Rental Property Investor · CT · Member since 2017 · 22 posts · 8 votes
BiggerPockets world I am in need of some wisdom from you BRRRR investors. I am looking at a 4 unit completely vacant property in Bridgeport, Connecticut. The property has fire damage on the top floor and needs an entire remodel. I wholesale and have completed a single family residential flip, but this is massive compared to the flip.
The property is in a bad area (but directly across from the high-school) so I am not too worried about location.
The numbers work and I think once I refinance I should be able to generate ~18%+ CaC and tie up an amount of equity I am comfortable with. My question to all of you, is do you think the rehab itself is to large of a project for my second investment? Secondly if anyone has any great contractors in Connecticut, I would love to speak to them. Thank you!
The first steps I would recommend as a new investor is to get a handle on analyzing the income, expenses and ROI of these properties in Bridgeport CT. Connecticut in general is in a sellers market. You will need to be creative in negotiating to get the price / terms you need.
You can use the Bigger Pockets calculators to start. Right now rents are strong, you can get $800 for a 1 bed, $1100 for 2 bed, and up to $1300 for a 3 bedroom. Use Zillow and rentometer.com to get data and analyze a few from your home to see what type if returns there are.
If these meet your investment criteria then start looking in person by contacting the listing agent.
@Joe Potenza It depends. Do you have an unfair competitive advantage? Are you a realtor, contractor, or lender already and have some parts of the puzzle figured out? If you are completely new and this is you first deal, personally, I'd choose to tackle another. OR get a mentor who can walk you through the process and help keep you from stepping on landmines!
Side note... I'd love to see your numbers. 18% COC for that type of home that is that damaged seems incredibly low... I would think you could get a better deal. Maybe it's the market...
The first steps I would recommend as a new investor is to get a handle on analyzing the income, expenses and ROI of these properties in Bridgeport CT. Connecticut in general is in a sellers market. You will need to be creative in negotiating to get the price / terms you need.
You can use the Bigger Pockets calculators to start. Right now rents are strong, you can get $800 for a 1 bed, $1100 for 2 bed, and up to $1300 for a 3 bedroom. Use Zillow and rentometer.com to get data and analyze a few from your home to see what type if returns there are.
If these meet your investment criteria then start looking in person by contacting the listing agent.
@Joe Potenza, I would say it really depends on your level of comfort and risk taking. Do you have contractor connections that you can rely on to get it done correctly the first time? Fire is tricky because there is a fine balance between surface damage and structural damage. Can the roof rafters be sistered or do they need replaced? Add to that the fact that materials have risen over 30% in the last few months, with wood up 300% in some cases. The more you know going in the better you can plan and mitigate risks, but there is only so far you can inspect before owning, and once you open up walls you may realize you have an extra 10-20-30k in repairs that were unaccounted for.
To me it sounds like the biggest risk is the rehab, although the comment about being a bad area and right across from a high school don't help either. As you likely know, the bigger the rehab, the bigger the chance for the budget to get way out of hand, but once you are in, you are in.
I flip fire-damaged properties and own a fire damage restoration company. It can be a big undertaking, although there can be profit in it IF the numbers are right and IF you have done your homework to know what you are getting into (both big “IFs”). Unless you are rather experienced with this type of damage, it may be hard for your to tell the extent of damage. In short, I generally recommend that first time flipper NOT take on a fire damaged property.
The challenge with fire damaged properties is that there is more than meets the eye. For example, often fire damage is water damage--they put the red stuff out with wet stuff. Unmitigated water damage becomes mold damage and and there is the potential of extensive smoke damage in the same airspace. So even elements that don’t appear damaged can be contaminated.
If you were to tackle this project, I would recommend you find a fire restoration company/contractor to walk the property with you and give you a good understanding as to what needs to be done. There are many things that could be overlooked as part of the renovation on fire-damaged properties.