All Forum Posts by: Rodney Buford

BP Colleagues,

I am hoping to get some input on a potential off market deal that I am struggling to pull the trigger on.  I am over analyzing this and is causing me to confuse all of the numbers.  I realize at the end of the day it's a decision I need to make but would love feedback from some experienced colleagues.

Class C property

Property - 8 Unit complex (6 are rentable, 1 totally gutted (~$25,000 rehab), 1 used for laundry and small office)

4 units up / 4 units below

All units 2 bd / 1 ba 

Current rents (6 units) - $425 (Market rent on the low end is $600, average $670)

Current Income/Expense (From 2018 taxes 8825 Income and Expense form)

• 2018 Gross Rents - $30,856
• 2018 Expenses - $25,629 (this is like 80% of rental income going to expenses which concerns me)
  • Tenants pays (Electric, Gas)
  • Landlord pays (Water, Trash, some electric for outside lighting)
    

Original asking price was $198,000 (based on an appraisal they had done this year)

• New Roof this year, Windows 3 years old, Newer hot water tanks, HVAC is older (but the person who owns these is a HVAC technician)

Comparables from appraisal 

• 8 Unit - all 1bd/1ba - Gross Income $38,400 - Sold Aug. 2018 $265,000
• 8 Unit - all 1bd/1ba - Sold July 2018 $270,000

My initial thought would be to BRRRR this but would need to get hard money or get a rennovation loan from a bank to get Unit #7 Rehabbed fully and rented, and as tenants turnover slowly start to update existing units and raise rents. The challenge with the Refinance is it only gives me 6 months (hard money) to improve the complex which I could get unit 7 done and potentially raise a few rents depending on leases but probably not enough to make a big impact on the appraised value. Using the BiggerPockers calculators I don't see the Cashflow immediately but could potentially see this change in Year 2 on.

Sorry for the long message, as you can see I am probably complicating this but fear can cripple a person but trying to push through and grow as a person.

Thank you in advance for any feedback.

@Andrew Postell Thank you very much for that information.  I am finding each lender is unique in their own way, but have received some positive responses so hopeful I can get this done in a timely manner.

Good morning BP,

Trying to complete the second to last "R" (Refinance) of my BRRRR Project, Looking to find a lender that can do 75% - 80% LTV. My 6 month Hard Money loan is coming due at the end of September, I could extend another 3 months but really don't need to. I have both sides of the duplex already rented. Summary of Project:

- Total (Purchase & Rehab) - $61,000

- Estimated Appraised value - $80,000 - $85,000 (New Roof, New Windows, Total remodel on inside)

- Total Rental Income - $1,200/month

Looking to see what lenders are out there that would be interested in refinancing, I have a W-2 job as well.  I appreciate any thoughts/help on lenders that I could reach out to.  

Thank you in advance for any insight or input.

Rodney

@Brian C. did you go through one of companies that are advertising helping get you lined up with replacing your mortgage for a fee or did you just go secure your own HELOC and do the process of using that HELOC as a checking account.

@Mark Waldrip Fortunately I didn't send any money, I was skeptical from the beginning.  Once I asked to meetup in person to get to know them they went silent.  The loan application revealed some of my information but nothing that they can do anything with.  Live & Learn!!!!  Do you dudiligence always!!!!

A gentlemen by the name of Michael Treat has joined many of the Kansas City real estate meetups (ie. Kansas City Real Estate Mentoring and Network Group) but he has joined all of local meetups and networking groups recently this week.  They were promoting private lending here is the information I received, I did fill out a loan form but fortunately didn't provide any SSN or banking information.  I was somewhat skeptical from the beginning but continued to dig for information.  Since they were from around Kansas City area I opted to try to setup a meeting in person as I wanted to meet them and build a relationship, but since my request I haven't heard anything.  I continued to dig and was able to track their IP Address from their email and found that this IP address has been used for a lot of scams.  

If your intersted here is the IP Trace I did for the IP address I tracked down from the email exchange I did with this person

https://whatismyipaddress.com/ip/209.85.220.41

Please do your dudiligence before sending any money to anyone. 

Loan Balance:$150,000.00

Adjusted Loan Balance:$150,000.00

Loan Interest Rate:5%

Loan Term:1 year

Loan fees:$1300

Interest Only Payment:$653.28

Number of Payments:12

Cumulative Payments:$157,500.00

Total Interest Paid:$7500

Note: The monthly loan payment was calculated at 12 payments of $653.28 plus a final payment of $150,000.00

AGREEMENT/CONDITIONS:

{1} Required Age: The borrower must not be below 18 years of age and any age below 18 would be disallowed from this loan offer.

{2} The applicant will start the repayment of loan at the end of every month starting from 2 months after loan has been transferred.

{3} BANK SECURITY POLICY: Due to the high rate of Internet insecurity we have our own method to securing Loan obtained from private lenders .For These reasons, our loans are secured against terrorism, theft and scam. Which is loan Passing through the Registration before Applicant can get HIS/HER loan.

{4} Failure to pay back the loan at this expected date/period, legal Actions will be taken against the applicant by our attorney Immediately.

{5} Applicant who is unable to meet with the repayment will be given 4 weeks more as a grace period before legal actions will be taken.

{6} I agree that the funds will be used judiciously for the said Purpose and not in any way be used for aiding terrorism, drug Trafficking, laundering etc and other actions / acts that are Forbidden by the laws of United Nations.

{7} That I make this agreement in sound mind knowing the implications.

{8} The borrower is going to bear the cost of the loan registration fee of $1300

which will be paid as a down payment to enable Loan transaction to be legal for transfer.

If you are in agreement with the loan terms and condition attach your ID for further processing of your loan.

Good morning BP community,

I could use some guidance on those who have dealt with really old houses.  I found a property (house but made into a 4 plex) in a college town that was built in 1902.  Outside has been updated with paint, roof, some windows, and foundation work.  Inside is a different story.  Plumbing needs a lot of work, electrical has been updated but still has some knob & tube wiring.  Another big concern is the plaster walls and ceiling, some of the ceiling has fallen down and walls have major cracks due to the house settling.  I am curious to hear what others have done in this situation is it better to remove the plaster and do sheetrock but that will take away from the history of it.

4 bedroom, 4 bath, 4 fireplaces, 4 kitchenettes, all hardwood floors 2 story.  2 units upstairs, 2 unit downstairs.  I am struggling to come up with good repair numbers as I am concerned with what I might find once the repairs start happening.

Looking to possibly to a BRRRR on this one. I think I can get the property for $70,000 (They had the property listed a year ago for $150,000), ARV probably around $130,000, Rent per unit $400-$500. My original estimate was around $40,000 for repairs but I think that is too low.

I realize there is more information needed for you all to provide detail guidance but looking for those that have had experience with older homes and did you build a bigger contingency for repairs.

As always appreciate all your feedback and thank you in advance,

Rodney

@Myles Cardenas I actually have been looking to invest in St. Joe as well.  I have a son going to college there and I am looking to do some rental property there for students.  PM me if you want to chat more.

Good morning BP community,

I am sure this is a user error on my part but when running my BRRRR Calculator more times than not I get "Inf%" for my Cash on Cash ROI. I am sure I am doing something wrong but can someone tell me what that means? I am still finding my way on these calculators.

Appreciate any input you all may have.

Rodney B.