All Forum Posts by: Patrick Goswitz

It is too hard to tell what the current value is because it needs such a major renovation. I paid 200k for it and construction quotes are about 375k. I added another 50k just in case. Using the GRM or Cap Rate Method, the ARV is coming around $936,000. It is also not easy to comp because there are not any triplexes that have sold in the area. Everything is a duplex because if you want 3 units or more, you have to spend 52k for an automatic fire sprinkler system.

I own a Triplex and was planning to refinance the property after renovations and then rent it. The property does need a significant renovation about 425k worth to redo everything. The property can bring in $6,900/ month according to Small Area Fair Market Rents in this zip code. I can use a HELOC to fund the renovations but that would require me to unload other properties. I was wondering what other options are out there or if using my HELOC would be the best route?

Has anyone had any experience with a Rental Rehabilitation Program when purchasing an investment property? It seems like a pretty good deal but also seems like it could be a big headache when dealing with the city. I can get up to 30k/ unit for a multi family home in renovations but must rent to low income for 10 years.

"The City of Knoxville's Rental Rehabilitation Program provides owners of substandard residential rental property with financial and technical rehabilitation assistance. In return for the City's rehabilitation assistance, participants agree to certain long term (5-20 years) rent and occupancy restrictions which provide for the continued availability of the housing to lower income families at an affordable rent. The Program utilizes forgivable loans called "Deferred Payment Loans," which require no monthly payments to subsidize the required costs of rehabilitation. Total funding is limited to 80 percent of cost of required rehabilitation or a maximum of $30,000 per unit."

When it comes to flipping, my biggest weakness is dealing with the contractors. I have no problem finding deals or financing them but I feel like I am getting screwed with contractors and a lot of it is my fault. Are there any contractors on here who would be willing to speak on the phone or zoom? I would be willing to pay a consulting fee.

Right now, I am doing a flip where the cost of material is 25k but the labor is 47k. This just doesn't add up to me. Any other advice would be greatly appreciated.

@Kristine Ann ok cool.

@Kristine Ann I guess it depends what state you're in. Here in TN, according to the 2 attorneys I have spoken too, it would not take anywhere close to 2 years.

 I should've been more clear on my question. Do the numbers make sense? Is this a good return on my money. After reading what others have said in another group, I should add a 5 year balloon. 

 If he doesn't make the payments though I would be able to take the house back. Not that I wish that upon him.

@Mike Grudzien I guess I should rephrase the question. Does it make sense financially for me to do the deal? I am not worried about his finances. I have already investigated that.

 I know the reason he is not going to the bank. I have ran credit checks/ background checks and we have a very close mutual friend. I agree with you about how he needs to get refinanced in 3-5 years so I can cash out.