Diary of a BRRR in Deltona Fl from Ct

Real Estate Deal Analysis & Advice

Diary of a BRRR in Deltona Fl from Ct

Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes

I have a 2/2/2 under contract in Deltona Florida. The property was inherited by 3 grandkids who have owned it for a little over a year. The monthly bills were a problem for them as they did not have the money to keep paying the holding cost. I started discussing possibly purchasing from them them about 8 months ago when they were much less motivated.

Fast forward 8 months and I have it under contract and they were willing to hold a note for 100% of the purchase price at 0% int for two years. These folks are friends of the family and we are looking for a win-win.

The title company has the P&S agreement and is performing the title search at this point. I am supposed to receive a prelim settlement statement tomorrow.

The purchase price is $45,000. and needs $10k in rehab to make rent ready. ARV is $85-90k. Rent will be $900-950 mo. I will be using a PM.

This is my first out of state purchase.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

11y

that's about right on price and rent might be a tad high based on my lending experience in Deltona... most wholesale deals are 40 to 60k but those are 3 bds and same vintage of course.. but the 0% and no money out of pocket are a super way to buy.

When I had my unfortunate experience of ending up with a couple hundred SFR's that I foreclosed on I sold many of them with 0% interest.. of course we got monthly payments and higher than normal the homes were negative cash flow for the buyer but they were free and CLEAR in 3 years... so it was a win win

