All Forum Posts by: Patrick Bavaro

@Dante Mazzariol unsure if you are looking for Canada specifically, but I am currently building a new build 4/3 in Cape Coral, FL. Total all in cost around $265k with 10% down with and post construction appraisals being around $340k-$360k. Rents expected to be $2400/mo. May consider cash out refi at the end of the build to pull all my capital out and then some, but unsure just yet. Message me if you’d like further details! Good luck!

@Christina Colon a lot of the markets others have already mentioned are all great. Most are also highly saturated, which doesn't mean there isn't opportunity, it's just more competitive. I'm currently building a new build 4/3 in Cape Coral with 10% down, build price at $240k (all in about $265k) with post construction appraisals being around $340k to $360k and I am contemplating the possibility of doing a STR. Benefit to Cape Coral is that it's a new city that still has a ton of growth potential. Should all else fail, I will have a solid LTR at $2400/mo or so.

Hi all, for those of you asking for an update, I wanted to share where I'm at. While I am still in the permitting process waiting on approval, I can tell you that I am still very positive in my feelings on this build. The team at R2R and the builder are both working as fast as they can, but it seems like there is a bottleneck at the city permitting office, which is the main reason for delay. I am hopeful we will be approved right after the holidays. I will also say that Zach and Scott at R2R and the entire build team have been very responsive and understanding with my concerns. I would recommend anyone on the fence still thinking about these new builds to reach out to me if you'd like to connect offline. Projections are looking extremely nice as is the equity position. Hope this helps anyone to evaluate the opportunity. Will update more once approved!  

@Rodrigo Ceja which of the builders was it that you were supposed to meet with? 

HI BP! 

Any and all strategies and ideas as welcome!! 

Before jumping into this question, some background for the readers. I am stuck in Analysis Paralysis and need some idea generation to help me move past it from more experienced and savvy investors. Right now, my wife and I own 2 SFHs that are currently rented, and are currently in the process of a new build (another 6-8 months likely). Our goal for 2022 is to move into the MFH space (preferably a 4 unit or more), but need some ideas for funding, or rather the "push" to make us take the leap as I know there are a few options available to us. Ultimately, we are full time W2 employees and I operate a high functioning sales team. Neither of us has an enormous amount of time to manage a rehab, so the idea of building a new MFH is enticing but we are open to ideas. We live in Broward County, Fl and while there are deals to be had, they are hard to find and typically out of our price-point. To put it into perspective, any 4 unit property that you do find (there are not many) are usually no less than $750k to get into and the rent amounts generally dont support the deal. We have 1 SFH in Broward that we currently own $292k on, but is worth about $415k and another home we recently purchased in Ocala, FL that we currently owe $180k on and is worth approx $225k (purchase price we just bought for). The new build home, we are all in for $265k ($240k on the mortgage) or so and when all is said and done, we THINK the home will be worth $325k conservatively. We currently have about $25k liquidity available towards our next deal, which is not significant.

Here are the options that I believe I have at my disposal. Please let me know if you see anything different. 

Option 1: 

-Sell the SFH in Broward County and walk away with a net of approx $100k before taxes. If we were to take this route, we would try and leverage a 1031 exchange so we aren't being hit heavily on the tax. We did live in this property for 2 of the last 5 years as well if that makes a difference. Use the proceeds to then fund the purchase of a MFH. Can a 1031 exchange be used to fund a new construction?

Option 2: Take out a Heloc against the equity in the SFH in Broward County. I have heard different information, but do believe Navy Federal Credit Union offers 100% LTV for a fixed Heloc starting at 5%, but I am unsure if this requires primary residency status. If this is something that turns out to be possible, I am leaning towards using those funds towards a downpayment on a MFH (new build or existing). My challenge here would be finding enough value add or upside to be able to pull out all of my funds to repay the Heloc when complete with either option. I don't believe we want to look at a cash out refi as we do not want to increase monthly payments on the home, effectively negating our rental income. I like the option of being able to simply pay back at a slightly higher interest rate.

Option 3: Keep the SFH in Broward and sell the new build SFH being built. This would give about $70k or so before tax liquidity. Not sure if there is enough capital there to deploy towards a 4plex though.

Option 4: Keep grinding and playing it out slow to continue to save funds and potentially use one of the strategies above in the next 3-6 months. 

Thank you for your time in advance! We are currently looking for REI in mainly Marion County, FL (Ocala) and Cape Coral, FL but are open to other areas as well as where we live in Broward ($$ usually the prohibiting factor).

Patrick 

@Zach Lemaster Totally agree with all you've suggested and stated! You guys definitely have a great product to choose from. My comments were not to present any pessimism to that fact, as it is actually the complete opposite. I am happy with my purchase and where we are in the build process as I went into this with the mindset that it would take time, as stated. My comments may seem blunt or to the point, but it is only to paint an accurate picture of the timelines compared to what some people may have in their minds. Your team, along with the Builders and Brad have put together a great product and I am thankful for the opportunity to be able to go through the learning side of new home development. Even after a misinterpretation of some of the information/timelines on my behalf, your team still operates with integrity and grace which shows a lot! If I had more capital I'd do another! 

Good to know about Brad on the selling side as well, should it come to that! I know we have been toying with the idea. 

Thanks Zach! 

Patrick 

Update to this post* I have been corrected on time timeline specified above regarding survey and septic plan design. This process started a few days after my land closed on 5/28/21. I was under the impression that survey and plans took 1-2 months POST financing closing (late July), when in fact It actually takes 3 to 4 months. The Delta Build team and Brad did in fact start in June to shave 1 to 2 months off the timeline which is a great testament to their professionalism and confidence of their product as not many builders would float that risk/cost. I hope this helps clear this up!

@Don M. Not yet. The builder contract stipulates they can increase if cost of material rise by more than 5%. This has not happened to me yet, and the same Brad told me "this builder never does that", so we will see if it is true. Only out of pocket expenses have been closing costs for the construand land acquisition ($26.5k for land with closing costs for the land). 

@Don M. Sure! There isnt much to update, sadly. We closed on the land in Mid May, closed on financing in Mid July (took 45-60 days...very long), and then after that survey and septic design had to take place which took about another month and a half or so which puts us towards end of August. Once those items were completed, the package was submitted to the city permitting in the first week of October. Earlier this week we received a few rejections on some of the reviews for permit which need to be corrected before a permit is issued. I am told this will take 7-10 business days, so we will see. Im hopeful that we will start construction once the permit is issued, but I also wouldn't be surprised if we have to wait a few weeks since its so busy. All in all, this will definitely take a year (hopefully not longer) to complete. 

For my feedback on the process, it has been neutral. The folks at R2R were helpful during the initial consultation, but are very hands off on the process. This is not their fault however as they act as the "middleman" making the connections to the builders and lenders. I decided to go with the 4/3 build and I will say that my main contact (Brad, not employed by the builder or R2R.. More of a wholesaler) on the ground of helping acquire the land etc. had spoke sweet misinformation to me telling me that the builder will begin submitting to the city for permits (which requires the survey and septic design to be completed $$$) while financing is being completed to shave 1-2 months off the typical timeframe. I found this to be surprising that the builder would take on that amount of risk so I filed it away in my brain that its likely to not happen, which is exactly what happened. 

At this point, would I do it again? Probably if the market holds until the build is complete and for the future (which I think it will). Just expect a full year process to take place. 

@Bud Gaffney second RentRedi. There is a BP discount as well for pro members.

@David Vanlandingham by chance do you use their maintenance feature with latchel?