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All Forum Posts by: Zachary McDonough
Zachary McDonough has started 44 posts and replied 97 times.
Post: The most underrated asset class
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Hey, guys! I am an agent-investor who often gets asked about the types of properties people should consider buying. Usually, I break down what a buy box is. In case you're not familiar, a buy box refers to your specific criteria (the more specific, the better typically) for buying, including the number of beds/baths, size, home features, area, neighborhood, zip code, price point, and more.
One implied element of a buy box is the asset class. Asset class is entirely subjective but is given grades such as A, B, C, and D. Now, these grades are usually specific to certain areas, but in general, A represents luxury, while D refers to neighborhoods with high crime rates and/or areas with a larger population of poorly maintained houses. The four grades provide a basis for investors to categorize neighborhoods and communities.
I have read many forum posts and watched videos where investors only seek out A and B class properties. However, I believe it's a financial mistake. While A/B class properties may attract higher quality tenants, the major opportunity in today's market lies in C-class properties nationwide due to increased rental demand, greater supply, and disproportional rent-to-price ratios.
In my agent business, I love helping my investors find tenants for two reasons: providing a white glove experience and capitalizing on the current rental demand. I am seeing looming fears in the market, resulting in a tremendous increase in rental demand. Sellers are off-loading properties and choosing to rent instead of buying. Just last week, during a recent rental open house, a prospective tenant explained to me that she had just sold her house for a large profit but wanted to hold off on buying until the market bottomed out. First-time home buyers accounted for 30% of purchases in 2022. So what does that say about the other 70%? They are step-up buyers, relocators, downsizers, and so on—essentially, people who already own homes and would also be potential buyers. However, in 2023, they are renting. In the southern Maryland market, transaction volume is down 37% according to June 2023 market reports. As a result, those sellers are entering the rental market with great liquidity and strong financial positions, making the rental market more competitive. Consequently, average earners are being pushed to areas where prices and rental terms are more acceptable. Demand outweighs supply. While average earners could buy, they are also waiting for the market to change or "cool" and are fearful of high rates. Saving for their down payment and closing costs has become difficult, especially with outrageous inflation. The increased demand is related to renting and other post-buying expertise for C-class properties, but what about actually buying C-class properties?
Two factors that go hand-in-hand in a buyer's market are higher DOM (days on market) and more inventory. Nationally, we are not currently in a buyer's market, yet high DOM and increased supply are measures that favor buyers. In my market, C-class markets have both. We find older homes and older neighborhoods hosting ill-maintained homeowners that yield more "fixer-uppers." Consequently, even fully finished homes are limited in value due to nearby poorly maintained properties, resulting in greater buying opportunities for savvy investors.
Lastly, the most important arbitrage opportunity I've found is the disproportional rent-to-price ratios. Generally, the DC, MD, and VA markets are considered "cyclical" markets, where property appreciation outweighs cash flow. "Cashflow" markets are typically found in the Midwest (e.g., Indiana), where you can buy a $75k home that rents for $1,500 per month. In the D(M)V area, investors often struggle to find properties with positive cash flow. However, when it comes to C-class properties, as discussed earlier, they can be bought at market discounts. Market trends indicate that rent prices in those communities do not have proportional (or sometimes any) discounts at all. Therefore, the greatest arbitrage opportunity for an investor in a cyclical market would be high cash flow with tremendous upside potential for appreciation if the neighborhood undergoes redevelopment over time.
I am personally putting my money into C-class assets. With enough time, C-class neighborhoods can turn into B-class neighborhoods.
Post: What I wish Pace Morby would have told me
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Quote from @Hawazin Alabbasi:
Quote from @Zachary McDonough:
Creative financing is like thinking outside the box when it comes to buying or selling a house. It's all about finding alternative ways to structure the deal that works for both the buyer and the seller.
One popular method is called "subject-to," or subto for short. Basically, it means that instead of getting a new loan, the buyer takes over the existing mortgage payments. They're still responsible for making those monthly payments, but they don't have to go through the whole process of getting a new loan. It can be super handy if someone can't qualify for a traditional mortgage or just wants to avoid all the hassle and fees.
Another cool option is seller financing. Picture this: the seller becomes the lender! Instead of going to a bank, the buyer makes payments directly to the seller. It's like cutting out the middleman. This can be a win-win situation because the buyer gets some flexibility and the seller gets regular cash flow.
