Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes
This will be my first hard money BRRR and first single unit. Under contract at $80k needs $25-30k rehab + sweat equity with the hopes of ARV $157k as the identical house next store sold for $157 in June.
This is my first time using hard money and leaving the multi unit arena? What’s everyone’s take on multi vs single unit house?
I’ll update later with numbers - closing on 11/13/20 and probably 60 days or less of work til tenant placed.
Flipper/Rehabber · Laurel, MD · Member since 2016 · 139 posts · 109 votes
5y
My biggest problem so far with multi-units is getting a property management company willing to manage that type of property. Most of the time the management companies I use in Baltimore only do single or town homes. Also, is your idea to get out of the hard money with conventional financing? typically banks will re-fi after 6 months and some others also ask for seasoning period. Just something to keep in mind. Good luck and looking forward to see those numbers. Best of luck!
Rental Property Investor · Arbutus, MD · Member since 2014 · 34 posts · 21 votes
5y
@Chris Mcdonald Congratulations on the new acquire! Where's the property located? I've seen and done deals with similar numbers to those in Dundalk (county side).
I own primarily single-unit [single-family attached/detached] properties (only 1 3-unit property). In my experience they're, generally, easier to manage and less hands-on than multi-units. These tenants act more like homeowners and generally have fewer requests and issues. It also seems easier to place quality tenants.
The downside, of course, is, in most cases, lower cash-flow in comparison to a multi-unit property.
@Jonathan Tavarez is right--in my experience I've had to do a minimum of a 6-month seasoning to do a cash-out refinance with a conventional loan based on the current market value (to take advantage of the renovations and subsequent forced equity).
Jonathan--have you tried Bay Management Group? I've used them for property management since 2015. They manage my 3-unit property in Baltimore (in the County, though).
Flipper/Rehabber · Laurel, MD · Member since 2016 · 139 posts · 109 votes
5y
@Rob Poole Yes, I have work with Bay Management since 2017 but with them is kind of property by property because even in same zipcode sometimes they say "Yes" for some and "No" for others. I have ask them regarding multi-units but they told me they dont manage those. So who knows lol.
Rental Property Investor · Baltimore, MD · Member since 2020 · 53 posts · 48 votes
5y
@Chris Mcdonald Congrats, my man! Sounds like an exciting chapter for you.
I wanted to ask though cos I'm curious and trying to prepare myself on how I may want to tackle a BRRRR myself. I was thinking maybe I should pay a visit to conventional banks first to see if I'm bankable in 6-8 months if I were about to purchase a BRRRR project? Did you do something like that as well? I'm curious about your thought process about the refinancing part down the road.
Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes
5y
@Jonathan Tavarez
That’s strange that your PM doesn’t want to do multi units, I would imagine they would charge by the door regardless of multi or single.
Yes the idea is to refi as soon as possible. This will be my first time investing in this manor and my mentor said sometimes there is a waiting period of 6 months. Ideally I’ll have it rented out by month 3 so Atleast I’ll stop the bleeding if I have to wait until month 6.
Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes
5y
@Rob Poole
All of my investments are on the west side Baltimore County. So far my multi units are cash cows and that’s why I live them but I have hit a wall from a financing perspective thus why I switched to single unit/hard money.
Hopefully it goes smooth and even if I have to go $15-20k out of pocket to acquire a new rental and learn the process, that’s fine by me. Hopefully I can get that number closer to 0 over the course of a few projects. You don’t learn anything by sitting on the sideline.
By the way I’m in Arbutus to if you ever need a realtor or brainstorm session.
If you run into issues with traditional banks on the refi, you can still get lower interest rates for long term rental doing a refi with hard money. A lot of the hard money interest rates are 10% to 18% for fix and flip, but if you are only in for 2-3 months, that is not so bad. Rates I have seen for hard money refi are around 6% and some allow only 3 months seasoning and up to a 30 year loan.
Real Estate Agent · Arbutus, MD · Member since 2019 · 127 posts · 59 votes
5y
@Randy Sommers
I’ll consider “soft” money if I have to. My short term loan is 11% hoping to be 5-7% on a fixed 30 year. But the lender did say they are shooting for 15s and 20s at the moment.
This will be a trial and error, hopefully I can prove the process to myself and rinse/repeat!
Rental Property Investor · Baltimore, MD · Member since 2018 · 107 posts · 129 votes
5y
What is the scope of the rehab? How much is the contractor going to be doing versus your own sweat equity? Are you doing any value-add like adding another bed/ bath or AC?
Most of the potential BRRRR deals that I look at require more rehab money 40-50k, in order to push up the ARV up to fully refi all of your money out.