All Forum Posts by: Stephen Glover

My numbers showed a conservative ARV of 3/1 rancher in Richmond, VA at $135,000. All-in costs including repairs, title, legal, lender fees, etc. was $108,000. I developed a relationship with a new bank with great portfolio products and was excited to work with them.

Renovation was completed 2 weeks after closing. Refi was underway with the appraisal 1 week later. Appraisal came back at $105,000!!! The bank sent a note saying they would only refinance 80% of $105,000. I was slated to lose $24,000 on an expected breakeven BRRRR.

After a small heart attack, I reached out to a few RE professionals in the area and the general response was "That sucks!" when hoping for a solution.  I remembered a few situations on BP podcasts where guests spoke about respectfully understanding the appraiser's methods, communicating your misunderstanding, and presenting appropriate data to support a revaluation.  Solely because of that podcast or two, I did just that.

Appraiser was willing to revaluate and came back a week later with an appraised value of $145,000.  The closing date is set, and I'll be paid $8,000 after paying off the private money and all other costs and have 20% equity in the home.  Mortgage will be ~$800/month and rent is $1250 with a two year term already in place.  

I write this because I would have taken a huge loss if I didn't know any better. There was no "option" to contest the appraisal. I might have left the bank completely, which had a great product and people. Luckily, the numbers were there and things worked out alright with an increase of net worth of around $35,000 in about a month with $0 of my own money invested on one SFH. Thanks BP!

@Bret Kennedy  Wow.  Sorry to hear that.  The leasing fee is standard, sure.  So it sounds like they placed the tenant, charged a leasing fee, the tenant never paid and they are still charging for some random maintenance retainer and management fees.  That's absolutely absurd.

Regardless if you read the entire contract or not (which is always a good idea), I want our clients to know exactly what they are getting into so we actually have a good long term relationship. It's not fun when clients aren't happy. Sorry you're having that experience, I promise it's not all that bad in VA!

I'll send you a DM.  I'll be happy to make some introductions as needed to some good local RE Attorneys.  Have a good network here that might be able to help you.

@Bret Kennedy you're right.  I should have picked a better use of verbiage myself.  I think I just see people throw PM's under the bus so quickly.  While some certainly deserve it, it almost seems like this one might be trying to help you from the little information I have.

I do want to help if possible.  What is it that your PM is doing that you don't like?  From what I gather, rent is coming in late, or not at all, which led to an eviction process.  Is there something your PM did wrong?  If they placed a bad tenant, I totally get that.  If they weren't proactive in sending a pay or quit, I get that too.  Is there something they completely dropped the ball on?  If so, you might have a way out of your contract.

If you're frustrated about the late rent and eviction process, holding on to the PM through the eviction might make your life a little easier... but again maybe not.

Anyway, I'm happy to discuss more here or in private messages and see if I can add value somewhere.  

@Bret Kennedy there’s a lot to unravel here. Why are you mad at the PM?

Did they place the tenant?

Do you own a lower class asset?

The PM is asking to stay thru the eviction- and evictions aren’t fun. Most PMs don’t get paid unless they collect rent, so is your PM actually trying to help you?

Your language of not understanding the difference between landlords and Property managers, or leases and management agreements tend to make me think it might not be the PM.

BP Team,

Thank you for all your help this far. I'm using the BRRRR method to acquire SFH. I have the opportunity to purchase 5 SFH at a great price. In the past my BRRRR has been done in an empty home, however all of these homes have tenants with leases going into 2020, some tenants have been around since 2005. Rents are decent, but definitely low for what they could be.

Any suggestions on how to utilize private money to do a BRRRR with a tenant in place??? Or some type of strategy to still use private money and appreciate the home as the tenant's leases are coming to an end even if they are a year out? There has to be a way that makes sense but its not coming to me yet.

Appreciate your suggestions in advance.

@Ryan Wydler Some of the investors I know that are doing it in RVA by way of master-leasing and can scale quickly.  Example:  They are renting out an owners apartment in a great area with an agreement that they can use it as an AirBNB.  Benefit to the owner is that it's a long term lease that always pays rent with no turnover.  Benefit to the AirBNB operator is that they make the profits above and beyond the rent cost.  It seems to be very lucrative.

A big Con:  Owners get upset when they realize the AirBNB model doesn't mesh very well beside long term residents in an apartment below, above, or across the hall... so the relationships seem to sour quickly.

@Account Closed said- you need to get to his meetup!  I've made some excellent connections there and it continues to grow.

@Account Closed is a great local resource too.  Between us, we know other BP members or lenders, attorneys, agents, CPA's, insurance guys, etc in Richmond that do a great job for our clients.  

@Cassidy Burns They are both equally responsible on lease.  Tenant A cannot leave the lease even if they physically leave the property.  You could allow Tenant B to stay but only after they go through the screening process to see if they qualify on their own.  If they do not qualify on their own, you're back to square one.  If Tenant B finds another roommate that qualifies, then that's the only way Tenant A is removed from the lease. Otherwise, they are breaking the lease and if rent doesn't come in you'll start the eviction process.

Another more viable option is to agree that they both leave and are responsible for rent/utilities until a new tenant is placed.  You charge the tenant the leasing fee and get it rented to qualified tenants.

Throughout this process, there is a fee for your time, typically a lease administration fee or a re-leasing fee which should be in your lease.

Hopefully one of these options work for you.  We've done a variety of all of these, whatever ends up working.

@Peter Jaglom We have turned down quite a few opportunities to manage there. We've tried to manage some lower end homes in other neighborhoods and have found that it makes it difficult to provide a higher level of service elsewhere.  The 3-4 homes we've experienced with will take up 50% of our time relative to the rest of our portfolio.