All Forum Posts by: Ugochukwu Opara

 Hey Ryan, I like love 19131, 19151, 19143, 19139, 19104, and 19142. What about you?

Hard money covered 90% or acquisitions and 100% of renovations. Getting ready to use them again shortly. Do you know of a better hard money or private lender 👀? 

Investment Info:

Small multi-family (2-4 units) hard money loan investment in Philadelphia.

Purchase price: $80,000
Cash invested: $80,000

Triplex in West Philly

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

It was on the market ad a duplex but could actually be used as a triplex by right.

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

Found it on MLS. I knew the realtor who had the listing from other transactions

How did you finance this deal?

hard money

How did you add value to the deal?

Complete rehab and renovations. We added ad deck and expanded the super small bathrooms on the 2 units upstairs. And we also implemented an open concept.

What was the outcome?

The property Appraised for $250,000. I did a cash out once the property was rented.
The bank I use lets me pull out 70% of appraised value, $175,000. I was all in at $160,000 so I paid everything off and kept the 15k for the next project. My mortgage on $175,000 is around $1200/m.

Rent roll is as followed:
2 bedroom - $1100
1 Bedroom - $850
Studio - $750
Gross Rent = $2700
Minus debt (-1200)
Minus expenses (-$500)
Gross income = $1000/m or $12,000 a year

Lessons learned? Challenges?

Contractors screwed me over so hard on this one.
I actually had plans to move into the studio apartment but I got screwed with the rehab so the numbers wouldn't make sense if I live in one of the units.

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

I recommend myself as a licensed real estate agent for Philadelphia and surrounding areas.

What's going on bigger pockets family?

My name is Ugo and I have a question and I would appreciate the input of everyone reading this.

Here is the scenario:

The owner has one property, a 4 unit apartment building (2 bedrooms 1 bath each).

the building was recently renovated.

Rent roll is $3620

The mortgage is $1400

Owner pays water, sewer, trash, electric for common area and laundry room = $250/m

Vacancy(5%) = $181

Management = $289.6 (not being used but bugeted for)

Capx (10%) = $362 (newly renovated so keep that in mind)

Net cash flow $1137.4 (around $284/m per door)

remember that property is being self-managed ($289.6 for management doesn't apply but is being budgeted for)

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With the above in mind, should owner spend $25,000 to add an illegal 2 bedroom unit in the basement?

The owner would occupy the unit and could get a roommate that would pay $350-450/m (all utilities included). The sucky part is that the unit in the basement would be non-conforming since the ceiling height is below 7 ft for Philadelphia. Hence why the owner is occupying it. If the owner moves in then the owner will plan to hang out for 305 years while purchasing other properties to build up the rental portfolio. 

The other option would be to leverage the $25,000 and put it down on a smaller multifamily as an investment property. This is limiting the owner to a purchase price of around $100-$115 and multifamilies in that range will most likely need work so cash investment will be much more than the $25k that owner has. The owner can save about $15,000 a year. 

Let me know if I am missing any information that you need to help with this situation. 

What would you do? What are your thoughts and why?

Hey @John D. ,

@Bettina F. hit it right on the nail the risk factor is really high and believe as a landlord, we all already have enough hurdles to overcome. I recommend you go the Section 8 route. This way you know the rent is consistent, to a certain level, despite what's going on with your tenant. I have a quad in West Philly now with all PHA aka Section 8 clients and it has worked out wonderfully for me.

@Charles McCabe also shared a great story! I too would have been rented my unit out vs waiting.

Cheers

@Ashley Wilson Congrats on what you've accomplished so far!

Realtor + Investor her, I did 3 flips last year as well but I always have to scrabble to get financing secured. Could you help me with that?

as for getting deals ... for me I just narrowed my farm and drove for dollars.

I also run ads of facebook that I offer a $500 for vacant property and that lead to one of the flips I did in 2016. You can post on craigslist that you are looking for a specific property in certain areas. There's always sheriff sales which lead to one of my flips in 2016. Also the MLS is actually pretty sweet if you are quick, this lead to my 3rd and final flip in 2016. I work as a realtor in the areas you farm but my flips have all been in philly so different market. Best of luck

I manage a construction crew in Philly @Max T.

