All Forum Posts by: Richard Forton

I have 18 units in my real estate holdings with 6 different properties. The last duplex I purchased in September of 2018 is my first BRRR attempt and here is how it has played out....

I purchased a duplex near my other 4 duplexes in the area and paid $160,000 for the property. I gave the sellers $30,000 down and did interest only payments on the $130k for 2 years or less. The duplex was so dated and needed a full rehab. All in with the rehab cost and my interest payments I am at about $45,000 with both units ready to rent by March 1st. Rents will be $1,000 and $1,200 for a total of $2,200 a month. Currently my interest payment in $705 a month so the cash flow starting next month will be great. Once I get the leases in place and a couple months of cash flow I will refi the property. It will look like this.

ARV will be $220,000

Cash in the deal will be $75,000

Current Debt is $130,000

75% of $220k will be $165,000

After paying the debt I will get $35k of my $75k back. I will have $40k invested in a brand new fully renovated duplex.

I have to admit I am not totally thrilled with the numbers. But after looking at it at this angle I changed my mind. I could of bought the property for $220,000 and had to put $55k down. While having the mystery of not knowing how well the property had been rehabbed or treated.

Overall, even with the BRRR not living up to the hype I feel like the deal has worked out better than buying the conventional way I bought my other properties. However, I did miss out on cashflow for 5 months, as well as spent many hours, days, and energy at the property. I think this was not a great move nor a mistake. But another way for me to expand my portfolio.

Good luck investing 

Hey John,

I also work full time. I am in radiology, specialize in Vascular surgeries. Definitely not a doctor but I work side by side doing the X-rays and other task. Also a adjunct professor at our nearby college. I have one 9 year old daughter and my wife is pregnant now. Now, we own 18 properties and self manage. I am not saying it to brag, but with my properties I have a lot of updates and have found that the repair and tenant calls for needs is very low. MAYBE 1 call a month between the 18 places....In the past I have had older, non updated properties and that is where it can take you away from your job. There is always the option of finding somebody that does have the time to manage the small to mid size deals. if they are a partner it could save you money from the management cost. Good property managers are like NFL quarterbacks, out of 32 teams you have like 8-10 that are worth anything. The others are just ripping you off or will drive your property to the ground. good luck sir

I try to have laundry hookups installed myself for my places and leave it up to the tenant to bring in their own washer dryer. However, that depends on who pays the water bill. Also, having the washer dryer options could lead to a $25-$50 a month rent hike.

Hey all,

I have been crushing the last 14 months, adding 9 units to my existing 9 units. I am having no luck finding good deals. I live about 30 miles north of Baltimore City in a town called Havre De Grace. My newest properties are here and my existing 9 unit building is in the neighboring town Aberdeen. I want to buy more where I am at because the Havre De Grace properties I am buying are solid structures, in a desirable location, with the surrounding property values being 2x, 3x, and even up to 8x the cost. The rents are high and the places are just awesome cashflow piggy banks, that actually appreciate every year! But now it seems like the party is coming to an end. There are no rentals or even houses that can be BRRRed or used as a fix and flip coming onto the market anymore. What are some great places in Maryland, Virginia, and Delaware to invest??

the way I look at it...

I have 16 doors over 4 properties and they all do amazing. But my w2 job which I earn $70,000 working 3-4 days a week, still performs better than any one of those properties by its self. So for me I don't want to give up that cash yet, even though it is only about 1/4 of my annual income.

All great advice. @Account Closed my problem with Baltimore is really that it is a dying city. Not sure what you know about this area. but being from here and working in the city at multiple hospitals I have seen a lot of changes over the years. The good areas are great, but very over priced! like to the point of the buyers being in the bubble danger. Then the ok and rough areas are more of a headache then any cash flow could offer. Having a few friends that buy and hold and fix and flip in the inner city. They have multiple disaster stories and experiences. I love the harbor. But most of the younger crowds and middle class is moving to the counties around Baltimore. These locations don't typically offer the 10 to 30 unit apartments. Its more of the high end big investing groups with complexes that have hundreds of units.

I also have looked into the 1031. This is a great route to take if I have a property ready to move forward on.

@Jay Hinrichs I am a refi until you die type as well. I have only owned these properties for just over a year, I had a lot of cash saved up that I was able to buy both of these properties at about 75% market value because I knew the sellers. But now that I have the places running amazing and 100% occupied I am thinking I should cash out and go bigger and using my money and my current w2 job to leverage myself into a much larger property.

@Chris Martin I am looking at large lenders now. I currently use a more local bank in my area, M&T bank

@Steven Trumpet This Baltimore area does not have a great selection of properties in the categories I'm looking at. It has a ton of C and D level properties that comes with a lot of baggage. But we all know that as RE people that those areas have the issues in and around them. And with Baltimore, once you get to the higher end areas in and around the city the places are just to overpriced right now. The pace these limited area places have appreciated around here is way above the national average.

@Brandon Sturgill I am very familiar with the Columbus area, my family moved from that area, and some still live around that area. I visited Columbus a lot as a kid and always enjoyed the area and seemed like a busy place. Fast forward to today, I know nothing about the RE market in Columbus or the economics for the area. I would be interested in those listings for sure. As well as any information on those growth stats you stated.

@Michael Le I agree that I can not go small out of state. I am thinking at least 15 units in order to have enough cash flow to deal with problems and have a management company where I am actually an account worth having.

I have been bouncing around this idea for a few weeks. I currently have a debt free duplex valued at $185,000 that does $2,000 a month and a 7 unit building that has a lean against the building for a personal business loan for about $160,000. This place brings in about $3,500 a month and is valued at $350,000. I am thinking about selling both of these and taking the estimated $450,000 and my personal money to purchase a large, 20+ unit, by putting 25% down. Been looking at the 1.7-2 million range. My only issue is I am north of Baltimore and the product around here is limited. And Baltimore city does not interest me at all!!!! Keep what I have? sell the debt free building to reinvest? sell both and go big? Also, go out of state? I just got back from Tampa and Houston nd saw many good properties. I know this is a good problem to have, I am just trying to make the next move to expand.

Thanks for any feedback!

My guess is you're new to this bank for investing purposes? This sounds very similar to my first loan terms. If you wanted to get better terms for a property this size you could take advantage of the fact it is under 6 units and say this is going to be purchased for you to live in. Should get more conventional mortgage terms.