All Forum Posts by: Nick Schultz

@Mitch Miller Thanks for your perspective. Flood insurance IS required for this property.

Hi Everyone! I have a deal I'm looking at that has me questioning which route I should take with it and I would like your feedback: 1150 sqft 3/1 all brick ranch with an unfinished basement (extra 1150 sqft in the basement). The basement with half underground so there is access to the outside, and windows (one side has small transom windows). The back corner of the house is in the 100 year flood zone. Is it best to completely avoid properties in a flood zone? My initial thought was to convert it into a duplex, renovate and rent the upstairs and downstairs separately. Purchase price: $190k

Estimated Rehab: $40k (Finish basement and convert into 2/1 with kitchen)

Estimated Net Cashflow: $370/month 

Main concern: Resale of a property with an untraditional layout.

Option 2: Live in the upstairs and Airbnb the downstairs at ~$75/night. Would generate ~$1100/month if it rented half of the time. 

Main concern: Demand for a basement as an Airbnb in a location that is a 10 minute drive from downtown and otherwise doesn't stand out.

My GC looked at the property with me and suggested I put more money into it and flip it as a SFR.

Estimated Rehab: $70k ARV: $330-350k Profit: ~$40-50k after sales costs

Main concern: How does the flood zone affect the resale value and general interest? 

I'd really appreciate any feedback you might have. Thank you!

@Igor S. I am interested!

Thanks for the advice and feedback everyone.

@Jonathan Greene I ended up passing on the deal for that very reason. After I taking a deep dive in the rehab costs, there wasn't enough margin to make it worth it.

@Odie Ayaga What is a typical minimum amount for a hard money lender? 

@Rick Pozos Great points. I realize now the post sounded a bit alarmist. I was nervous about committing to my first deal without a clear financing plan, and did not want to get stuck with a property that I couldn't completely rehab. I'm sure I would've figured it out, but was hoping for some peace of mind. 

Hi BP! I'm looking at a BRRR and I need cash to make up the difference. Property is $45k with rehab estimate of another $45k. ARV estimate $125k-$130k. I'll buy the property with cash and put in $15k for rehab. I need $30k from a lender to make this deal work. Payback within 90 days. This is a super fast turnaround and I need to commit by 10AM tomorrow morning. Please PM me for more details if you're interested.

@Crencenthia F Brown Great idea! I'd also be interested in a virtual or in-person meet up.

@Account Closed It sounds like you're referring to the development happening in my neighborhood. I saw the preliminary design and it looks to be nine modern 2-unit townhomes (sold as SFH) in the middle of an established neighborhood of ranch-style SFHs. It will be an interesting dynamic as this new construction will likely drive up property values for the neighborhood as a whole. Home prices have already risen significantly in this neighborhood over the past 5 years, with no signs of slowing down.

@Ann Zane As I'm sure you know, Raleigh is a very hot market and no SFRs on the MLS will come close to the 1% rule if you're looking for rental properties. Raleigh market currently is strictly a fix and flip investment market in my opinion. Buy and hold as a primary resident should yield decent appreciation. One suggestion for your analysis is that you can expect the Raleigh market to appreciate faster than inflation based on population growth, stable economy and businesses, and lots of media attention as a top city to live in. Good luck!

@Desmond Dunn New construction in the Raleigh area is going to be around $150 per sqft. All custom fixtures and high-end materials would put you well above $200/sqft. Spec build could be cheaper than $150 but it all depends on who the GC is and whether you get good quotes from your subcontractors. Value definitely depends on where in Raleigh you are building. If you're downtown it's upwards of $300/sqft, the further out you go drops off to about $200-$250/sqft inside the beltline, and $150-200/sqft outside the beltline. Good Luck!

@Dawn Brenengen in Raleigh! She’s been very helpful to me.