You can see how our current interest rate market has made it tough to pencil out deals. So taking the creative approach can help ease the exit strategy, which (for me) is buy-n-holds. According to Google search engine, the average rates (as of 5/19/23) are 7.521%. So creative financing at a rate even 1% below the average can drastically affect your exit strategy. (FYI, an exit strategy is a fancy way of your plan for the property, like sell, rent, flip, etc)
So when I started seeing all these videos from Pace Morby about how I could buy investment property at 2020 interest rates with no credit, no experience, and no money, I got excited!! However, I’ll give you a small spoiler alert, it didn’t pan out as I defined it in the beginning.
How things started:
- 30 day close
- $6,000-$9,000 in expected closing costs
- $50,000 rehab costs
- Interest rate: 3.125%
When we started this process, it was early December. In fact, it was 3 days prior to me having my shoulder reconstructed, which might be part of why this deal was stressful. The lender was Carrington Mortgage Services. One of the first things, I did was talk to the lender prior to signing the contract. Over the phone, I received approval to access the seller’s mortgage information (ie rates, loan term, etc) by the verbal approval of the seller. We asked several questions about how seamless the experience would be. They assured us that it would take more steps than normal but would result in about 30 days close.
Once the seller and I talked a bit, we set out to close in 35 days…
First rule: be more conservative if you can. Try to get better margins on your risks. Worried about losing money? Find reasons to ask the seller for a price decrease. Worried about not closing on time? Create a buffer.
Well, anyways, as soon as we were assigned our loan officer. He laughed and said that there’d be no way we could close in 30 days but expected it to be worst case 60 days. So the seller agreed to the extension, because of limited options. So we proceeded on. As we approached 60 days, the bank very slowly asked for more paperwork after claiming several times that we were set. So it was clear to me, 60 days wasn’t going to happen.
So we marched on. We were supposed to close on January 5th, but we extended it to late February. When late February wasn’t going to happen, we extended it to March 15th. The bank had a forbearance agreement with the seller, so we figured if we could close before the agreement expired (March), we’d successfully close this deal. Now, in case you don’t know, forbearance is basically a pause on mortgage payments. The bank allows you some time to catch up. This has become increasingly popular since COVID.
As we entered March, the bank continued to fumble over what paperwork we needed. Between mid-February and mid-March, I emailed or called nearly once a day to our assigned loan processor/officer for updates. They would respond rarely but I could tell we were progressing but not at a rapid rate.
Another lesson: I quickly learned that the banks had very little motivation in the assumption process. They clearly were not profiting off this transaction, which unfortunately gave me very little ability or leverage to make demands since they did NOT care at all. It’s clear to me that banks do not make much money in the maintenance of loans or buying loans in the secondary market (as Carrington Mortgage Services does), which leads me to question why anyone would want to run a business like that. But one of the three of YOU still reading this may be able to answer that. Regardless, let’s continue.
When we were exiting the first week of March, I was hammering the lender, telling them that they were at risk of losing the transaction (an empty threat). I hammered on saying, “You need to produce the TRID CD.” For those interested, traditional lenders have to produce CD or closing disclosures 3 days before closing to allow buyers to review them for error. Trust me they are needed. I caught a ton of errors in their CD!
Well, finally, we got a CD, which allowed us to close as soon as they sent the closing package to title. Well, they couldn’t produce that package until the day of closing, which wasn’t till 3/22. So yes, you guessed it!! We had to get the seller to sign another extension. So finally we reach the settlement day, title sent us the ALTA, and my jaw drops.
The ALTA settlement sheet says the seller has to pay money. A lot of money. Like $1,200. So I talked to my title company, PR Title Group. (Btw, I highly recommend them. Whet and Tamra are fantastic. ) PR title says they inputted the closing numbers from the bank. Then, the bank claims that title is wrong. Well, surprise, surprise, the bank messed up yet again! The closing numbers were way higher than expected though! We had to bring her mortgage current. We also had to file a quit claim deed due to the way the deal had to be structured per VA assumption, according to the bank.
But guess what we closed!!
How things ended:
- 30 day close
- $23,000 in closing costs
- $50,000 rehab costs
- Interest rate: 3.125%
Why would we want to close if the closing costs double? Can’t you see why not everyone would want to do this? It may sound easy but it’s not. It takes a lot of problem-solving. It takes immense faith in the process and your own ability.
