All Forum Posts by: Michael Strobel

Hi @Kimarley Gayle - 

Great on you for getting started in real estate. So Ive actually used my VA to get started and full transparency....best thing I ever did. Was actually able to get paid to move in (prorated rents) since I negotiated the seller to help with my closing costs. I bought a small duplex 5 years ago. Lived in it for a couple years before finding a 4 plex property (using my VA loan again) and house hacking there until I got married.

Some pros and cons of the VA loan from my opinion.

Pros: 0% down payment; you begin to learn how to be a landlord; you are an investor!

Cons: The equity you have in the home is minimal since you put nothing down. If you are planning to stay for a while, this isnt a big deal but before the housing market got real hot, it felt like I didnt have a lot of equity in my property for a while (Even after 5 years, I was only able to get ~$60k in equity when I sold my first duplex); some red tape (some sellers realize that VA loan inspection requirements are more stringent so they could avoid your offer)

Househacking will eventually allow you to move out of the unit and rent that unit gaining you maximum cashflow. 

The biggest lesson Ill share with you that took me a little too long to learn is from day 1, find the best way to maximize your income (make sure your rents are markets rents, can you charge for other sources like laundry/parking etc) and make sure you look at every operational expense (insurance/taxes/trash/water/electric etc) and ensure you are getting the best deal you can as early as possible (example, my insurance almost doubled on my properties and for a while I was just like, oh that stinks. DUMB, should have shopped for other insurance right away instead of waste 6+ months paying more than I should have. Not saying to be a cheap *** for your tenants but find ways to efficiently raise your income as best you can and lower your expenses. Thats the sweet spot. 

Feel free to hit me up if you have any questions about the VA loan.

@Payton Burks - Nice work on wholesaling some properties! I think you actually wholesaled one right across from my duplex on Windemere. It's a small Lynchburg for sure :)

@Payton Burks Welcome to Lynchburg. Local investor here with a couple small multis. Cool to see you are getting some properties under contract.

@Corey Hartzler Hey there! Long time no talk. Hope all is well with you. Small world that we are both on BP. We will have to connect sometime soon!

Following here. @Anosh Wadia did you end up utilizing Beta private loans? Or did you use someone else?

@Jaysen Medhurst Thanks for responding. Right now the owners asking $138k. But an actually negotiated down to the 115k-125k range. rents will be conservatively $650-$675/unit per month. These properties are in Lynchburg. 

I am having trouble with finding a lender after touching base with nearly 10. Im going to reach out to the owner again to see if he would be interested in 5 yr seller financing option (or maybe even just a 30 month option) for a few hundred per month to build some cashflow so that I can refinance with a bank loan at the end of whatever term they agree to. Have you ever done a seller financing before?

Hey BP Fam!

I am a current small multifamily buy and hold investor and real estate agent in Central Virginia and I have been running a small direct mail campaign to help me find off-market deals. I own 2 properties (6 units) that I currently own that I have gotten into with zero down over the last few years.

My direct mail campaign has provided me a pretty solid lead with a gentleman in his late 80’s that is looking to sell his portfolio over the next year or so. He owns 3 duplexes and 1 fourplex. We have spoken on the phone once already and he let me know that he is in poor health and is looking to liquidate his properties. He is currently only looking to sell 2 of his duplexes right now because they are both completely vacant. He has been self-managing his properties for nearly 50 years and he’s just not interested in putting them into property management. The owner told me he’s just too old to go show the property/make any repairs so both properties have been sitting vacant for a while. He is asking $138k for each duplex. Not an outrageous ask but they are probably worth $145-$150k fully rented and upgraded. They aren’t in bad condition but could use about 10k each in upgrades to bring them up to where they need to be to command top rents.

I believe I can negotiate down to about $117k-125k each (hopefully less). My dilemma is getting financing for these properties. If I was able to negotiate these down to $125k each, a bank would require the down payment of 25% or $31,250 since its an investment property and not a personal residence. ($62,500 for both properties) I just don't have that cash right now. I have some cashflow savings from my other properties and personal savings but not anywhere close to those numbers. What I want to try and do is find a bank that will allow for them to hold 75% LTV and the seller hold a note (in 2nd position) for the other 25%. Then I can use my cashflow and savings for closing costs/repairs.

Has anyone worked with any lenders in Virginia (or nationally) that will allow for this? I’ve heard it done on the BP podcast and other books I’ve read. I’ve called/reached out to nearly a dozen banks with little success. I've built some relationships with some local banks but not really getting any traction with them. 

Open to other ideas as well such as reasonable private money to fund. I set a goal for the beginning of the year to go from 6 to 12 units by Dec 31. This lead could get me there but financing is my only obstacle. I would love any advice you may have BP.

Thanks!

