All Forum Posts by: Ryan McGrath

Ah. The million dollar question. Unless she is going through some sort of financial hardship, she should be contributing to household expenses, whether its the mortgage, utilities, groceries, etc. Approach the conversation carefully, and just ask her how she feels about contributing and see how she reacts. If she tells you she doesn't feel she should pay anything or wants to short-change you, then she is likely just taking advantage and wants a free ride. 

If she loves you, she will WANT to contribute. 

Thanks for the feedback everyone!! I appreciate it. The house is definitely NOT a legal boarding house. Current owner has been operating it this way for 7 years so he is lucky to have gotten this far without any issues. 

After some more research, Charlie is correct and in order to make it legal, I would need to install a sprinkler system and steel fire escapes, which is about $25k+ right off the bat, not to mention other misc upgrades. 

Although this could turn out to be a big hassle, if it were brought legal it could be a good long-term cash-flowing property. 

If the seller is willing to negotiate the sales price to mitigate the costs of making it a legal rooming house, it just might be worth the hassle. 

Thanks for the feedback Noel! This is actually my 4th purchase but my first BRRRR. Seller is relocating to another state and doesn't want to manage from across the country which is why he is selling. I agree though rehab wont be easy with occupied tenants, but aside from the roof, I feel like updating the kitchens is how I will get my best bang for my buck on the ARV. I could just purchase and only do the roof and exterior paint, but don't think the appraisal will come in where I want it, and ideally I want cash out of this deal to pursue the next.

Hello BP community! I'm fairly new to investing and pursuing deals using the BRRRR method. I found what I think is a good deal and was hoping to get some feedback from the community.

It’s a single family home in MA located in zip code 02780. Nice area of town with comps averaging $145/SF.

House is legally a 5BR, 3.5 BA, however actually has 8BR. The existing owner lives in one bedroom and rents the remaining 7BR between $500-600 each, so total rental income for all 8BR would be $4,400.

This is a cash deal with a purchase price of 279k. The house was recently appraised at 359k so there’s $80k equity built into the deal.

Rehab costs are $15k which includes a new roof, new kitchen cabinets/countertops (one main kitchen, and one of the attic “apartments” kitchenette) and some touch up paint at the exterior. The rest of the house is mostly updated and really does not need any immediate work. Gas boiler is about 15 years old and has city sewer.

NOI: $42,274
ROI: 15% based on the 279K purchase price

Goal is refinance on an 80% LTV on a $400k valuation. Comps in the area are much higher with comparable homes selling around $450k with same square footage.

Based on a 80% LTV at 400k with a 30/yr loan @ 4%, I'd cash out with $26k and have a yearly cashflow of $23,504.

My concerns here are the fact that its not legally an 8BR, and also the fact that 8 tenants in 1 single-family home is a lot to manage and I’ll likely have higher than average vacancy, but I’m up for it as the numbers seem to really work. 4 of the existing tenants have been there for 3+ years.

Sorry for the book but wanted everyone to get the picture.

Feedback would be greatly appreciated! 

Michael, 

Thanks for responding! The one thing I would implement after reading this story would be to always be creative and resourceful in your deals. I love how you were able to get from 16% occupancy to 100%, simply by engaging local leaders and government agencies, which clearly paid off. 

I can't help but to add one more thing: weather the storm! 

Many great takeaways and thanks again for sharing!

Well done, Michael! I love reading stories like this. Very inspiring. Thanks for sharing!