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Eric Munson
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Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
I will post some pics as soon as I figure out how to do it(or when my kids get home:)
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
It sounds fantastically good to me. Are you saying for $55,000 (45,000 that you don't have to pay for 2 years) you will be getting $2,700 amonth rent? Thats what % of your property cost??? It sounds like you will be making a fortune on this Then when you finance it you will get 80% of your $85,000 appraised value and you will be walking away with $13,000 from the bank plus your income for the 2 years??? I must be misunderstanding some part of this.
How much are your taxes, Insurance, Vacancy and Maintanence, Property manager?? No mortgage for 2 years. No payment of Principal and interest for 2 years??. It sounds like an armed robbery. Your income is $32,400 a year or $64,800 for the 2 years less your expenses?? When the 2 years are up you will have paid for your property?
I hope my grand children never do anything like this!!!
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Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Barbara G. - I had two different local agents look at it for rent and ARV.
One agent gave me $900. And one gave me $950. For monthy rent so it's not $2,700. Mo.
Also, I have a unsecured note from a family member for the rehab and closing. This is my eighth rental and I want to do it without using any of my personal funds
Taxes are $1,600 and the ins. quote that I recieved was $850.(with wind mitigation cert)
This is more an equity play than highcash flow but it will have positive cash flow.
My refi will hopefully be at 75% LTV but may be 70% for cash out. Time will tell.
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Eric Munson
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Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Barbara G.- just realized why you thought the rent was $2,700. The 2/2/2 stands for 2 bedroom, 2 bath with a 2car garage. Sorry for the confusion.
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
OH!! It's a one family house? I thought it was a 3 family house. That's a completely different scenario. Still it sounds like it works.
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Eric Munson
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Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Barbara G.- yes it's a 1150 sq ft single family 2 bed 2 bath house built in the mid to late eighties. Goal is to cash them out a quickly as possible an not take advantage of the financing. They agreed to the second year in case we had seasoning issues with the refi.
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
Very good. Are you going to renovate it first and Rent it for the $900+ and then Refinance it?
We just bought 2 family for $72,000 (in Conn) with a projected rent of $1,800 or $1,900 a month ($900 an apartment) . So that will be approx 2Xs what you paid with 2 times the income? So they are very comparable? We actually don't know what this 2 family will appraise for after the renovation of approx $20,000 to $25,000 and then we are going to refinance. It was difficult finding a bank but the one we located said we did not have to wait for year but could do it when we wanted to do the refinance. W are hoping it will appraise for $120,000+ but we don't really know. It will be interesting to see how these 2 properties compare once we both have them completed? What is your time line? We have already put our deposit down.
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Eric Munson
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Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Barbara G.- yes, I will be doing the rehab and renting asap. I have been using this strategy in Central Ct(new Britain) and am at the point where I am ready to refi. That one is a 3 unit and brings in $2,700. Mo(was $1,300. When I purchased)
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
Yes we are also interested in a duplex in Bristol. What is New Britiain like nd how does it compare to Bristol conn and Waterbury Conn and Danbury Conn?? The one we are negotiating on costs $200,000 and it rents for $2,200 but it is not appraising for $200,000. It does not need any renovation and is in very good condition. So I don't really know where this one will be going. What is Bristol Conn like? This will be our first Bristol Conn experience. We don't really want it if it doesn't appraise for $200,000 because the numbers aren't that good.
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Eric Munson
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Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Barbara G. - those numbers are tight. Like all markets you need to know the good areas from the bad. In New Britain you could be in a good area and a couple streets over you are in a bad area. The 3 family I own in NB is in a good area and rents for $2,710. to be exact. I purchased for $160k and have been reinvesting cashflow to turn over the units. This property was purchased using a private investor for approx 95% and family note for the gap and closing etc(walked away from closing with cash in hand).
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Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
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Barbara G.
Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
11y
That's a really good looking house. It looks in really good conditon. What kind of renovations are you going to do for $5,000. ? Will you be doing the renovations before any one moves in?
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Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Barbara G. - the scope of work includes paint, floors, counters, vanities, toilets, appliances etc.
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Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
0 Reply
Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
0 Reply
Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
0 Reply
Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
0 Reply
Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Eric Munson
that's about right on price and rent might be a tad high based on my lending experience in Deltona... most wholesale deals are 40 to 60k but those are 3 bds and same vintage of course.. but the 0% and no money out of pocket are a super way to buy.
When I had my unfortunate experience of ending up with a couple hundred SFR's that I foreclosed on I sold many of them with 0% interest.. of course we got monthly payments and higher than normal the homes were negative cash flow for the buyer but they were free and CLEAR in 3 years... so it was a win win
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Jay Hinrichs - thanks for you insight on the market. One agent gave me 895 for rent and one gave me 950. I will be marketing it at 895 and will see how it goes.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
2bd s can be tough in the burbs.
also with your friends and the nice financing they are offering.
Its obvious they are not hurting for money...
offer to pay them 30 equal monthly payments.. it will be negative for you.. but the PV of money makes there note a 15% yield note. its only a little longer.. you pay no Interest and no finance charges etc.. and in 30 short months your property is paid for that's when you get TRUE cash flow
Podcast Guest on Show #222
JLH Capital Partners51 Review
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1 Reply
Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Jay Hinrichs - I offered 1k a month for 48 months and they were not interested. The extra year on the note just came about this week when I asked for a right to renew clause on the note. I may put away my cash flow from all of my rentals to pay this off in three years. I apriciate the creative thinking.
They are hurting for money and want me to turn it around within 8 months of possible. They just want it gone at this point. I should be able to have it free and clear within 5 years if not 3.
My goal for this property is to use it as a stepping stone to my retirement house on the Gulf Coast.
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Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
excuse the typos...I'm on my phone
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Eric Munson
great well at least you can knock down the principal in those 24 months while you have no interest vig... I wonder why they just don't sell it they could get 45k cash from most wholesalers or TK guys that play in that market.
But this is a good one for you... !!!!!!!!!!!!
Podcast Guest on Show #222
JLH Capital Partners51 Review
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Eric Munson
OP
Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
11y
@Jay Hinrichs - they know they could sell it quickly for possibly more. They recieved a lot of direct mail marketing. They trust me and know I will make sure they get thier money(even if I have to use my funds). Thanks for all of your comments. Pay down will be a priority while I have the 0%gift.
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