All Forum Posts by: Colleen Fiumara

Investment Info:

Single-family residence buy & hold investment in Halifax.

Purchase price: $188,000
Cash invested: $17,000

This is a small bungalow up in my town center commercial zone but grandfathered in as legal non-confirming residential. I used a fannie mae homestyle loan and renovated the cottage into my home office space for now. It will be a nice 1bd/1bth rental when I move on to a different office space and rent it out. The lot is .7 acres with 200 feet of frontage. My longterm goal will be to have a small office building built on the lot. My back yard backs up to our town's Walmart parking lot.

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

The location and size of the lot, the zoning being mixed use commercial/residential.

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

It was originally on MLS, I spoke to the agent when it was under agreement and she called me back when the original deal fell through! We had a failed septic test that allowed me to negotiate down further and obtain a rehab loan including septic replacement.

How did you finance this deal?

Fannie Mae Homestyle

How did you add value to the deal?

We replaced the entire septic systems, rehabbed the cottage with windows, doors, roof repair, exterior paint, interior original wood floors refinished, some LVP added where needed, complete kitchen replacement.

What was the outcome?

So far I am using it as my home office about 3 minutes away from my personal home in my town, I am refinancing now then will rent this when I leave and move on to whatever my next office space will be!

Lessons learned? Challenges?

I learned a lot of hard lessons during the rehab loan, finding contractors to estimate was difficult, getting the vendors paid by the bank was difficult, there are a lot of extra fees such as a required HUD consultant, inspections and draw fees.

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

I am a real estate broker/owner, I also contributed my fee to the seller as part of my offer. I would not recommend the lender I used.

I am buying a small run down cottage listed on the town field card as a residential single family, but completely covered in red for commercial zone on the town's zoning map, it backs up to a grocery store and is across from a bank.  I got a great deal so I took and it an got under agreement. Now I'm all over the place for use.  I want to potentially renovate into a small office for my company, or I could rehab and rent, it would be a cute 2bd/1bth rental.  I am torn on how to renovate depending on what I'll do with it, I don't want to commit to straight office by removing the shower for example in case at some point I want to rent it as a house. I need to choose a focus.  (either way it's a low budget DIY renovate over time situation, I can't spend too much on the house because it will eventually be a tear down). The lot/location will be worth something for a rebuild some day.

Secondly, trying to figure out the best way to borrow for this. 

• Just use it as a home office. Primary home Residential loan would be a great rate and less down but may cause a problem for a future underwriter if I see a multifamily in a few months and want to buy that as my primary/owner occupied 2 family for example. I say this because that is my next purchase, I'm actively looking. My lender said it would be hard to show going from a single family primary to a multi primary. (My question: can I simply show my intent has changed from home office to full office and now I need a home?)

• Investment property loan is more down, higher interest but leaves me open to purchase a (higher priced, low down payment) primary soon.  I have the money saved to make the higher down payment on the little cottage but it's close to all of what I had set aside to purchase and light reno so it would be tight. But I also figured I'd just be moving my money from low yield mutual fund savings into the real estate (still good investment but no longer liquid) and in this current health emergency situation that is risky. I am a real estate broker and currently have transactions closing but will I in a couple months? (Something to consider - can I refill that savings)
  

• My third lending option would be a commercial loan buy it as I see it as an office building conversion, it's in the right location, what benefit would it be to go with a commercial loan now? One option is to go full commercial, knock down the cottage and build a small retail strip for lease. (I'd ask my zoning officer first of course the rules, etc) I do have 200 ft of frontage and I'm in the commercial zone.

I have no primary now and I own one rental property from many years ago that will have no interference.

I appreciate you reading this far and any advice you can give is greatly appreciated.  I've talked to a few lenders, agents, investors but I really knew I would get some great advice in this group.

I'm swamped without a bookkeeper right now at tax time trying to reconcile the whole year of 2019 and for me a CPA is a necessity, I'd say both or at least reconcile your books monthly not yearly lol! 😆

My other option is wait until a close a few more transactions and save up my own 2.5-5% but I don't want to wait. I want to start now.

Hi new & experienced investors, I need help with the initial deposit on my company's first flip, I have spoken to several hard money lenders but maybe not the right one yet.  DoHardMoney does offer 100% financing (up to 70% arv) but you need to put down your own earnest money which (in Massachusetts) is typically $500-1000 with your offer and 2.5-5% down with your p&s agreement.  Is it wise to take out a personal or small business loan to cover that initial down payment?  Or is there a hard money lender that can assist with this portion as well?  DoHardMoney is $3,000 up front to invest in their program with $2,350 promised back to you at your first closing.  The plan would be to rehab and sell the property and pay back DoHardMoney and the personal/small business loan immediately and hopefully have enough left to use my own 2.5-5% down on the next one.  Thanks for your help.

Anatoly, thank you so much.

thank you so much John!

Thanks Curtis and Michele! I do need to find out the condition, the investor has been in the building I have not. As of now I am setting up the cash flow analysis spreadsheet and one line is the replacement/improvement reserve.  My thought is he will change them over time as they stop working. There is no plan right now to go in and replace everything at once. I am thinking a monthly 8% reserve will start to build and cover these gradual replacements.

What do you safely budget monthly for replacements and improvements of a multi family such as appliances, roof replacement, renovations, appliances, countertops, additions, etc?  I have a client looking at a 12 unit apartment building, 12 stoves, 12 fridges, 12 dishwashers, 2 large water heaters, 12 garbage disposals.