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Helmi Teklu
  • Rental Property Investor
  • Woodbridge, NJ
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1st post and jumping into the fray mid spring next year!

Helmi Teklu
  • Rental Property Investor
  • Woodbridge, NJ
Posted Nov 13 2019, 20:05

Helllo! This is my first post so be easy :)

Little about me :) I have one property that I did an FHA loan on, lived in it for a year and moved out to a smaller apt( too big) while renting it out. I want to charge full steam ahead in 2020 using the BRRR method!

I’ve recently re-located to New Jersey(ready for some meet ups!)and have finally got my personal business up and running to fuel my future investment portfolios.

Next spring I will be making some moves and wanted a few opinions!

1st portion: I have a house located in Denver Colorado that I bought for 363k and I am renting it out. Prior to knowing the BRRR method( my notary for the loan docs told me about Bigger Pockets😁) I didn't know about the 1% rule. The tenant signed a two year lease but has incurred nsf cost the last 4 months and is struggling to meet the payments every month. Based on this after the winter we will offer her out of the lease and we don't expect her to put up much of a fight. It is a 4/2.5 rented at 2,600 all in. The PM charges 250 leaving me with pennies on the dollar for profit. I squeak by because it is newly remodeled so no maintenance is required but I want out. I plan on selling in the spring to get it off my credit and lower my DTI. I hope to sell it for 400k flat (will list at 415k based on appraisal one month ago).

Should I do this? Everything I’ve read points to a very loud yes, As soon as possible!

Advise?

2nd portion: my dearest mother has a portfolio of 3 rentals and her main residence. All three are in shambles and each was purchased in the 50-60k range around 2013-15 before the pharmacy school was announced. They are all located near a new pharmacy school with rents sitting at about $350. The market tags the rents at $600-650 with other units sitting closer to 110k based on running some comps in that neighborhood. The properties are significantly under rented due to my step father. Between my savings and a optimistic 40k return on the Denver home I hope to BRRR the three properties, remodel her main house and do a cash out refinance so I can manage the properties and give her an early retirement. Initial remodel looks to be light >10k per unit and looking to update it to a modern style instead of the 80 style currently there.

From my initial understanding this looks like a great way to come into this softly with no massive recourse and a huge upside for both parties.

What is the recommended course of action since this is my mother? Should I do seller financing ( she currently has all houses under her name and my step dads name) or would it be possible to do a commercial loan under my business? She is open to it all as long and she doesn’t have to manage anything

I am leaning towards owning the properties out right so no issues occur with my step dad.

Looking for great answers! I have yet to run the property numbers, did an initial look at rents and contacted a few local real estate agents to confirm local property values in the 2 neighborhoods they are each located at so looking for a general opinion. She is over seas for the next two months so I don’t have the exact addresses and my step dad is oblivious to what is happening.

Side note: they are located in NY; should I get my real estate license to save on the fees even though NY requires a lawyer for real estate deals, is it worth the time and effort?

Anything helps!

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