All Forum Posts by: Porsha Fross

The companies that provide the equipment and split the income are called Route Operators. This is a very lucrative business with some operators owning thousands of machines. The personnel  they use to collect the money and do repairs do it everyday and have the parts available for a quick fix. You will be signing a multi year contract to make it worth their while but you have no headaches. 

If you own your washers and dryers you will probably make some decent money but get ready when something breaks and the tenants want it fixed right away.

If you are priced lower than the local laundromat (which most are for some reason) your tenants not only have to carry all their stuff to the Laundromat but will have to spend more money and may want you to cover it.

Also a Service Tech will probably charge $100 to show up plus parts. 

Weigh your headache level against your income goals. 

One other question. If you don't need to provide laundry to get tenants how much could you rent the room for as a storage unit?

@Shea Spinelli 

If you PM me, I can send you a sample XL spreadsheet that you can customize that we use to apportion the expenses among the Tenants .. Works equally well for either Gas or Water.

Quote from @Porsha Fross:

We have an 11-unit apartment building (five 1br/1ba, six 2br/1ba) and want to do a cosmetic rehab (new kitchen, bathroom, paint, sanding, and staining hardwood floors, excluding repairs on MEPs). We've received a few quotes, but most are over $30k per unit.

I've seen several posts on Facebook and Instagram BRRRR groups that do medium rehab for $8k-$14k per unit for both labor and material costs. Do you know where these people get quality work and contractors for that price?

What general contractor recommendation have you used in the past that can pull a permit with the City of Chicago that you recommend? I also need a roofing contractor, so I am open to any recommendations you have. Thanks!

The last time I did an apartment rehab was over 5 years ago, pre-covid for sure. We came in about $20,000 per unit back then, and the owner paid for some of the exclusive materials that he wanted. 

I would suspect that those prices you're seeing on Facebook are for crews that are not licensed, not insured, no workers comp etc etc....

Basically it's the old story...... You are never, ever, going to get quality work from licensed, insured contractors....... for an 'affordable price'..

Hey @Porsha Fross 👋🏽

It sounds like you might be looking for a construction loan rather than a rehab loan - I've done a 203k loan and I will highly recommend that you get quotes from multiple general contractors and make sure that they've done 203k's before and if not, make sure they understand what is required. You should also have your lender help you understand what the loan entails. I changed my scope of work multiple times and initially didn't think I could and I was able to change my timeline, too. What I thought I would finish it 6 months took 1 year and part of the reasoning for that was because I changed my general contractor a few times after I purchased the property

Hi Porsha- a Homestyle loan will not work in this scenario.  Homestyle does not allow for ground up construction only for a major rehab but also limits you to 75% of the after repaired value.   I think you need to more likely look at a CTP (construction to permanent) loan and your best bet with that tends to be a local banker in your area.  Homestyle will allow you to finish a “substantially” complete home but that is one that is already 90% complete.   Hope this helps! 

Porsha,

Homestyle is a great program fairly simple in terms of guide lines and not hard to get approved. Chicago is easy there are tons of solid GC's and builders. What we do at the bank and with most banks is either get your builder approved or we can provide you a list of the already approved builders that have built successfully under the program.

If you trying to get started the first thing is get your Pre-approval set up and start the processing. Most builders require you to provide a Pre-approval letter or Loan commitment from the bank. You will also have builders pushing you to use their lender (Do not) go down that road. Choose your bank and stick with the approval in order to not get pushed into a "Builder war" with generic incentives which are useless.

"Some" not all builders tend to use the "Builder incentive" tactic like - We will give you $20K towards closing which sounds great but when the builder is setting the market and creating its own sales to move the market it’s a scam! They offer all of these bells and whistles to sell you a grossly marked up home that they set the sale price and then knock off (Ghost funds) fake credits.

Then if they leave that area and do not build any more high priced homes guess what happens real fast. Those recently built homes start to lose value because the comparable sales surrounding them that are "Not" new builds and are selling for less causing a standstill on those new homes. No one really talks about this but they should because a lot of people get stuck buying a new fancy home and then in 12-24 months they are under water.

Again not everywhere but in a lot of places where you see a small phase of builds go up and then it’s off to another city or county.

The other thing that is not talked about much is home prices if the home price is under say $200K the builder loses interest. They tend to take the bigger builds that will make them more money. The banks include the lot of land into the construction as well but do shop for land that superseded the home price. The land cannot have more value than the home it must make sense.

Originally posted by @Trevor Winder:

@Denise Brown-Puryear I am about to close with LendingOne and the communication is subpar. Can you tell me more about your experience with Lima as I am in the process of onboarding more investors and I don’t want these new investors to have a crappy experience as that obviously reflects poorly on me. Basically, I’m shopping around. I just need to know the terms so I can manage expectations for me and my investors. Highly frustrated!

I ended up not using LendingOne based on earler feedback and went with another company which is local although they have a larger nationwide network.  Deal closed a few months ago and I'm preparing to work on a rehab deal with them in 2020.  Message me privately for more info.