All Forum Posts by: Wesley Thompson

I recently locked up my first subject - to deal which I wholesaled to another buyer. Really excited as creative situations is where I'm looking to build my credentials and skills.

Property Value: $220,000 - $230,000

Loan takeover amount: $168,720 (PITI - $1178), VA loan @ 3.25%

Solar Loan - $48,500 (monthly payment $158), 20-year ammortization @ 1.9%

Cash to seller - $12,500 

Assignment fee - $5000

10-year balloon

Located near Augusta, Ga just a few miles from a military base. Found the opportunity in a FB group for RE in the area. 

 @Brian Tome thanks for the wisdom nuggets! Risk is really my main concern. It's public water and sewer, couldn't speak to system ages and conditions but plan to have cameras run down them during DD to see conditions between units and where they connect to public systems. Code doesn't require sprinklers and I've read the whole things a few times now. I'm waiting to hear back from the city about the zoning/code because I think there are some discrepancies. There is one lot for all the tenants, it's not paved. Loose stones from what I can tell. No room to expand. 

 @Will Stewart The market lot rent is $400, which is where the occupied units are at for lot rent. Market rent is tough to analyze, but if going with 1% rule on the unit rents - they'd be $40-50k. This area isn't that high cost of living. 

 Appreciate the lead on insurance!

Once the expenses for debt servicing and property management expenses are factored in they become significantly less since it's a smaller park. Additionally, I've learned at roughly $50,000 per lot/trailer would be an A class property which this isn't. Also learned that homes older that '76 can't be moved. So most of these will either be high maintenance or costs thousands to demolish in place and replace if needed. So having a tough time computing at what price this makes sense.... if I can convert the POF to TOH that would ideal but will likely take time and effort and comes with risks.

I'm looking at a small MHP, 6-Units, in Maryland. It will be my fist MHP and commercial property. It's a small market about 30 minutes away from a small city in MD. pp=$305,000

4 of the 6 units are occupied at $850/mo average between lot and unit rent. One unit is tenant ready, and the other needs replacing (expected with sale). Expenses are just under 50% annually with the two units empty.

The seller is at about an 8% CAP on the current numbers. Using their proforma for the occupied and vacant units, it would be about 17% cap when filled. I think some of their expense numbers aren't accurate.

My plan would be to 

1) Convert the POH into TOH through sale of the units to tenants and just charge lot rent

2) Gift the units to tenants and charge a higher lot rent

Both would reduce the expenses for property management, insurance, repairs and maintenance. My PM says they're slightly below market rent at the moment $50-100 per units depending on condition and size. 

Here's where I'm stuck...

1) Insurance - i've found it very difficult to find potential insurers and they want very specific information on the units I don't currently have. Is there some sort of rule I could at least use for underwriting?

2) Numbers - Once I factor in the debt servicing and PM expenses the numbers do not become very attractive. How should I approach balancing this when submitting options on an LOI?

Looking forward to responses and thank you in advance!

@Scott E. it's in episode 585 starting about the 30 min mark. Went back and listened and it sounds skewed towards commercial RE

On a recent BP podcast episode David spoke briefly about stabilizing a property, and then bringing on an investor. I've never heard about this strategy before and curious if anyone has done it, pros/cons, and what the execution of such an arrangement is like.

Investment Info:

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

Purchase price: $110,000
Cash invested: $45,000

Closed 09/23/2021- Tenant occupied duplex with each unit currently renting for $650/mo. Property does need renovations but most will not be completed until units are vacated. 16% CoC, Return on Equity 25%

20 Mar 2022 Update - Fully renovated and placing tenant soon for $1600 mo. Cashflow at $522/mo which gives about 14% CoC return between mortgage and rehab loan. Working cash-out refinance to pull as much equity out as possible!

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

Want to gain experience with BRRRR strategy and investing out of the area

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

Found by agent, was technically off-market.

How did you finance this deal?

Conventional investment loan for purchase + rehab loan from my bank.

How did you add value to the deal?

Tenants were evicted after failure to pay for two months and then full renovation to the market area.

What was the outcome?

Working a cash-out refinance right now to pull out as much equity as possible while also having cashflow. Unfortunately working through a zoning issue (not actually zoned for a duplex even though it's always been one). Property manager found a single tenant for the whole property at $1600/mo whereas both units would've rented for $815/mo so we're not losing too much monthly income.

Lessons learned? Challenges?

Know the ARV - this property was difficult to comp, and while that's not the seller's problem it does calculate to risk for the buyer so that is a factor to consider on future deals.

Estopple - will NEVER purchase a tenant occupied property without one and will make due diligence contingent on it!

Zoning - know the zoning of the property and area. Just because a property is obviously a multi-family and is rented as one, doesn't mean it's zoned for multi-family (things change).

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

Adrienne Green - Auburndale Group

Gabe Whitmer - First Bank

Ashley Cross - Whitewater Property Management

Mike Cross - Trident Rehab

 It is what it is. Working the rezoning of the property through the planning agency. Nothing terribly complicated, hopefully we'll get this sorted soon.