It’s not easy but it’s worth it. Here’s why we are okay with the new cost:
- Purchase price: $246,000
- Mortgage: $1450/mo (PITI included)
- ARV: $380,000
- Rehab costs: $50,000
- All-in costs: $73,000
- Gross rent: $2600/month
- Gross cashflow: $1150/month
- ROI: 18.90%
Not bad in my opinion. Some of the value in this property is my experience. I learned so much about how these things worked. I stayed up late researching. I fought hard to make a deal work for the seller. We provided a great solution to a seller in need. Now, you may be asking, “Would you do it again?” And I would answer, “Heck yeah.”
Expectations would be set and the deal would be a lot easier. Last lesson: In life, raising the bar for yourself starts with lowering the bar for everyone else. Be accountable, take ownership, and don’t expect it all to happen overnight.
Your real estate friend,
Zack McDonough
- Purchase price: $246,000
- Mortgage: $1450/mo (PITI included)
- ARV: $380,000
- Rehab costs: $50,000
- All-in costs: $73,000
- Gross rent: $2600/month
- Gross cashflow: $1150/month
- ROI: 18.90%
?
So the house needed major cosmetic work. Seller needed out. Agreement to subto. She (seller) stays on the loan. Deeds me the house. I am made a co-borrower with her. Once her hubby passed, she couldn't afford the mortgage and stay in the house.
She gets the liability without reward. I get liability with reward (cashflow). Does that answer your questions?
Post: What I wish Pace Morby would have told me
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Quote from @Blake Novotney:
Great write-up, and glad you got it closed! Working with lenders (or anyone for that matter) that just don't care about the transaction as a whole is incredibly frustrating. How did you come across this lead, I saw you mentioned bringing it current, were they in pre-forclosure?
This was through FB!! Building connections!!
They had a forbearance agreement with the bank :(
Post: Interest Rate On the Rise AGAIN??
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
About 30 mins ago, the NY Times just uploaded an article that may affect interest rates.
Nationally, investors are gearing up for another rate hike by the Fed. Why so? The Fed is looking at the labor market to determine whether the economy needs cooling or not. Good job market data is interpreted as more reason to raise rates.
Well, well, well. A June payroll report showed more wage growth, which would solidify that the Fed will raise rates again.
Do I know with full certainty? Definitely not. However, over the past year, that has been the trend.
So...what does that mean for buyers and sellers?
1. Real estate affordability will not improve, decreasing buyer demand.
2. Decreased affordability will yield less inventory since sellers will sit tight with low rates.
3. Continued stalemate in the market.
In southern Maryland, buyers and sellers will still need to move. We have a very insulated job market due to government work, which greatly benefits the real estate market.
Buyers, I know the rates may suck. I urge you if you can buy real estate, do it! Buying is a personal decision. It's not everyone's time all the time to buy or sell. But locking in a high rate now will protect with the rates tumble and the prices soar.
Sellers, prices are up 3% YoY according to the SMAR's June Market report. It may be the time to sell for you but adjust your mindset. Days on the market are up as well as prices.
Hope you enjoyed my take. Here's the link to the NYT article: https://www.nytimes.com/2023/07/07/business/economy/june-payrolls-report-fed.html
Post: What I wish Pace Morby would have told me
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Quote from @Scott Gaspar:
Quote from @Zachary McDonough:
Quote from @Vince Mayer:
This is not a sub 2 deal. This is a VA assumption.
Explain how they are different. I must be ignorant. Because upon talking with Pace Morby students, I was under the impression that it is a form of sub to.
In a sub2 the loan stays in the sellers name, in an assumption the loan is changed to the buyers name. Typically only VA, FHA, and USDA loans are assumable, from my research
For this assumption, the loan still stayed in the seller's name. I was added to the loan as well, but the lender disclosures were clear that the seller was still on the hook if we defaulted.
Post: What I wish Pace Morby would have told me
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Quote from @Don Konipol:
Quote from @Vince Mayer:
This is not a sub 2 deal. This is a VA assumption.
Exactly! HUGE difference. A "subject to " transaction BYPASSES loan approval process and lender action. Assumption is often as involved as obtaining a new loan. Obviously, this was well worth it to obtain a 3.125% interest rate. But let's NOT confuse an ASSUMPTION of a VA loan that has a forbearance agreement in place and back interest and fees due with a subject to transaction. They are two different breeds of animal.
