All Forum Posts by: Nick Noon

Thanks @Andrew Freed!  I respect your outlook on it.   See you at the next meeting as well!  

Thank you @Sabrina Sanchez for your opinion on this deal. It is very much appreciated, especially someone who is so close to the Worcester marker.  I look forward to seeing you at the next meetup in Worcester and hopefully talking about me closing this deal!

I was presented with an off market 2 family deal that I am analyzing in Worcester, MA

1st floor is a 3 bed/1bath, 2nd floor is a 2 bed/1 bath with possible expansion into the finished attic to make it a 3 bedroom.  Utilities are all separated, the house need some updating but no major Cap Ex in the very near future anyway.  

After some negotiation, he is willing to take $330k for the property as long as we delay closing for a month in order for his sister who is living there to find a new place.  

I guess my general question to the Worcester investors out there is that I run the numbers and its still pretty skinny. I figure I can get $3200 to $3400 total for both units, the mortgage would be around 1700, taxes around 420 a month, throw in some rainy day money for repairs and cap ex and im not looking at a crazy cash flow or ROI. However, I feel like you can't really find a two family in Worcester for that price in this decent of condition. So even though the numbers aren't great, does it still seem like a good deal...maybe a 6 month flip? It's hard to find a rental property in the low 3's anywhere in the greater Boston area it seems in general.

Would appreciate any general advice. 

Exactly what I was thinking.  Thank you again for the advice

Thank you both for the honest feedback!  You are confirming a lot of my own thoughts I had.  I'm not entirely happy with the pictures that were taken.  They do seem to show some imperfections that aren't really as noticeable when you walk the space.  Some of the pictures look too touched up as well.  I did end up painting the fireplaces black after the pictures were taken.

If I dont get good traction at the open house today I'm going to drop the price.  Any suggestions on the price drop?  My agent wants to do $5k, but I don't think that's going to make a difference.   I was thinking a minimum of $10k, or maybe even $15k to make a statement.  I dont want to paint myself in a corner, but I do want to get this property off the market. Any advice on this would be much appreciated.

Hello BP!

I am looking to see if I could get a little help in selling my Tyngsboro flip.  I bought my first flip project in Decemeber and I finally got it on the market.  It's a beautiful 1795 colonial I restored at 28 farwell rd which is in one of the best neighborhoods in tyngsborough.  It was a off market deal I couldn't pass up.  I've put well over $200,000 into the rehab and I was hoping the house would be gobbled up fairly quickly in this market,  but we have been on the market for 2 weeks and only 2 showings.  

The only feedback I have received from numerous people is "it's incredibly beautiful" or "its seems like its priced low"

I'm having trouble trying to make a decision to get this property sold before the HM lender interest eats me alive.  I want to lower the price but my agent and a lot of other people think it's too soon, and its priced right.  The market seems to be telling me different.  I know July isn't a great month and it usually picks back up in August but I would still think there would be more interest.  We have 3D tours and videos and it gets numerous hits and saves on zillow daily, but still no showings.   We have another open house tomorrow (during a thunderstorm of course) and I'm going to see what kind of turnout we get tomorrow and try and reevaluate. 

I would sincerely appreciate anyone's input or advice that might be familiar with the area.  I want it gone so I can start the next!

Thank you everyone in advance.

I went to the free seminar a couple weeks back in MA.  I went there knowing what it was all about (a pitch to buying the other seminars) but I figured it was right down the street from me and I figured it would be a way to meet other RE investors.  I didn't seen any other RE investors at the seminar, there was only about 15 people there and they were all there for the "get rich quick" scheme.  So, a waste of time in my opinion.  

One thing that I couldn't understand is the instructor starts off by saying you can get a better life with "PASSIVE INCOME".  That it was the key to success.  Right after he says that, he spent the next 45 minutes talking about flipping houses and wholesaling, which is not passive income in my mind.  I guess it has a bigger WOW factor when you're talking about $30k-$40k profits than talking about $100/month/unit cashflow from apartments.  It was a bit comical and I almost wanted to stop and and ask him why he was talking about ways to create ordinary income after you just explained that passive income is the best thing since sliced bread.

