All Forum Posts by: Rhonda Burke

Investment Info:

Single-family residence buy & hold investment in De Ruyter.

Purchase price: $55,000
Cash invested: $22,000

2bd 1ba, SF rental.

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

Looking for first rental property with good cash flow.

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

MLS.

How did you finance this deal?

Conventional with 20% down and cash for rehab budget.

How did you add value to the deal?

Replaced roof, upgraded electric, exterior paint, hot water heater, flooring in kitchen and bath, new appliances, new counter top, painted cabinets, screened front porch, new doors.

What was the outcome?

Purchase on the eve of Covid shut down. Three years later almost doubled in value and moderate increase in rents. Easy to self manage.

Lessons learned? Challenges?

Cash poor, so did the repairs ourselves. Took much longer than planned and went over budget, but not bad for first time.

I am currently under contract for a 5 unit multi-family. It's in a small mid-western town near Cincinnati where rents are good and increasing due to housing shortage. The small town also has a weekend/seasonal draw for out-door recreation and historical small tourist events, so there is some potential for use as an AirBnB. The building is solid but has 40 years of deferred maintenance and updates needed. The building owner recently passed away and the 90 year old relative just wants to sell rather than invest any money or mess with tenants. There are two tenants currently and rents are low for fair market. 3 units are vacant. All need updated to attract decent tenants- most recently used for junk storage for the owner.

*I am working with a small local bank, however struggling to get the purchase of the house and funds to fix it up approved due to debt to income. They won't use the potential rental income because there are no leases with the two tenants and 3 units are vacant.

* I have spoken to three hard money/DSCR lenders, however my total project is too small for their commercial lending guidelines. (Under contract for $45k for purchase with repair budget of $60k-75k to upgrade electric, paint, kitchens, baths, flooring.)

* I am able to use a line of credit on my house to buy the building out right, but would not have enough for the repairs. 

* I did approach the seller to to see if they would finance the deal, but was turned down.

1. Should I just buy it and figure out the repairs to slowly get each unit upgraded over the next 1-2 years? The current rents are at $500 each for the two occupied units. The fair market value should be closer to $700 for the 1bd and $950 for the 2bd once remodeled, however. The current $1k/mo will cover the expenses for now.

2. Will it be easier or harder to get a mortgage, line of credit, or rehab loan if I already own the building by purchasing this way? 

3. What am I missing? or What else should I consider?

Thanks for sharing. I'm a novice and haven't had to do an eviction. I am definitely taking notes though. I imagine I'll need to figure out Butler county at some point in this new adventure.

Honestly, if it's about money, you are better off to convert to a modern roof and gutter system. As you have said, there are only a few that can handle slate roofing and box gutters. I only know of one, Durable Slate. Unless you need to preserve the historical architecture, you should consider converting the roof or get on the wait list to repair it. Just my humble opinion.

Just had some interaction with MIB Services in my day job. The guys were very professional in the work they did in our business, so I will be adding them as a contact for HVAC & electric whenever I get my first deal.