I may be ignorant but I see those examples as two versions of sub to. The assumption being the most sophisticated of the two.
Post: What I wish Pace Morby would have told me
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Quote from @Dennis Muno:
I think you had a bad lender. What type of loan was it again? And why did it take 60 days or so to get the loan closed?
Also, why did it take so long to send you a closing disclosure? It sounds like the bank did an awful job
Those are some great questions. It was VA. Carrington Mortgage was dragging their feet throughout the whole transaction.
Post: What I wish Pace Morby would have told me
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Quote from @Vince Mayer:
This is not a sub 2 deal. This is a VA assumption.
Explain how they are different. I must be ignorant. Because upon talking with Pace Morby students, I was under the impression that it is a form of sub to.
Post: What I wish Pace Morby would have told me
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Quote from @Scott Gaspar:
Quote from @Zachary McDonough:
Creative financing is like thinking outside the box when it comes to buying or selling a house. It's all about finding alternative ways to structure the deal that works for both the buyer and the seller.
One popular method is called "subject-to," or subto for short. Basically, it means that instead of getting a new loan, the buyer takes over the existing mortgage payments. They're still responsible for making those monthly payments, but they don't have to go through the whole process of getting a new loan. It can be super handy if someone can't qualify for a traditional mortgage or just wants to avoid all the hassle and fees.
Another cool option is seller financing. Picture this: the seller becomes the lender! Instead of going to a bank, the buyer makes payments directly to the seller. It's like cutting out the middleman. This can be a win-win situation because the buyer gets some flexibility and the seller gets regular cash flow.
You can see how our current interest rate market has made it tough to pencil out deals. So taking the creative approach can help ease the exit strategy, which (for me) is buy-n-holds. According to Google search engine, the average rates (as of 5/19/23) are 7.521%. So creative financing at a rate even 1% below the average can drastically affect your exit strategy. (FYI, an exit strategy is a fancy way of your plan for the property, like sell, rent, flip, etc)
So when I started seeing all these videos from Pace Morby about how I could buy investment property at 2020 interest rates with no credit, no experience, and no money, I got excited!! However, I’ll give you a small spoiler alert, it didn’t pan out as I defined it in the beginning.
How things started:
- 30 day close
- $6,000-$9,000 in expected closing costs
- $50,000 rehab costs
- Interest rate: 3.125%
When we started this process, it was early December. In fact, it was 3 days prior to me having my shoulder reconstructed, which might be part of why this deal was stressful. The lender was Carrington Mortgage Services. One of the first things, I did was talk to the lender prior to signing the contract. Over the phone, I received approval to access the seller’s mortgage information (ie rates, loan term, etc) by the verbal approval of the seller. We asked several questions about how seamless the experience would be. They assured us that it would take more steps than normal but would result in about 30 days close.
Once the seller and I talked a bit, we set out to close in 35 days…
First rule: be more conservative if you can. Try to get better margins on your risks. Worried about losing money? Find reasons to ask the seller for a price decrease. Worried about not closing on time? Create a buffer.
Well, anyways, as soon as we were assigned our loan officer. He laughed and said that there’d be no way we could close in 30 days but expected it to be worst case 60 days. So the seller agreed to the extension, because of limited options. So we proceeded on. As we approached 60 days, the bank very slowly asked for more paperwork after claiming several times that we were set. So it was clear to me, 60 days wasn’t going to happen.
So we marched on. We were supposed to close on January 5th, but we extended it to late February. When late February wasn’t going to happen, we extended it to March 15th. The bank had a forbearance agreement with the seller, so we figured if we could close before the agreement expired (March), we’d successfully close this deal. Now, in case you don’t know, forbearance is basically a pause on mortgage payments. The bank allows you some time to catch up. This has become increasingly popular since COVID.
As we entered March, the bank continued to fumble over what paperwork we needed. Between mid-February and mid-March, I emailed or called nearly once a day to our assigned loan processor/officer for updates. They would respond rarely but I could tell we were progressing but not at a rapid rate.
Another lesson: I quickly learned that the banks had very little motivation in the assumption process. They clearly were not profiting off this transaction, which unfortunately gave me very little ability or leverage to make demands since they did NOT care at all. It’s clear to me that banks do not make much money in the maintenance of loans or buying loans in the secondary market (as Carrington Mortgage Services does), which leads me to question why anyone would want to run a business like that. But one of the three of YOU still reading this may be able to answer that. Regardless, let’s continue.
