and did some DIY to make up the difference.

How did you add value to the deal?

We added a new metal roof since the carport showed signs of past leaking, new vinyl plank everywhere, new paint, gutted the kitchen, added new appliances and new cabinets, added beadboard panelling to the kitchen and one bedroom to cover up some old wallpaper, new baseboards, replaced all wood windows with vinyl, new carport ceiling, new wheelchair ramp.

What was the outcome?

Thanks to COVID, it appraised for above our initial ARV of $77k. It came in at $102k. We're all-in for about $50k. We'll get an 80% LTV for a 30-year fixed at 4.75% and walk away with about $44k, which returns our $14k invested and gives us an additional $30k to look for another deal!

Lessons learned? Challenges?

I should have had contractors give estimates. It worked out this time, but it could easily have not. My initial interest-only loan from the bank for the purchase and rehab didn't require flood insurance. We knew it was in a flood plain, but by the time I started refinancing out, I forgot about flood insurance or thought it wouldn't be required somehow. Initial quotes were pushing $200/mo, which would kill all cash flow and then some. But my all-star insurance agent found some for $40/mo.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, we used dual-agency with our relative's agent. She was fine and a family friend. Now she's on the lookout for more deals for us.

Investment Info:

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

Purchase price: $43,000
Cash invested: $25,400

See a detailed deal breakdown at http://303fleetwood.com

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

It was in my hometown, it was within my price range, and I was confident in what I could do after a couple of years of learning, mostly on Bigger Pockets, and getting my personal finances in order.

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

I found this on the MLS as a REO in late 2019, just before COVID hit. My realtor, also an investor, didn't want me to do it. It was listed for about $49,000, I believe. A couple of back and forths with offers and counters and we settled at the selling price. My realtor estimated the ARV to be $80,000, but I didn't have her pull comps.

How did you finance this deal?

This was a 25-year commercial loan with a 2-year balloon from a small local bank. I was worried about the 2-year balloon but the banker said they'd simply keep extending the 2-year loan but after revisiting the interest rate. Since I was still working on my improving my personal finances, this was a 7% interest rate. I eventually re-financed after the rehab was completed to a 30-year 4.125% rate with the credit union I bank with. All rehab money was out-of-pocket.

How did you add value to the deal?

We rehabbed the larger unit completely, replaced wood windows on the smaller unit with vinyl. Before and after pics are at http://303fleetwood.com

What was the outcome?

We refinanced out of the 2-year balloon commercial loan to a 30-year fixed with my local credit union. The duplex appraised for $117,500 and we bought it for $43,000, put about $25,000 into it out-of-pocket, including 20% down, rehab, and holding costs. We walked away at closing with about $57,000 deposited into our checking account. We used most of it to pay off debt to put ourselves in a much stronger position moving forward. We've since completed another BRRRR deal on a SFH in the same town.

Lessons learned? Challenges?

I'm not a typical DIYer, so doing all the work was hard for me. My father-in-law helped a lot, but it took a year to complete. It shouldn't have taken so long. I shouldn't have used laminate floors, there's already been some slight water damage, causing a few boards to curl at the edges. I also didn't estimate the rehab well. I didn't have comps pulled to estimate an ARV. It worked out well in the end b/c I went with my realtor's hand-waving of an ARV at $80k and it appraised for $117k.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I still work with my realtor, Lisa Ellis, but I've taken a note from Jerry Norton on YouTube and try to work with the listing agent on MLS deals so they're a bit more incentivized to help me out.

Hello! I'm trying to think of ways to structure a deal for an 8-unit apartment building. It's likely that the property is upside down. The owner is up-to-date on payments and has no foreseeable issues continuing make payments. The property has been vacant for at least 10 years. The owner is out-of-state and the property failed because the owner failed to manage his Property Managers. The PMs leased to bad tenants and failed to maintain the property. The owner literally just gave up and boarded up the doors. It's just sitting, wasting away.

Owner still owes $100k and has monthly payments of $820. Property was purchased for around $180k in 2004. I have much due diligence to do, but I think it could be worth at least $250k, perhaps up to $300k.

The property likely needs a gut job, maybe $100k in rehab costs.

Is there a way to structure a deal where I get shared ownership and bring the rehab money, then share the profit of long-term rentals? I need a loan for the rehab so the lender will need some collateral. Any ideas on how to structure this?

Hello! I'm engaged with the current owner of this property and I'm trying to figure out how I might structure this deal to land it. Feel free to ask questions and I'll do my best to answer them. The owner lives out-of-state and had not tried selling before I contacted him. I still have a lot of due diligence to do but I'm trying to also figure out the finances so if the DD says it's a good deal, I can pull the trigger.

This is my third deal. I have a duplex and I'm closing on a single-family this month. The goal for this property would be buy and hold for long-term rentals.

The property is located in South-Central Missouri close to a military installation. It's a total of 8 doors in two buildings on a single plot. One building has four 2 bed, 1 bath apartments. The other building has four 1 bed, 1 bath apartments. Both buildings are boarded up and have been vacant for at least 10 years according to the owner (older pic included below). The owner purchased the property in 2004 and still owes $100,000. Monthly payments are $820. Based on my Internet searches I think he purchased it for around $175k. I know I need comps. I think it could be worth $300k after rehab.

I gather the owner probably has several income streams and, instead of letting the bank foreclose on the property, he's continuing to begrudgingly make payments. The owner says both buildings probably need gut jobs. I haven't seen them inside yet but I'm betting so. I've been on the outside of each. They're on slabs. They're two stories each with cinder block walls.

Before I even do a walk-through, I think it will take about $100,000 to rehab.

There's a bit of room in the back of the plot that could possibly make a nice place for covered parking after it's cleared of brush and trees that might add additional value. The cost of this is not included in the $100k rehab estimate.

I think the 2/1 units can pull in $550 each and the 1/1 units can pull in $500 for $4,200 in gross rents per month.

I'm trying to figure out how to purchase and rehab these. I have $20k cash, $3k per month from my W-2 that I save that could go towards payments, and cash flow from my other properties of $1k per month. I have no home equity.

One big problem I see is that these might not be worth $100k as they stand today. Who will provide loans for an underwater property? And if the owner is still paying on time, will a bank even consider a short sale?

Hello,

New here, no deals yet. I've chosen to focus my investing in Buy and Hold properties in Southern Missouri where I live and work. I have about 10k saved up so far.  I'm looking at buying rent-ready properties. Looking at the numbers and making some assumptions on the values of the homes and rents (I'll pull my realtor in very soon!), I see it might be very possible to cash flow more than $100 a month and have Cash-on-Cash Returns over 10%.  This seems good to me.  But this leaves the investment making very little money. It would likely take about 10 years to make back the initial investment of down payments, closing costs, holding costs, initial small repairs, etc.). More and more, this just doesn't get me excited.

To try and improve the deal analysis, I'm looking at ensuring the purchase price will give me at least 30% equity while still only putting 20% down. This makes me feel a bit better, but even so, that equity is, of course, tied up in the house for many years.

I think I can save 10k every 6-12 months to repeat this process once or twice a year.

Can you please offer your thoughts on Buy and Hold properties using this strategy? The goal would be to retire early as well as have extra income today. I haven't run the numbers to understand exactly what that means, but I think I need to. On the surface, it doesn't seem to be a strategy that will allow me to retire early.

Thanks and all the best,

Mike