All Forum Posts by: Thomas Magill

Thank you both. I’ve done what you suggested and found a lender. I appreciate your responses. 

Thank you John! This is a very apt response 

I purchased, renovated, rented, and now I'm looking to refinance the property.  I'm looking for suggestions on banking institutions, lending terms I should be looking for (30 yr fixed, 25 yr because its a partnership), typical interest rates, etc. 

I purchased the property in a partnership with my LLC and a partners LLC. I'm stating this in case it will impact the financing.

Any help with this question will be greatly appreciated.

P.S. technically I only completed BRR, I'm looking to do the next two RR's

Investment Info:

Single-family residence fix & flip investment in Mt Holly.

Purchase price: $60,000
Cash invested: $110,000
Sale price: $176,000

This was a full gut renovation. In addition to removing the interiors, we raised the ceilings from 7'-4" to 10'-6" in the common areas. When we purchased this property it was a 1100 sf with 2 bd, 1 bth. We converted it to a 3 bd 2 bth and relocated a bedroom to create an open floor plan with a distinct separation between public and private areas.

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

I loved the location of this property and purchased it right when the pandemic was in full swing. A lot of investors stopped buying and this property fell out of contract. We picked it up at a discount.

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

We purchased this property from a wholesaler.

How did you finance this deal?

We purchased the property with investor funds and funded the construction out of pocket.

How did you add value to the deal?

We added a bedroom and bathroom, reconfigured the floor plan to create a separation between public and private, and hired an engineer to calculate if we could raise the ceiling 3 ft.

What was the outcome?

The property went under contract for purchase in 2 days. It will close in the beginning of August.

Lessons learned? Challenges?

I lucked out and hired a great contractor. The success of this project is mostly attributable to him and his team.

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

I worked with the buying agent, but I got my real estate license early on so I could sell properties myself. I have been working with an amazing private money lender for the past year. He makes the purchasing phase very easy.

Albertinny:

The hardest part during the contractor change out process was being nice to the previous contractor.  I had to bite my lip a lot because I still needed him to close out the job. He had the plumber under his contract, as well as the license with the city. 

If I had to do it again I would have done more research/ due diligence  on him. At the end of the day, I don’t blame him, I blame myself. Which is a hard pill to swallow, but if you take ownership of it, it certainly provides clarity. 

Investment Info:

Single-family residence fix & flip investment in Cramerton.

Purchase price: $39,000
Cash invested: $76,000
Sale price: $189,900

This was one of the most challenging and rewarding projects I've completed to date. It took about 7-8 months to source and close on the property which had 25 heirs. Most of the main living space floor, sub floors and piers were damaged beyond repair and needed to be replaced. I had to change contractors midway through the project. But, in the end, the product/investment was worth the wait.

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

The character of the home. The home was in bad shape on the inside, but the exterior wasn't bad. There were a couple cost effective moves that needed to be made on the outside, ie new roof and gutters that completely changed the homes curb appeal.

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

I went to look at another property in this neighborhood and this guy was sitting on his porch and called me over. At first, he asked if I wanted to buy his home, which was in really good shape, and I declined. He then explained that his family owned a home a couple blocks away and that he would show it to me. He was 1 of 25 heirs on the property and was not one of the original heirs and could not negotiate terms. I eventually spoke to the right person and agreed to a price.

How did you finance this deal?

I purchased this property in all cash.

How did you add value to the deal?

I added a jack and jill bathroom between bedrooms 2 and 3 as well as a master bathroom. The original home was a 4/1 that I turned into a 3/2.5.

What was the outcome?

The original contractor relied heavily on one foreman that injured his back on the property just prior to mine, so the GC had to scurry to find workers which delayed the progress. Eventually, the GC and I came to an agreement that I would take over the day to day and hire my own subs to finish.

Lessons learned? Challenges?

I have a rule to never provide a deposit for any reason on a project. Unfortunately, I broke that rule on this project because the GC came highly recommended. I will never to that again, ever. It took forever to have the GC "work off" the original 8K that I paid him.

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

Im a broker, but I did work with a lovely RE broker who represented the buyer and worked very hard to get the deal done.

Correct, Purchase price - 150K, rehab cost 33K = total cash investment is 183K. 

Investment Info:

Single-family residence fix & flip investment in Belmont.

Purchase price: $150,000

Cash invested: $183,300

Sale price: $249,900

This property is in one of the best cities just outside of Charlotte, NC. It is a small quaint city with a lot of character.

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

I really enjoy flipping houses because of the instant gratification. I love seeing the fruits of your labor within months as opposed to years. I come from a commercial real estate development/construction back ground and we wouldn't see a finished project for 2-4 years after inception. I love being able to design/build/and provide a home in just a couple months. It is extremely gratifying.

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

I found this deal through direct mail. It took about 6-8 months from first contact to close. The home was owned by a lovely couple. The wife's mother was the original owner and had passed away, so there was a lot of memories in the home that needed to be dispersed to family members. I could see it was difficult for the woman, so I remained patient. The husband and I went back and forth over the course of a couple months and finally agreed to a price we could both live with.

How did you finance this deal?

I self funded 50% of the deal and received the rest from a private money lender (through a friend).

How did you add value to the deal?

The house's infrastructure or bones were in good shape, and just needed some updating. We demo'd the kitchen and baths, tore up the carpet and removed some wood paneling. Under the carpet was original wood (gold mine), so we refinished it and it looks amazing. We installed a new kitchen (fixtures, appliances, some plumbing upgrades), new baths (wall/floor tile, vanity, fixtures) and paint/minor carpentry.

What was the outcome?

We created a beautiful home for hopefully a beautiful family. The property will go on the market today.

Lessons learned? Challenges?

We went over budget on a couple items that we didn't initially include (some exterior painting, landscaping) these were calculated decisions that added value to the entry sequence of the property. The biggest hit was the well pump was not functioning to the standard we would like so it had to be replaced. This item should have been included in the initial budget due to its age, but we felt it was functioning well (no pun intended) so it wasn't included.

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

I got my license about a year ago so I will be listing it, but I'm sure I will interact with some good people.

I quit my job about a year ago and started my own real estate flipping business.  I worked for one of the largest international developers, Hines, in their asset management division.  And, one thing I learned was larger real estate investment firms put a lot of value in the schools you attend.  My point is, regardless of your experience they want smart individuals working for them.  

I would agree with most of the people here to just put your head down and grind it out.  But, if you absolutely can't stomach the idea of going to work anymore, I would get a job as an analyst in asset management or development.  You will be exposed to all of the important parts to real estate investments. (underwriting, construction cost, soft cost, etc) This will help you understand the economics behind the deals.  

@Michael Quarles

I appreciate the response and this is exactly what I was looking for as far as innovative goes... Thank you!