When we were exiting the first week of March, I was hammering the lender, telling them that they were at risk of losing the transaction (an empty threat). I hammered on saying, “You need to produce the TRID CD.” For those interested, traditional lenders have to produce CD or closing disclosures 3 days before closing to allow buyers to review them for error. Trust me they are needed. I caught a ton of errors in their CD!
Well, finally, we got a CD, which allowed us to close as soon as they sent the closing package to title. Well, they couldn’t produce that package until the day of closing, which wasn’t till 3/22. So yes, you guessed it!! We had to get the seller to sign another extension. So finally we reach the settlement day, title sent us the ALTA, and my jaw drops.
The ALTA settlement sheet says the seller has to pay money. A lot of money. Like $1,200. So I talked to my title company, PR Title Group. (Btw, I highly recommend them. Whet and Tamra are fantastic. ) PR title says they inputted the closing numbers from the bank. Then, the bank claims that title is wrong. Well, surprise, surprise, the bank messed up yet again! The closing numbers were way higher than expected though! We had to bring her mortgage current. We also had to file a quit claim deed due to the way the deal had to be structured per VA assumption, according to the bank.
But guess what we closed!!
How things ended:
- 30 day close
- $23,000 in closing costs
- $50,000 rehab costs
- Interest rate: 3.125%
Why would we want to close if the closing costs double? Can’t you see why not everyone would want to do this? It may sound easy but it’s not. It takes a lot of problem-solving. It takes immense faith in the process and your own ability.
It’s not easy but it’s worth it. Here’s why we are okay with the new cost:
- Purchase price: $246,000
- Mortgage: $1450/mo (PITI included)
- ARV: $380,000
- Rehab costs: $50,000
- All-in costs: $73,000
- Gross rent: $2600/month
- Gross cashflow: $1150/month
- ROI: 18.90%
Not bad in my opinion. Some of the value in this property is my experience. I learned so much about how these things worked. I stayed up late researching. I fought hard to make a deal work for the seller. We provided a great solution to a seller in need. Now, you may be asking, “Would you do it again?” And I would answer, “Heck yeah.”
Expectations would be set and the deal would be a lot easier. Last lesson: In life, raising the bar for yourself starts with lowering the bar for everyone else. Be accountable, take ownership, and don’t expect it all to happen overnight.
Your real estate friend,
Zack McDonough
Probably a dumb question but does anyone know of Pace posts on the forum?
Not to my knowledge
Post: What I wish Pace Morby would have told me
- Rental Property Investor
- Accokeek, MD
- Posts 106
- Votes 84
Creative financing is like thinking outside the box when it comes to buying or selling a house. It's all about finding alternative ways to structure the deal that works for both the buyer and the seller.
One popular method is called "subject-to," or subto for short. Basically, it means that instead of getting a new loan, the buyer takes over the existing mortgage payments. They're still responsible for making those monthly payments, but they don't have to go through the whole process of getting a new loan. It can be super handy if someone can't qualify for a traditional mortgage or just wants to avoid all the hassle and fees.
Another cool option is seller financing. Picture this: the seller becomes the lender! Instead of going to a bank, the buyer makes payments directly to the seller. It's like cutting out the middleman. This can be a win-win situation because the buyer gets some flexibility and the seller gets regular cash flow.
You can see how our current interest rate market has made it tough to pencil out deals. So taking the creative approach can help ease the exit strategy, which (for me) is buy-n-holds. According to Google search engine, the average rates (as of 5/19/23) are 7.521%. So creative financing at a rate even 1% below the average can drastically affect your exit strategy. (FYI, an exit strategy is a fancy way of your plan for the property, like sell, rent, flip, etc)
So when I started seeing all these videos from Pace Morby about how I could buy investment property at 2020 interest rates with no credit, no experience, and no money, I got excited!! However, I’ll give you a small spoiler alert, it didn’t pan out as I defined it in the beginning.
