All Forum Posts by: Peter Philando

Here are some pics

Investment Info:

Single-family residence fix & flip investment in Montgomery.

Purchase price: $50,000
Cash invested: $23,994
Sale price: $135,000

This was a very challenging project. I had to fire one contractor who was just all talk and no action. He knew how to do the work but was a poor business owner which showed up as bad money management, among other things. I also had to fire the listing realtor because she did not do her part and was not straightforward when deal did not close.

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

I am predominantly a buy/hold investor but decided to flip this one because of how hot the market was

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

My contractor was looking at it for another buyer but there were some plumbing issues that the buyer was not comfortable with. The buyer was a realtor so he told her that I buy houses. My offer included paying for all closing costs and close in 2 weeks. I also wanted to use the realtor when it was time to sell

How did you finance this deal?

It was a cash purchase and use my own funds for rehab

How did you add value to the deal?

The main work was to gut both bathrooms and create a 3rd master suite. I kept the kitchen cabinets and appliances, but replaced the countertop and added the peel/stick ledger stone backsplash. Painted throughout and refinished wood floors. On the exterior, removed all the overgrown bushes from the front and back, cut 2 small trees in front, planted some sod, power wash exterior of the house, and added mulch and solar lights.

What was the outcome?

I listed at $130K and took a cash offer for $125K but the buyers could not close at the end. I fired the realtor/agent because she was negligent in her duties. I relisted using flatfee.com for $175 and took a full-price offer for $135K. I was meticulous in communicating with the title company and buyers' agent to a successful close.

Lessons learned? Challenges?

In a hot market like this, I will not use a listing agent and save myself the 3%. Most agents are just using access to the MLS as their main strength and don't really work to market and sell your property. Well, there are ways to list on the MLS without hiring a listing agent. You have to put in a bit more work but on higher-priced sales, it's definitely worth the extra effort.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

NO

@Jonathan Greene

I see your stats and what? Thank you for your contributions but you can also be wrong too and should be able to admit it.

Yes = Sherman Williams Agreeable Gray. It's always available because HD/Lowes can mix it and I/contractor never have to guess about the paint color. It's beautiful in pictures. I will rock that gray until someone proves that it does not work anymore. I rent and sell houses and those ALWAYS work, why would I waste time on this

Why is it when people post on this site, which is supposed to be a helpful place for seasoned and budding investors, some people go for the easy potshots? If you really don't have anything to contribute to the conversation why don't you find a thread where you can help?

@Allan A Ramirez

Congratulations on your rental investments. I keep it simple, so the tenant pays all utilities and property upkeep (lawn care). I don't invest in any cold-weather climate so things like sidewalk snow shoveling may be different. Pool maintenance I pay for but include in the rent. I have a property in Florida where I make sure I take care of the lawn and pool, so basically, it's hands-free for the tenant which works out great since the husband is on the road all the time and the wife is home with 3 small children. I always tell the tenant that renting a house is different than renting an apartment because you're responsible for common area maintenance.

Now, if I notice that my yard is not being maintained, then I warn the tenant 3X. On the 4th time, I now take over the yard maintenance and bill the tenant. However, it has to be outrageous for me to interfere.

Hope this helps

@Greg Parker Thanks for your quick reply. I have been quoted up to 30%, which seems crazy to me

What is the average AirBnB management fee (%)? I am in the Montgomery, AL market? Thanks in advance for any input

I didn't pick Alabama on purpose. I just saw a cheap HUBZU auction property late one night (or really early in the morning) and I bought it. I look at Google maps to see what the neighborhood was like (the map was a bit old) but pulled the trigger and told my wife in the morning. "Honey we bought a house in Alabama" LOL. 

I use tenantcloud.com to manage the properties so you can do everything from there including collecting rents. I only accept online payments through the app. I only meet the tenant in-person if I'm in Alabama at the time, otherwise, everything is done via phone, email, text. I use a Google number with a Montgomery area code, then store that number in our phones as "TENANT CALLING". That number is the property management number. 

I have boots on the ground that sometimes open the house for showings or sometimes I give the tenant the lockbox code. I try to follow Joe Asamoah's technique where he does a home visit of every potential tenant before signing a lease. I have explained it to my team there and they do it. I keep them busy with work and they go the extra mile for me. I have moved exclusively to Section 8 and the military because I want that guaranteed payment. I put a lot of effort into the screening process.

I live in the Miami/Ft Lauderdale area and invest in Montgomery, AL. I was up one night and just bought a cheap house on HUBZU one night in a state I never visited before. However, I have made several trips there, driven all over the city .... good areas, bad areas, so-so areas. I found BiggerPockets after the purchase and it has helped me to navigate my way. The one thing I can say is to visit the area you want to invest in, if you can. While there drive around, schedule meetings with potential team members, visit the Home Depot in the morning to meet potential contractors, etc. I bought a map of the city and used it while I drove around .... now that map hangs over my desk. I know you can make it without visiting but it's well worth your time. 

As others have said, you need to figure out your strategy. Montgomery is not an appreciating market but great cashflow. So my number one focus is cashflow, therefore I set a specific goal based on cashflow. I need 30 properties cash flowing no less than $300/month to passively make $100K/year. I don't calculate cap rate, COC, etc. I also want equity so I can BRRRR if desired, therefore I need to put in more effort to find deals that would give equity and good cash flow. I'm now at the point where I looking into flipping in this market. I started out with property managers but have moved to self manage, except for one house. I have solid boots on the ground where they help with showing properties for rent. I have a great investor friend that I bought 2 houses from and we talk at least once per week. I'm heading there in a few days to finish up a rehab. Now, I feel so confident I can do this anywhere. So, visit and know your market, meet people, use property managers if unsure then you can take over property after a year, make offers, get addicted .... BUT GET START!