All Forum Posts by: Samantha Miller

@Eric Greenberg West Philly! 

@Kevin Paulk Thanks!

@Harrison Lopes 19139! I'd consider it in the Haddington pocket. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $83,000
Cash invested: $13,000

I purchased a small duplex last year - it has a studio apartment on the first floor which was vacant and a 1 bedroom apartment on the second floor which was rented for $600/month.

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

The numbers worked. The property didn't need too much rehab. Original asking price was $90k, the top 1 bed unit was already renting for $600 which was a little low, and the bottom unit I knew could also rent for $600. So at $1200 a month gross cash flow and asking under $100k with very little work to do made sense.

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

I saw it in an email from a wholesaler's distribution list. I emailed him for details. He wanted to take a sight-unseen offer as the seller was hesitant to have people walk through. He said he had a lot of interest in the deal. I offered $85k verbally, but then convinced him to let me send my contractor through. The contractor found a beam that would need replacing and a few other minor things, so I went back and told the wholesaler I could only do $80k. We settled at $83k.

How did you finance this deal?

Hard money loan with a little of my own cash to close the gap.

How did you add value to the deal?

Used a GC who repaired the one beam that needed work, did a little electrical and plumbing repairs, fixed a door jam, etc. Had another contractor remove a small tree and debris from the yard, and one more to touch up paint on the exterior. Overall spent about $13,000 (originally estimated $10k).

What was the outcome?

All in for about $96k: $83k purchase + $13k rehab. Took about 2 months total. Refinanced the hard money loan: appraisal came in at $125k, so I was able to pull back out $93k leaving only $3k (plus closing costs) in the deal.

Lessons learned? Challenges?

With this property and in general with lightly rehabbed properties, always anticipate more repairs to be done especially within the first ~6 months of ownership. After the first floor tenant moved in, there was a sewage leak in the basement and a couple other minor things came up. At that point the property had income coming in for both units so that does help, but I generally always warn people to just set aside another $5k for repairs even after you think rehab is done.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

The hard money lender was Crowdcopia who I've used several times and would highly recommend. The title company was Prosperity Abstract who was chosen by the wholesaler, but I would also recommend because they are one of few title company's left in the area who know how to handle wholesale deals.

How does an appraiser analyze a new construction property if it is the ONLY new construction within the comparable area/radius? Is there a rule of thumb or formula by which they can compare to the most similar rehabbed property? Or will they extend the radius further to find the nearest new construction comparable?

@Nat C. I sent you a direct message. Thanks!

@Nat C. would your company do plans for a Philadelphia-based site?

Thanks for your thoughts @Thripura Vemireddy @Chris Youssi @Greg Dickerson !!!

@Edgar U. Definitely all great advice for anyone looking to buy land to build on! I work for a developer and have detailed knowledge of the zoning code in my area, so I felt confident in the value/potential of the lot, but it's not uncommon for buyers in my area to run into surprises due to being unfamiliar with these codes!

@Nat C. I am estimating roughly 1200/mo for each unit, so $3600 total. Yes a partner would probably be a good idea if I can find one! Does your company's plans include the structural/MEPs/fire safety etc.? Thank you!

Hey BP,

I recently purchased a small vacant lot in Philadelphia. I am now considering building a triplex (3 unit) on the lot, so I would need a loan for the construction costs. For any lenders or experienced builders out there, what are your thoughts on how I would finance the project? How will potential lenders look at the deal, considering I already own the lot? Will the terms of my loan be any different then if I was coming to them to ask for a purchase + construction loan? Would I be able to put less money down on the construction loan? I would assume I am still putting up the lot as collateral. My goal would be to rent out the units and refinance, but the other exit strategy would be to sell.

If it helps, here are the estimated numbers:

• Lot: $30k (already closed)
• Construction Costs: approx. $350,000
• Zoning, Architectural Plans, etc.: approx. $10k
• ARV: $525,000

Thanks!

@Jared Aquino Yes! Found a great roommate. I did as everyone suggested: called references, asked about rental history, employment, etc. She was from out of state so we did a video call. I got lucky, she was great. Stayed for a year, paid on time, never a problem. She just moved out recently after getting accepted to grad school. 

@Hunter Cone Definitely! Yeah no magic numbers, some people use a PM right from the start, some may never use one. Depends on the individual. As far as the pandemic, it's hard to say for sure how the effects will manifest over the next few months, but as of today I would say there are still plenty of motivated buyers! The issue is mostly just getting around any restrictions with showings, inspections, etc. which differs state by state, county by county. Some people are "holding off" on making moves (selling and buying side) until we have more clarity, but I would not necessarily say there is an overall decrease in buyer interest. 

@Hunter Cone You are welcome! I live in that same house now with my significant other, and I am starting to plan renovations! Values have gone up in my neighborhood since buying, so for this property I will likely sell within the next year, and then buy my next rental. I do work with many investors in my area, and what I've mostly seen is that they self manage the first few properties before bringing in professional property management (maybe once they hit 5+ properties or so). That way, they have first hand knowledge of what needs to be done to properly manage their investments before putting it in the hands of a third party. After all, you still have to manage your property manager! Haha. I hope that helps!