I closed on two properties in Manchester for a total of six units in an owner finance deal a few months ago. Both are in the "bad" section of Manchester I suppose. One is on Spruce and one is on Union East of Elm. We are currently completely rehabbing the units down the studs so we can refinance and raise rents. I will tell you is we've been working on one of the units the past couple of months not collecting any rent obviously and we are still cash flowing really nice, so it will be even better when we add $1200 a month to that as well. Also an opportunity to add a unit in the current storage area. The existing tenants are not "ideal" tenants but we are strict with our rules so they pay their rent. You have no idea how many of them have thanked is for being great landlords because we are active landlords. Painting a porch and fixing some of small repairs that were needed has gone a long way with the tenants and they see that they don't want to be evicted because we are going to take care of issues with the properties. Yea they aren't A class neighborhoods but they will stay C class if no one ever invests in them. We are investing in the area and we are going to BRRRR everything we can to get good tenants and make a profit in the meantime. The city needs more people to do this so we can get rid of some of the ugliness. A lot of landlords seem to be renting to anyone with a pulse which to me why vacnacy is at 2%. Thats too low, it should be at 5% if the proper sceeening and rent is being established. And to tell you the truth, some of the tenants who like the cover of night already see the writing on the wall that change is coming. Keep in mind, drug dealers are cowards. They don't want to live in a place that a landlord is constantly checking on. They will go somewhere else cheaper And quiter. And I love the constant police presence in the area as you can see the city wants to clean things up. We have talked to the police as well and they told us to call them anytime there is a problem and there will come take care of it. We need to fight back and the way to do that is to improve the neighborhoods.

I would love to meet up with fellow Manchester investors to talk about their strategies as well.  I am down at my apartments every weekend working on them!

Best of luck to all on your future endeavors

@Tucker McCarthy  I was told by many people that there is no such thing as seller carryback anymore, I would never get it financed, I've never heard of such a thing...I heard it all.  Well guess what, you ask enough people and you'll get a yes from someone.  My motto has always been if people don't think I'm crazy I'm doing something wrong.  It reassuring to me that I am not doing what the average person is doing, because the average person isn't financially free.  I work in Newton and am usually home by 6:00pm and can squeeze in some time on the weekends usually between different commitments, but I would definitely be available to talk about our strategy and where we are investing.  I would love to get your viewpoint on the area as well.  I have been told multiple times that Manchester is horrible, its a warzone, don't invest up there, but it's all just talk to me.  We went up there and we formulated our own opinions.  We have found that the it is very spotty.  We did not buy in the best neighborhoods, but we plan to make an impact for the better in the area.  Manchester will never get better unless people invest money in it.  People say not to invest there because they are too scared to, and that shouldn't sway your opinion.  We are wiling to take the risk because it may payoff big. 

@Steve Racicot  Yea, I'm probably in the "not so great" areas.  We have one on Spruce st. to the East side of downtown, and one on Laurel/Union st.  Not great areas, but we are looking to make an impact and buy the entire neighborhood if thats that it takes to create a nice area to live.  

Good morning BP, I wanted to share our first deal(s) as a brand new company.

I recently started a partnership LLC with two people I have known my whole life. I have been on a real estate high ever since I bought my first live-in flip a year ago. My partners and I were able to pull some equity out of our homes and were able to scrap together $100k to start the business.

Through much discussion earlier this year, we finally decided that we were going to invest in Southern NH, mainly focusing on Manchester, NH.  We were looking at Lowell, MA at first, but 2 familys were typically in the $350k range and there was heavy competition.  We looked at the market in Manchester and there seemed to be some opportunity there. 

