All Forum Posts by: Nate Brown

Investment Info:

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

Purchase price: $84,000
Cash invested: $150,000

The property is a detached duplex with separate entrances for each unit. Both units are occupied The combined rent roll is $1,500 per mo. I paid $84K cash for the property and will use cash for the construction costs, so I have no capital costs. The property and both units has significant physical distress. So, the property needs significant repairs and updating. I anticipate $45K-55K in reno costs with a 6-12 month timeline to be completed in three Phases. 1) Exterior 2) Unit 1 3) Unit 2.

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

The price per-door and the value add opportunity

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

I found this on the MLS and I made what I felt was a fair offer based on the current cash flow and physical condition of the property.

How did you finance this deal?

Cash from myself and my partner.

How did you add value to the deal?

By being able to offer cash, close quickly and absorb the significant cost of repairs because I do not have to pay for capital.

What was the outcome?

The offer was accepted in less than 48 hours.

Lessons learned? Challenges?

Lesson Learned: The city's Building & Code Department can be an ally and an asset
Challenges: Showing the very talented members of my team how technology can be leveraged to improve and enhance efficiency

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

I worked with a great team, but this is my first deal. It would be irresponsible of me to make a recommendation at this time. If all goes well on the next 2 or 3, I'll be screaming their praises.

Investment Info:

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

Purchase price: $84,000
Cash invested: $150,000

The property is a 1,568 sq ft. detached duplex, built in 1900. It sits on a corner lot, has a large back yard and separate entrances for each unit. Both units are currently occupied, with a combined rent roll of $1,500 per month. The tenants are responsible for their electricity usage. The landlord pays water/sewage, gas (for hot water), and trash collection. I paid $84K cash for the property and will use cash for the construction costs, so I have no capital costs.

The property and both units has significant physical distress due to neglect from the previous landlord. As such, the property is in need of significant repairs and updating. I anticipate $45K-55K in renovation costs. I expect the timeline to be 6-12 months (taking COVID-19's impact into account). Construction will occur in three Phases.

Phase 1 - Exterior
Phase 2 - Unit 1
Phase 3 - Unit 2
I anticipate 2-3 months total vacancy as I improve the units.

The value add opportunities for this property are, higher rents (28% increase), shifting the cost of water/sewage & gas to the tenants, include a coin laundry service and collecting pet fees/rents. The current expense percentage (including set-a-sides for vacancy, repairs/maintenance, property management, CapEx, insurance & taxes) is 49%, giving us an initial CoC ROI of 7.7%. When the property is repaired, optimized and fully tenanted I will refi into the best loan possible. Conservatively, I anticipate the new CoC ROI to be at 12%, cash flowing $262 per month (after all the expenses mentioned above) as I leave $26,400 in the deal.

Despite everything going on in the world today, I'm super excited to have my first buy & hold property. To all the wonderful Podcast hosts and authors at BP (such as Brandon, Josh, David, & Mindy, Scott, Matt & Amanda, just to name a few), you guys gave me the knowledge base and confidence to make this happen! I may never get the chance to say it to you in person, so I'll say it here....THANK YOU, THANK YOU & THANK YOU again.

To everyone reading this, Take care & I hope you and your family stays healthy & safe!

Nate Brown.

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

The price per-door and the value add opportunity

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

I found this on the MLS and I made what I felt was a fair offer based on the current cash flow and physical condition of the property.

How did you finance this deal?

Cash from myself and my partner.

How did you add value to the deal?

By being able to offer cash, close quickly and absorb the significant cost of repairs because I do not have to pay for capital.

What was the outcome?

The offer was accepted in less than 48 hours.

Lessons learned? Challenges?

Lesson Learned: The city's Building & Code Department can be an ally and an asset
Challenges: Showing the very talented members of my team how technology can be leveraged to improve and enhance efficiency

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

I worked with a great team, but this is my first deal. It would be irresponsible of me to make a recommendation at this time. If all goes well on the next 2 or 3, I'll be screaming their praises.

I'll be there!!! Looking forward to it

Hi Craig. Thanks for post & for answering my questions. I'm buying the lot from a property owner and NOT a builder. I reached out to 3 builders, that operate in Nassau & Suffolk Counties, and your price of $125 PSF is spot on. My plan is to secure the permits for the lot split and the new construction before I approach a builder. I'll add those soft costs to my wholesale/assignment fee.  

Hello BP!

I have the opportunity to purchase a subdivided lot in Nassau County long Island. The lot would be ideal for a modest 1,500 sqft, 3-4 bed/2 bath home. The owners have agreed to sell me the lot via Seller Financing. The deal is contingent upon the Village's approval of the subdivision and construction of a new SFR. I've met with an inspector with the Buildings department and he affirmed that the lot could be divided. My plan is to wholesale the deal to a builder. My questions are:

1- Should I secure written approval for the split & construction prior to presenting to a builder?

2- How much would it cost to build a new 1,500 sqft, 3-4 bed/2 bath house in Nassau County?

3- Has anyone ever closed a similar deal? If so, what advice would you be willing to give?

I want to thank everyone in advance for reading my post and answering my questions. 

Hello BP. I have the opportunity to purchase a vacant lot in New Haven CT. The property in located in a "C" area and is zoned for a 3 family dwelling. I have 2 questions.

1) Are there any developers building new construction multi-families in New Haven?

2) If so, how much would they pay for a lot like this?

Any insight would be greatly appreciated!

Hey Stephen. I'm a novice investor looking to jump start my investing career. I've started a mail campaign in Lehigh as well as Chester counties in PA. I currently do not have anything under contract near Allentown. I'll reach out to you as soon as I have something that fits your criteria. I do however have a duplex under contract in Lebanon PA. It's a 4 over 2 with a total rent roll of $1,500 per month. Im asking $112,500. Click here for more details. It'll be great to hear from you even if your're not interested. I'd appreciate and advice you insight you may have. Happy investing!!!!

Thanks Taylor. I appreciate you taking the time to explain this to me. Now I know where to start and how to calculate the value. The lots are located on a busy roadway where houses are scarce and commercial businesses are the norm. Both lots combined total 12,000 SF. I'm not an expert, but I think a 4 or 5 unit strip mall is ideal. I'll get moving on the research and I'll fill you in on any progress I make. Thanks again!

Hello fellow BP members! 

I'm a novice wholesaler. Through my marketing, I met the owner and landlord of a single family house in Coatesville PA. The house is a 4/1 and rents for $1500 per month. However, as of today (10/4/17) it is vacant. The current market value of the house is 120K and I have it under contract for 105K. In addition to the house, the contract also includes 2 vacant lots that are adjacent to the property and an other vacant lot across town. The two adjacent lots are zoned for both residential & commercial use. As such, the property tax for the house (which includes the two lots) are $4,863 per year. This number makes the numbers in a buy & hold scenario for the house marginal (8% cash on cash & 6.99% cap rate). I feel the true profit potential is in the 3 vacant lots. More specifically the two zoned for commercial use. So FINALLY, my question is how do I determine the value of the lots for commercial use and how do I go about getting them in front of buyers/developers?