All Forum Posts by: Patrick Reynolds

when doing your vetting and search, make sure you are looking for an agent that specializes in the kind of rental property you are looking for. For example are you looking for a duplex? turnkey? value add multi-family? buy and hold? etc. The type of rental property that you are looking for may differ from the agent's idea of a rental property and finding an agent looking for the ins and outs of what you deem is suitable will be key in finding your deal!

First and foremost take care of the moisture issue especially on buy and hold. But as far as your budget goes, I LOVE new flooring! A lament hard wood that may run you $1 -$2 sq/ft. You will not only see an increase in appraisal value but you will get more rental income on the unit as well which helps cash flow. If you can stretch your budget a bit more and depending on the current age of your roof, a new one could absolutely catch you a nice return in your appraisal.

It depends on the property type. Is it a single family residence or multi-family?  

I was able to really bolster the value of my rentals by adding laundry hookups and converted a small back yard into parking. Laundry hookups and a a washer and dryer ran me about 1200 initially per unit but brought the rent per unit up $150. leveling off the yard and spreading crushed stone for off street parking cost me almost $3000 but was another $100 per month per unit. When it was reappraised the value of showing higher rentals and creating off street parking really helped me out.

With a single family look for properties that may be listed with any .5 baths. Often there is a dead space or closet that you can remodel to create a full bathroom for relatively cheap but can really make a difference in property value.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Worcester.

Purchase price: $216,000
Cash invested: $28,000

I purchased a distressed 3 unit and renovated the second and third floor units via house hacking. It is currently all rented out and cashflows at $950 per month after my budgeted expenses and reserves.

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

I wanted to get into multi family invested because I felt that creating passive income would give me the flexibility to one day leave my job through passive income. I wanted to find something I could BRRRR to move to my next deal

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

It took me about 5 months, using a realtor who specialized in multi-units and showed me about 35 properties before I found one that checked all my boxes

How did you finance this deal?

30 year fixed FHA mortgage with 3.5% down I accumulated through savings

How did you add value to the deal?

I completely gutted the second and third floors and combined the galley kitchen and bathroom into larger bathroom with laundry in units. I also installed high efficiency forced hot air systems rather than electric and extended the driveway to accommodate spaces for all three units which I include in the lease.

What was the outcome?

After about 2 years of house hacking and moving floor to floor living through renovations, I have all three units rented out for a total of $3100 with a $1721 mortgage. I cashflow $950 as I set aside the rest for my capex budget and monthly property manager's expense.

Lessons learned? Challenges?

I had to go through an eviction after rushing to place my first tenant and did not thoroughly vet them before hand and learned the value of using a property manager or real estate agent to do this for me. The property manager charges 1 month's rent to place a tenant which I turn around and have the tenant pay 1/2 of when signing the lease.

Look for an agent that specializes in value add properties if you are looking on the MLS. It will take you longer but my first deal was a 3 family I purchased for 216,000. Admittedly it turned into a house hack and I lived out of one of the units for a year before the numbers were in my favor but I am now cash flow positive and in the middle of refinancing with a new appraised value of 325,000 and looking for my next deal. Point being, not all BRRRR opportunities are instant ones, because if they were they wouldn't be on the market long. An agent that specializes in value add properties can help you identify ones that work with the BRRRR method even if they are few and far between in your area.