All Forum Posts by: Stephen Kunen

Yes Bob Rust from Rust Law

Following. I am interested in the same question 

We started our first direct mail campaign for multifamily properties (5+ units) this month. So far we have one valid lead. However we think the seller is asking too much, even though it is a stabilized asset in a good area. Would you buy this deal?

Asking price: $1 million

8 3b1b apartments in 2 buildings + 1 office / in law suite + 3 storage units built in the 70’s in a good school district in Lehigh County, Pennsylvania (approximately 20 miles from the Allentown-Bethlehem-Easton MSA)

Income: $120,480

(current rents $8640 / month: 8 3b1b apartments for $1030 / month each, 1 storage unit for $400 /month;

1 additional office / in law suite 1b1b can be rented for $600 / month and 2 additional storage units can be rented for $400 / month each; these are currently used by owner)

Expenses: $50,107

(Electricity: $1,440, water and sewer: $6,400, taxes: $11,943, insurance: $2,400, garbage: $1,560, vacancy: $6,024, capex: $6024, maintenance, $6,024, management: $8,292)

NOI: $70,373

Cash on cash return: 6.0%

Cap rate at asking: 7.0%

BP rental property analysis:

https://www.biggerpockets.com/buy_and_hold_results...

Rents for the 3b1b can be increased to $1,200 based on Rentometer report. Additional amenities include a workout area in the basement with some equipment (weights, treadmill, etc.), on site laundry and parking. Additional income can be generated from coin operated laundry and vending machines.

Thank you for your input!

Bob Rust from Rust Law LLC

https://allcountyexpert.com/. You can mention me as a current client.

We plan to do seller finance for a property in Stone Mountain, GA, as the seller. Any recommendation for an attorney who can do this?

Thanks @Braeden Cook. Yes it was 25% down which was a bit of a stretch but we were able to make it work. The LTV for the next Loan was 80% and the mortgage went up about $600 but the increased rents make up for it.

@Account Closed; welcome and thanks! Because this property was a four unit it still falls into the residential side of the mortgages so our initial mortgage (30 yr fixed) came in at a 5.125% rate ( but we probably could have gotten a lower rate with an adjustable rate mortgage knowing we would refinance out) and the new rate is 5.95% fixed for ten years.  The key here is to make sure that the higher rents will be sustainable and able to pay the new mortgage payment with enough cushion.  We did take cash out and are going to use it for the next deal.

@Kyle Keck congratulations to you too. Good luck!

Starting out as turnkey property investors in SFRs, we decided to invest closer to home, in multifamily and use the BRRRR method last year. It took us almost a year to find the deal - a fully rented 4-unit in Allentown, PA that can use some work in order to increase rents (thanks to BP we found the deal off market from an investor on BP). We closed on the deal in January this year and slowly renovated it as existing tenants moved out and finalized the refinance this month. The numbers are below:

Purchase price: $158,000

Renovation cost: $10,000

ARV: $225,000

Rents: $865, $700, $875 and $850

Lessons learned:

- On market deals are very competitive and the numbers rarely, if ever, would work, especially for a BRRRR, in the market we are investing.

- Even within 1-4 units, a 4 unit may appraise better per unit than 1-3 units.

- We purchased the property initially with conventional financing and refinanced again with conventional financing. Some banks / people will tell you that this cannot be done, but you just have to keep trying to find the bank who does.

- In order to keep doing this successfully we need to create a "funnel" like Brandon Turner always says. We are trying other things besides looking at the MLS as a result.

- Even though we are diehard buy and hold investors, we are opening up to fix and flip now to take advantage of the sellers market. With the proceeds we can hopefully buy more cash flowing rentals which are not necessarily BRRRR material.

- Networking is SUPER important because this is definitely a relationship business.

Happy investing!