I've recently read and heard a lot about Master Lease Options as a way to take control of properties without exchanging title (at least initially). Theres a duplex Im looking at that is pretty bad shape but its in a good area. It is currently completely vacant (and has been for probably well over 2 years) due to the disrepair the owner has let it fall into. The owner knows it would be impossible to get a mortgage on it right now so he's been open to the idea of creative financing. If I can negotiate a cheap monthly payment to him and I can have the option to buy at any point within the then I can use private money/hard money for the repairs then rent out both sides for 5-6 years to at a significant cashflow in order to pay down the rehab and have enough cash flow for the option purchase price. Ive read Brandon Turners experience with his apt building and Ive done some other research but there are a few questions I have about it:

1. A seller (lessor) doesnt need to own this free and clear like seller financing typically is right?

2. If a seller (lessor) does still have mortgage payments, if we enter into a MLO and I start paying him/her monthly payments, what is to prevent him from not paying his mortgage and still getting my money? Ill never know if they paying his/her mortgage but still taking my money every month. Esp if the property needs significant amount of work, the last thing I want to do is put money into fixing it just to either have him/her default and Im completely screwed. 

3.If anyone has done a MLO, what were the pain points you experienced? How would you have done It differently?

Thanks!

Investment Info:

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

Purchase price: $207,500
Cash invested: $4,000

After nearly 2 years of hoping for my next real estate deal Hand wrote letters to over 100 property owners. Saw about 7-9% response rate but I was able to negotiate with a couple owners but was unable to find a decent deal. However, nearly a year after negotiating with an owner, they reached back out to me about their 4 plex and I offered the same amount and it was accepted. Entire negotiation was done via text messaging! I sent the owner a contract and closed about 45 days later.

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

Growing my real estate portfolio!

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

My own Direct Mail. Negotiated it via text messaging. Initially, owner wanted $250k. I offered $200. A year later, he came back and asked if I was interested in buying. I offered him $200k and he agreed. Negotiated the owner to pay $7500 in closing cost with a final purchase price of $207,500.

How did you finance this deal?

2nd VA Loan

How did you add value to the deal?

Upgraded the unit I lived in when I moved in (new flooring, paint and appliances) and will upgrade the other units as they turn.

What was the outcome?

4 more units to my portfolio!

Lessons learned? Challenges?

Didn't use a realtor. Very challenging to make sure you have all the T's crossed and I's dotted. I have a huge appreciation for what relators do.

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

Select bank - Rick Comar

Investment Info:

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

Purchase price: $207,500
Cash invested: $4,000

After nearly 2 years of hoping for my next real estate deal, I decided to drive around and write down a potential multi family I could see myself living in. Hand wrote letters to over 100 property owners. Saw about 7-9% response rate ("Mostly f$#k off") but I was able to negotiate with a couple owners but was unable to find a decent deal. Sent 2 other mailings with similar results. However, nearly a year after negotiating with an owner, they reached back out to me about their 4 plex and I offered the same amount and it was accepted. Entire negotiation was done via text messaging! I sent the owner a contract and closed about 45 days later.

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

Growing my real estate portfolio!

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

My own Direct Mail. Negotiated it via text messaging. Initially, owner wanted $250k. I offered $200. A year later, he came back and asked if I was interested in buying. I offered him $200k and he agreed. Negotiated the owner to pay $7500 in closing cost with a final purchase price of $207,500.

How did you finance this deal?

2nd VA Loan

How did you add value to the deal?

Upgraded the unit I lived in when I moved in (new flooring, paint and appliances) and will upgrade the other units as they turn.

What was the outcome?

4 more units to my portfolio!

Lessons learned? Challenges?

Didn't use a realtor. Very challenging to make sure you have all the T's crossed and I's dotted. I have a huge appreciation for what relators do.

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

Select bank - Rick Comar

Investment Info:

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

Purchase price: $146,500
Cash invested: $3,000

1st deal was a House Hack. Bought a duplex. Moved into one side and the other was already rented at $650. Had a friend move in with me and I was getting $950/mo when PITI was only $809. Was able to live well below my means. Learned the basics of landlording over the next 2 years.

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

The Lynchburg market is a very transient area due to colleges in the area and real estate is relatively cheap as compared to where I am from in PA.

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

MLS and through a Realtor

How did you finance this deal?

VA Loan

How did you add value to the deal?

Sold a motorcycle and put that money into improving the kitchen

What was the outcome?

House hacked for 2 years. Learned some of the fundamentals of landlording. Lived SIGNIFICANTLY below my means.

Lessons learned? Challenges?

Moral to the story, for your first deal, you will not have everything figured out. Don't be afraid to jump. Especially if you are house hacking!

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

Yes. Jeremiah Cochenour was a great realtor and very helpful for an aspiring real estate investor.