How things started:
- 30 day close
- $6,000-$9,000 in expected closing costs
- $50,000 rehab costs
- Interest rate: 3.125%
When we started this process, it was early December. In fact, it was 3 days prior to me having my shoulder reconstructed, which might be part of why this deal was stressful. The lender was Carrington Mortgage Services. One of the first things, I did was talk to the lender prior to signing the contract. Over the phone, I received approval to access the seller’s mortgage information (ie rates, loan term, etc) by the verbal approval of the seller. We asked several questions about how seamless the experience would be. They assured us that it would take more steps than normal but would result in about 30 days close.
Once the seller and I talked a bit, we set out to close in 35 days…
First rule: be more conservative if you can. Try to get better margins on your risks. Worried about losing money? Find reasons to ask the seller for a price decrease. Worried about not closing on time? Create a buffer.
Well, anyways, as soon as we were assigned our loan officer. He laughed and said that there’d be no way we could close in 30 days but expected it to be worst case 60 days. So the seller agreed to the extension, because of limited options. So we proceeded on. As we approached 60 days, the bank very slowly asked for more paperwork after claiming several times that we were set. So it was clear to me, 60 days wasn’t going to happen.
So we marched on. We were supposed to close on January 5th, but we extended it to late February. When late February wasn’t going to happen, we extended it to March 15th. The bank had a forbearance agreement with the seller, so we figured if we could close before the agreement expired (March), we’d successfully close this deal. Now, in case you don’t know, forbearance is basically a pause on mortgage payments. The bank allows you some time to catch up. This has become increasingly popular since COVID.
As we entered March, the bank continued to fumble over what paperwork we needed. Between mid-February and mid-March, I emailed or called nearly once a day to our assigned loan processor/officer for updates. They would respond rarely but I could tell we were progressing but not at a rapid rate.
Another lesson: I quickly learned that the banks had very little motivation in the assumption process. They clearly were not profiting off this transaction, which unfortunately gave me very little ability or leverage to make demands since they did NOT care at all. It’s clear to me that banks do not make much money in the maintenance of loans or buying loans in the secondary market (as Carrington Mortgage Services does), which leads me to question why anyone would want to run a business like that. But one of the three of YOU still reading this may be able to answer that. Regardless, let’s continue.
When we were exiting the first week of March, I was hammering the lender, telling them that they were at risk of losing the transaction (an empty threat). I hammered on saying, “You need to produce the TRID CD.” For those interested, traditional lenders have to produce CD or closing disclosures 3 days before closing to allow buyers to review them for error. Trust me they are needed. I caught a ton of errors in their CD!
Well, finally, we got a CD, which allowed us to close as soon as they sent the closing package to title. Well, they couldn’t produce that package until the day of closing, which wasn’t till 3/22. So yes, you guessed it!! We had to get the seller to sign another extension. So finally we reach the settlement day, title sent us the ALTA, and my jaw drops.
The ALTA settlement sheet says the seller has to pay money. A lot of money. Like $1,200. So I talked to my title company, PR Title Group. (Btw, I highly recommend them. Whet and Tamra are fantastic. ) PR title says they inputted the closing numbers from the bank. Then, the bank claims that title is wrong. Well, surprise, surprise, the bank messed up yet again! The closing numbers were way higher than expected though! We had to bring her mortgage current. We also had to file a quit claim deed due to the way the deal had to be structured per VA assumption, according to the bank.
But guess what we closed!!
How things ended:
- 30 day close
- $23,000 in closing costs
- $50,000 rehab costs
- Interest rate: 3.125%
Why would we want to close if the closing costs double? Can’t you see why not everyone would want to do this? It may sound easy but it’s not. It takes a lot of problem-solving. It takes immense faith in the process and your own ability.
It’s not easy but it’s worth it. Here’s why we are okay with the new cost:
- Purchase price: $246,000
- Mortgage: $1450/mo (PITI included)
- ARV: $380,000
- Rehab costs: $50,000
- All-in costs: $73,000
- Gross rent: $2600/month
- Gross cashflow: $1150/month
- ROI: 18.90%
Not bad in my opinion. Some of the value in this property is my experience. I learned so much about how these things worked. I stayed up late researching. I fought hard to make a deal work for the seller. We provided a great solution to a seller in need. Now, you may be asking, “Would you do it again?” And I would answer, “Heck yeah.”
Expectations would be set and the deal would be a lot easier. Last lesson: In life, raising the bar for yourself starts with lowering the bar for everyone else. Be accountable, take ownership, and don’t expect it all to happen overnight.
Your real estate friend,
Zack McDonough