We decided to meet with a RE agent in Manchester that knew area fairly well. We explained to her from our very first meeting that we were RE investors and we were looking to buy distressed properties that we could add value to and refinance to pull our money back out. I have a lengthy construction background so the BRRRR strategy was our best bet. We were looking to use hard money to get them financed then to refinance out in 6 months. At one point in the conversation, I did mention that we could buy a turnkey property if owner financing was available. Now, I've never owner financed a property, but I sure read a lot about it...so I had enough information to be dangerous. This is when it got really exciting; the RE agent said she has a strong relationship with a RE investor that is looking to unload his portfolio (looking to retire soon) and that he has considered owner financing before.

We jumped right on this opportunity. The investor had 2 properties on the market right now and we asked her to immediately go see them. They were both 3-family properties in a C-class neighborhood. One of them was listed for $249,000 and the other was listed for $215,000. We looked at both properties and they both needed some work. The RE agent asked us how a owner finance deal would be structured. I have never done this, so I said the first thing that came to my mind from the knowledge I had from reading RE books. I told the RE agent that the seller would carry back 20% of the purchase price, for 5%APR, with a balloon payment in 5 years. Well wouldn't you know it, the seller accepted the terms! We made offers on both properties for $220,000 and $195,000 and they were accepted! Even though he had higher offers on the table.

Now the tricky part, how to finance them. I called my contact at my credit union and he gave me my first lump on the head. "We can't do that". Is what I was told. "We need 20% down from YOU". I went into panic mode, I just told the seller that we could make it happen and now I would was going to look like an idiot because I couldn't perform. I talked to my partner and he suggested I called our contact at another bank who does commercial loans. So mid-freakout I called my other contact and was told, "yea, no problem. We are a commercial loan, we can do whatever you want". WOW, what a change in mood that was. I asked him if I would need to put a certain amount down and he said that he didn't care because "We are in first position at 75% LTV, what do we care?" A couple days later I told him that the deal was accepted and to start underwriting. Now that the deal became real, the tune started to change. Now I was being told that it had to go to his boss and that he didn't know if it would get approved, and blah blah blah. I was pissed off to say the least. After a lot of negotiations, I was told that they would do the loan, but we needed to put down at least 10% and that the 3rd part note would have to match their terms, which was OH BY THE WAY, 20 year am. with 5 year fixed, prepayment penalty.....so we were a little mislead from the beginning. We took the lump on the head and said, we will still do the deal.

So now we are thinking everything is good, until we get more bad news.  The loan officer calls me again, so the deal was underwritten and approved, but we need to hold $5,000 in escrow per unit for lead paint abatement. 6 units x $5,000 = $30,000.  We couldn't believe how many times we kept getting these bumps in the road.  After some discussion, we had to agree to the escrow since this deal wouldn't be coming around again anytime soon.  Not to mention, the seller said if this deal goes good, we could look at the rest of his portfolio and be able to make offers off market.  So we went from basically $0 down to about $80,000 in a matter of 2 weeks. We stuck with it though and we are looking to close on both properties this Friday.

Our original goal was to get 2 units this year, and after a month of being a company we were now going to close on 6 units at only 10% down!  We have a goal of 500 units in 10 years so we are striving to hit our goal!

Here are the numbers:

Property #1:

Purchase price:  $220,000

D/P:  $22,000

Closing:  $4,000

Seller carryback:  $44,000

Rental Income (3 units):  $3,200/month

CapEx: $240

Vacancy:  $150

Repairs:  $170

Snow/Landscape:  $45

Utilities:  $100

Prop. Mgmt:  $300

Taxes:  $450

NOI: $20,940

Debt:  $15,680

Annual Cashflow:  $5,260

CoC ROI: 20.2%

Property #2:

Purchase price: $195,000

D/P: $19,500

Closing: $4,000

Seller carryback: $39,000

Rental Income (3 units): $3,000/month

CapEx: $240

Vacancy: $150

Repairs: $150

Snow/Landscape: $45

Utilities: $100

Prop. Mgmt: $300

Taxes: $394

NOI: $19,452

Debt: $13,231

Annual Cashflow: $6,221

CoC ROI: 26.4%