All Forum Posts by: Austin Tam

Harjeet Bhatti @ MB Financial told me I could do a cash out refi any time after rehabbing it, and they lend in 46 states. You may want to reach out to her. 

I found this on the Cleveland Water website: 

"Cleveland Water meters measure water in thousand cubic feet (one cubic foot equals approximately 7.5 gallons), or MCF. Charges for the amount of water consumed are based on the number of MCF units used during a billing period. One MCF unit equals 1,000 cubic feet or approximately 7,480.05 gallons."

If I'm understanding this correctly, it means the meter's smallest unit of measurement is .001 mcf or 1 cubic foot, and any time a toilet is flushed, the meter reads it as .001 mcf regardless of how many gallons the toilet actually uses.  Is that right? 

 The sewer bill is based off water usage, so the two bills go hand in hand in my mind.  You should be able to access hourly usage through your account on the Cleveland Water Portal if you have an account. http://my.clevelandwater.com

I have two duplexes in Cleveland and the water/sewer bills are really crushing my cash flow.  I looked into the hourly usage and can find patterns in what I'm confident are toilet flushes.  I'm seeing 7.5 gallons per flush. All the toilets in the properties are water-efficient and supposed to use 1.8 gpf or less.  Am I missing something here?  Is anyone else seeing this discrepancy? 

edit: Found this on the Cleveland water website: 

"Cleveland Water meters measure water in thousand cubic feet (one cubic foot equals approximately 7.5 gallons), or MCF. Charges for the amount of water consumed are based on the number of MCF units used during a billing period. One MCF unit equals 1,000 cubic feet or approximately 7,480.05 gallons."

My understanding is the meter's lowest unit of measurement is 0.001 MCF.  So they charge .001 MCF or 7.5 gallons for every flush even though only 1.8 gallons are used.  Is that right??

If you're planning on financing the property, you likely won't cash flow very much if at all in the A/B suburbs, and if you purchase from a turn key company I can pretty much guarantee you won't cash flow (consistently) at all.  From what I've seen, Cleveland turnkey companies price their properties well above market and their advertised income numbers disregard a lot of expenses.  

To be clear, and it was already mentioned in this thread, Holton-Wise isn't a turn key company.  They have a realty arm that functions like a normal real estate firm and sells the properties; some are rent ready, some are not. When you purchase the property, their PM arm takes over, does the necessary renovations to get it rent ready, and then manages it thereafter. 

I'd love to hear about your experience investing in Cleveland so far. I'm closing on my second duplex there myself.

 Hi Amy,

I'm interested in purchasing your Cleveland properties.  I have a few questions:

-Do you have property management in place?  Which company are you using and are you happy with them?

-It looks like tenant pays water and sewer on these properties; are there any monthly utilities you are responsible for? What do those costs look like?

-What are you paying in insurance for each property and who is the provider/broker? 

-Who is responsible for maintaining the lawn? 

-Are all tenants up to date on rent? Are any of them problematic? 

You can reach me at [email protected]  Thanks!

With that budget, you have plenty of options. Your first step is to figure out if you're comfortable committing to the full 2-3M  If you decide you want to live in the more prestigious areas, you'll probably need it. 

If you decide you'd rather diversify your risk and spend less on the primary residence, there are plenty of options for that as well. 

In terms of return on money, you're almost always better off purchasing a fixer, and even better if you have the time and patience to build out.  Renovating an existing structure will run around $250/sqft.  Building additional square footage will run $350-$500/sqft depending on your choice of finishes.  With the permitting, it'll likely be at least a year before you can break ground and another six months or more for the work to complete.  With renovated homes going for $900/sqft on the low end, the delta is your forced equity.  

I live in the Parkside along Sunset ave, so I'll make the case for Sunset. If you've ever wondered where all the SF natives are, that's where we are. It certainly isn't the trendiest part of the city, but it's great for families. The areas closer to the beach are definitely hipsterfying. The public schools in the area are all highly rated, and you have several good private schools to choose from as well.  If your kids can test in, Lowell is one of the best high schools in the country.

Location-wise, 36th and 37th ave near Judah and Taraval are the most convenient since they're close to the train lines and have plenty of street parking, which is a rare luxury in SF. 

The biggest downside is that Sunset, Richmond, West Portal areas have the worst micro-climates.  The fog comes out of the ocean from the west and hits those neighborhoods first.  Most mornings I'll get on the train in mist and fog and come out to a sunny FiDi. 

Good luck on your search and congrats on the twins! And feel free to reach out if you have any questions about the city.  I know it pretty well.

You'll need to refi less in order for it to cash flow.  Based on your cost projections, your max cash out amount is 68k to break even.  If you'd like to cash flow, say, $100/mo, you can only cash out 49k, but that would leave you 34k invested and a measly 3.53% cash on cash return. You would need a PP of 52k to yield a 10% Cash on Cash return with $100/mo cash flow.

Not all deals are built for BRRR. Some are just better suited for flips. If you plan on taking out the full 75% LTV on every BRRR, you'll need a much higher rent to ARV than this particular property. Otherwise you'll need to adjust your cash out amount and purchase price to hit the numbers you want.

 Sorry, didn't see that.  I missed that bit.  

The analysis isn't quite as straightforward as looking at each individual deal and seeing if the cash flow is positive on individual properties unless you're planning on only purchasing a single property.  

If you do end up finding a deal where you can refi more than you put in, you have choices.  You could decide the appropriate refi amount to cash flow positive and only cash out that amount.  Or you could take the max ltv and put it into another property and play the arbitrage game.  In that case you'd run the analysis as a portfolio of properties as opposed to a single.