All Forum Posts by: Tony Pellettieri

We're about 10 weeks in to real estate investing and just closed on our 3rd Deal. Beginning to learn a lot of valuable CF strategies after recently joining Subto this past Monday. We are about to go under contract on our first CF deal for Door #s 4,5,6+. This deal is one that has been heavy on my heart as the seller is a close friend of mine, my current realtor, and currently in Foreclosure/Default on her Hard Money New Construction Loan which was her first investment. Would be open to feedback on Deal Structure and advice in general as this is our 4th deal and first "BIGGER" project.

Background. About 3 months ago, I quit my job to start investing in real estate. Prior to that, I had been listening to books over the previous 4 years, 200+ Titles in Audible currently. We started a company that remodels homes and have been working on scaling since month 2. We just closed on our 3rd property and are shooting for 50 this year. We are hoping Subto helps with the gain in momentum as we’re going to need all we can get to hit 50+ in our first year.

Deal Structure (Pictures of Property at Bottom)

Property: 2 Acres of cleared Land. Subdivided into 1 acre each. The first Acre is a Cleared Lot & we plan to build on it.The second Acre has a small 661sq ft House on it, and an existing foundation for a 1392 sqft house which a builder started but stopped construction on due to not being paid as the HML would not issue a draw.

Entry - We currently own 3 properties we are almost done remodeling and we plan to hold. The plan is to take out a HML on one of them to cover costs associated with Acquisition and Construction, and DSCR Cash outs after the other two are complete.Exit - Plan to Hold all 3 soon to be Aquired/Built properties for rent / future appreciation, +Cash Flow, and +Net DSCR Cash outs.

Acquisition - Contract for Deed $130,000 @ 0% Interest 9 months

• HML Payoff $73,000 + Legal Fees on Execution of Contract
• Balloon Payment of $57,000 at time of DSCR Refi after construction of home on lot one, and the finish of construction on lot two is complete.
• Mechanic’s Lien, $43,000 for foundation and other work done, paid by seller at closing when contract is fulfilled.

Rehab/Construction

• Lot 1 - Home to be Constructed TBD. Looking into potentially Multi Family or what size of home will capture the most value.
• Lot 2 661 SqFt House Rehab $5,000
• Lot 2 1392 House Finish Construction on Foundation $140,000

Rent

• Lot 1 TBD, We’re hoping we can construct Multi Family for max rent
• Lot 2 661 SqFt House $750/mo
• Lot 2 1392 SqFt House $1900/mo

Refi/Exit

Lot 2 ARV $350,000

• $80,000 Cost of Land/House/Foundation
• $5,000 Cost to Rehab 661 SqFt House
• $140,000 Cost to Finish Construction on existing Foundation

Lot 1 ARV TBD

• $50,000 Cost of Land in Acquisition
• Total Cost TBD

Using a DSCR 75% LTV 8.3% 30Yr Cash Out Loan, I Estimate we should be able to pull out approximately $255,000 after fees/points. That's $30k net cash out on Lot 2. PITI for the two homes on Lot 2 will be approximately $2,483/mo. Estimated Monthly Rent to be collected is $2,550-$2750/mo giving us positive cash flow of $67-267/mo in year one on Lot 2.What we do on Lot 1 will depend on zoning and the type of property we will be able to construct. The end result will ultimately be positive cash flow/net cash out.

This may not seem like a home run in terms of profit, but to me, it’s a home run in helping a good friend out of a bad situation.

Tony & Kim

That's Great!

@Cameron Goodall

We have the space reserved and anyone who would like to attend is welcome anytime. I'm happy to offer any suggestions, advice, or referrals if you need any.

 Look forward to meeting y’all! Glad you found Bigger Pockets. Personally, It has been one of my greatest resources! Get involved, ask questions, explore the different forum categories. Any questions, or if you need any local referrals, happy to help however I can.

 They sure do... which is why you likely have't found any, and why we can't legally share them. 

 Great advice in terms of looking at smaller towns around 45 mins away. Much less competition, lower prices, more motivated sellers, etc.

@Tamara Jackson

Welcome to BP!

If you're interested in attending a local REIA meeting there is a great one in Matthews, NC I attend weekly and would recommend. It's located at Jonathan's on Tuesday mornings 8am - 10630 Independence Pointe Pkwy, Matthews, NC 28105

@Andrew Lowery

Welcome to Bigger Pockets!

I would recommend educating yourself through books. I prefer audio books as I can listen to them at the gym, while I'm commuting, etc. A couple of great books on I'd recommend checking out on the topics of Acquisition using OPM and Creative Financing are below.

The Book on Investing In Real Estate with No (and Low) Money Down - Audio Book

Wealth Without Cash - Audio Book

Hope these help you as much as they've helped me! They should get you on the right track.

I'd also recommend checking out some local REIA groups. There is a great one in Matthews, NC I attend weekly and would recommend. It's located at Jonathan's on Tuesday mornings 8am - 10630 Independence Pointe Pkwy, Matthews, NC 28105.

Good Luck!

@Alecia Loveless

Find a good deal, and the money will be available to you. There are MANY lenders here on the BP forums. HMLs are pretty easy to obtain but are packed with fees. Depending on the price point of the properties you're pursuing, the % of fees can be high.

As far as finding deals... Opportunity is in the eye of the beholder. Get more proficient with analyzing deals. This will help you to better identify potential opportunities. One investor may look at a potential investment, either advertised for sale or not, and see no opportunity, while another may have the vision to see what is possible.

Education has been at the center of our success so far in REI. I listen to a lot of books on audible to continuously educate myself on whatever I am currently doing.

Hey Kevin!

We had a bit of an unconventional start in REI. Our overall business plan changed and was to scale about 2 months into our business. We first planned to Fix/Flip 5-10 houses in our first year, which many people we shared this with thought to be an audacious goal. After joining BP and changing our business plan, we now plan to BRRRR/Hold 50+ properties this year.

After many talks, and receiving much feedback, with fellow investors here on BP we knew we had to put systems in place if we wanted to even have a chance at obtaining our new goal. 

Build a Team. We ran across this Team Building Page on BP and used it as a template to start gathering the members of our Team.

Systems. As you scale, often times a good idea to do prior to scaling, putting essential systems in place to help you manage all of the additional work/tasks can be very helpful. A great book to read/listen to on the topic of scaling which I'd highly recommend, Clockwork, Revised and Expanded - By: Mike Michalowicz.

Organization. In our experience, when going from doing just a few projects at a time, to having many projects going on at any given time, being as organized as possible can help reduce feelings of being overwhelmed as you start to scale.

We are early on in our journey of scaling but just thought I'd give a brief overview of what we've been doing and what has helped us so far.

Good luck with growing your Rental Portfolio!