All Forum Posts by: Account Closed

@Charlie MacPherson - Thanks for the thorough investigation and detailed note. Appreciate your compliments on the property and our renovations too. To answer you questions, the comps at the time of purchase provided an ARV of $2.56M, based on 137 Jaffrey ($3M settled), 147 Jaffrey ($2.95M active), 6 Horsehoe Lane ($2.95M settled), 34 Rabbit Run ($2.7M active), 8 Greenbriar Lane ($2.7M settled). Those you listed will definitely be in the consideration set for buyers looking at our area but they're not apples to apples comps, given they're mostly newer construction and in HOA developments vs ours being a standalone single family with longer history. Our agent landed on the same comps as our lender too, hence out confidence to invest what we have to date.

In terms if value, I definitely believe we added $1m+ to the property. It’s literally a brand new house inside an existing structure, we replaced absolutely everything and our investment is almost at that number too.

I believe our issue is 2 fold: price and time. A neighboring property held firm at $2.95M (6 Horseshoe Lane) for more than a year and ended up selling at that number. Compared to our direct comps, we’re aggressively priced, now more and $1m lower than 147 Jaffrey which is smaller than ours with far fewer updates; we just don’t have the runway to hold firm at a higher number while waiting for a buyer to bite.

We’ve now switched agents, taken new photos and have a fulsome marketing plan in place. Listing goes live tonight. Wish us luck!

Thanks for all the commentary and suggestions.  Currently looking into refinance and rent as an option, as well as switching brokers and a further price reduction.  Hopefully one of the 2 will result in a change of fortune, I'll report back.

Appreciate the commentary so far, but Diane - your cursory glance at the area is totally inaccurate.

Hoping we can get back on track and have a factual conversation about strategies others have used to create additional exits when offers aren’t where they need to be.

David - thanks for your thoughts. Yes, it’s listed with a licensed agent and the brokerage is well versed in moving high dollar properties in our area. Online coverage has been broad too, with a heavy East Coast focus but extending as far as the Time’s newspaper in the UK and James Edition in China. 

Will - I'm working to refi primary and another rental we have, but selling the primary before running out of cash on hand is doubtful (it's also an expensive property) and we'd need to sell one property to be able to carry the flip house mortgage long term. We've closed some stock positions to boost funds, but I'm trying to balance a slow bleed vs ripping the Bandade, so to speak. With the lack of movement in our area, it's hard to say whether its worth securing the funds to carry the property through the Winter in the hopes of the market improving in our area and us finding a buyer.

Josh - Feedback on the renovations we completed has been positive, with the main suggestions being that it should be under $2m, that the ceilings are low on the ground floor (8ft) and some of the guest bedrooms are a small for the price point. Here's the specifics on the property and financials:

- 7,000+ square ft, 5 bed, 4/2 bath on 3 acres with a pool

- Purchased for $970k, ~$750k rehab budget (actual spend went over) and ARV of $2.56M

- Listed for $2.4m, with a neighbor listed at $3M and 5+ comps between $2.3M-$2.7M

- Current list is $1.9m.

The last 2 years, we've seen homes comparable to ours moving within 10 days on the market, yet all comps are sitting tight at their original list prices with nothing going under contract. This lack of activity across the board is the biggest concern, hence the interest in contingencies such as deed-in-lieu-of, or similar, in the event that the continued marketing, open houses and aggressive price drops don't generate a buyer.

Hi all,

Looking for some guidance, any thoughts on possible outs would be much appreciated. I've invested in/renovated a number of single family properties in the suburbs of Philadelphia (Mainline), with values ranging from $400k-$1.3m and decided to tackle a significantly larger project 6 months ago; comps were incredible with high sale prices and very low days-on-market, it looked like a home run.

The loan is under an LLC but with a personal guarantee; the renovations are complete and the house is beautiful, but the market has been unbelievably slow compared to the previous 3 years, on which our financials were based. We've been on the market since early Spring and despite significant price drops ($500k in total reductions), we're running out of runway before the loan maturates and funds on hand are depleted. Marketing has been fulsome, price reductions have been aggressive and though a refi into a longer loan is an option, we're not in a position financially cover the holding costs much longer. And, I'm personally on the hook for any loan defaults.

While we continue to aggressively drop the price and hold open houses, I've called number of cash-for-homes companies but have been told it's outside their typical purchase criteria. I'm considering approaching the lender about a deed-in-lieu-of-foreclosure, given the 7-figure difference between appraised value/loan balance, I'm hoping that would be a solid last resort.

Keen to hear if anyone has been through a similar situation and whether there's any other creative solutions I should consider. 

Sincerely,

Michael

Have you considered a line of credit? TD have a strong offering, up to 75% LTV with low fees and no seasoning if renovations are extensive enough. If you have good equity from purchase or you believe the value has increased sufficiently after the work completed, it could be an avenue to explore.

That's incredibly helpful Craig, thanks. Can you expand on how the management company componant would work and what contracts they'd establish with each building? Would it have any ownership percentage of either LLC established to purchase the commercial buildings?

Would love to discuss your approach to the Philadelphia region, I'll shoot you a PM shortly.

Hi all,

I've mainly focused on fix and flips over the last couple of years but am currently moving into more of a hold and rent strategy. I'm looking to discuss corporate structures with a local attorney but have been unable to find the right one at this point, so wanted to seek advice from the BP community.

My strategy is as follows:

1. Continue to fix and flip, but only ever undertake 1 at once

2. Sequentially purchase multiple buy and holds, mainly focusing on commercial buildings, again one at a time.

I'm keen to get perspective on the right number of entities to establish for both adequate protection and maximizing tax benefits. I'm currently thinking:

1. One sole member LLC for all fix and flips. By only ever undertaking 1 flip at a time, there wouldn't be a need for multiple LLC's on this side of the equation as we'd be out of one property before purchasing the next to minimize risk.

2. With the buy and hold side, would 1 entity be sufficient for purchasing and operating multiple commercial buildings, or would you suggest having 1 entity per building? The average commercial building will be 4,000-7,000 sq ft, zoned as office/commercial only. A large umbrella policy would be taken out for extra coverage prior to purchasing the first building.

Interested to obtain thoughts on whether a parent LLC or Delaware Series LLC would be beneficial, or whether my thinking above on one LLC for residential flips and one for commercial will provide adequate coverage.

Thanks in advance for your thoughts

Michael

Thank you @Dave Van Horn, much appreciated.