Message me you contact info, I'll send someone out to help you.

Guaranteed work

Cheers!

@Nick Rose a 6 units for 58K .... OMG!

I'm in Philly and I just picked my first multi as well. 4 units (2 bedroom 1 bath each) and acquisition and renovation cost will total $290,000 ... gross rents would only $2400-3000 (I am occupy one unit). So man 6 units for 58k on my end would be a no brainer! Congrats! Good job, seriously!

1. Seller is aloof, I never take what sellers say for to be honest. I always go in and find the facts myself. In my market, of you can prove the rent roll of your property then you're devaluing it essentially. Multi, with the acception of residential ones 2-4 units, are almost always based on how much money they are bringing in so seller being aloof for me would be a good thing. All the negatives or things they don't know would just mean a lower price since they don't have their ducks in a row.

2. All sounds like cosmetics for the interior HOWEVER ... the exterior has to be taken care of properly or you risk issues. In Philly the L&I would come down on me hard if there was a lot of rot and tenants told on me because of it. So yes, get that taken care of asap, maybe negotiate a 10 year balloon vs 5 since you have to treat the exterior which seller has neglected. 

3. Keep heaters as the are, get them serviced and make sure they are working for now and just budget for their replacement in the very near future. beef up on you cap-ex, be very lean in your first few years until you get a solid foundation and feel for the property.

4. The balloon, I would default to a local bank and see what can be done, if you have other rental properties then try and get a blank loan and help cover the 6 unit once the balloon is due. My recommendation, so long as it won't ruin the sale, would be to get a longer balloon period ... make if 10 years, 15 if you can. And you logic would be that the exterior work shows tons of rot and you need to address that asap before you can rent it for anything.

Congrats again sir, we here at bigger pockets support your endeavors. Thanks for the question!

hi @Nicholas Carelli,

I'm 26 and I absolutely can relate with the getting old feeling ... I'll be 27 in November! 

First and foremost, congrats on being able to save like a boss (Rick Ross Voice)! 

I buy and sell in philly now and condo's are awesome and then they are not.

I think your plan is great, and the only reason I feel this way is because you have a friend that will be helping you out with expenses (however I want to warn you against renting to friends & Family). 

Things to consider will be:

1) Will you still be able to save once you buy?

2) Will you still be able to save EVEN WITHOUT your friend to help split the bills.

Condos are convenient but you pay for the convenience, all of them will have a monthly condo fee on top of your PITI (principle, Interest, Taxes, and Insurance) and some will have a one time fee for you to enter the condo aka a "Contribution Fee". One good thing is that some condo fee with cover your insurance, the exterior of the building so you only have to worry about your unit interior with greatly decreases what you pay for in insurance. From my experience, if possible, you're better off looking for a house, something super nice. This way you avoid the condo fee in all. and if you can't find a 4 plex ... why not do a duplex or a triplex, something smaller.

But if you're set on grabbing a condo ... the get at it! Look for something ugly and under priced and grab it up, and do light renovations as you move along. Maybe a new kitchen this year, new baths the 2nd year, new hardwood floors the 3rd. 

I so badly wanted to be in a condo downtown and in the mix of it all. 

But I settled for a 4plex in west philly about 3 miles outside of downtown because the numbers made sense ( 4 units, 2 bedroom 1 bath, and each can rent $750-850/m so very very happy). It's is bad shape but I will renovate it and take it from there. I settle Aug 31st (fingers crossed though, you never know what could delay a settlement).

In closing, there's no right answer! It's honestly what you want to do but make sure you're realistic and consider everything before you make your move. The reason I didn't go with a condo is because I knew it would really slow down my ability to save. and without my savings I wouldn't be able to get to property #2, and property #3 and property #4 and so forth. My goal now is to get to net $6,000 cash from my rentals and then I can honestly go where ever I want, downtown or not. but until then, I will try to sacrifice!

thanks 😎👍🏾