Diary of a BRRR in Deltona Fl from Ct

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Diary of a BRRR in Deltona Fl from Ct

Eric Munson
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
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@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

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  • Account Closed
    Las Vegas, NV · Member since 2015 · 29 posts · 0 votes
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    Sounds like fun.   Try finding deals like these in HAWAII...................lol.

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  • Ken A.
    Investor · Lake, FL · Member since 2015 · 121 posts · 28 votes
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    Deltona is a solid, rental community. Probably going to get some "decent" appreciation as all Florida homes will. Demographics are too strong. Nice job, always stick with old leads as sometimes they come back! This has happened to me with MLS properties also! Looks like deal is dead and then months/year later we get the property!

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  • Eric Munson
    OP
    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    @Ken A. - Thanks...I called for a sewer inspection today. It's tough not having a go to team in place like I have here at home. Feel free to follow along...it should be an interesting ride. 

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  • Ken A.
    Investor · Lake, FL · Member since 2015 · 121 posts · 28 votes
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    You'll probably get $895 all day long (also use the $-95 rent price).  Is there an extra room for a "pseudo" / possible 3 bedroom?  It would then rent much faster to advertise it that way?

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  • Eric Munson
    OP
    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    @Ken A. - I tried to figure out how I could add a third bedroom but with this floorplan it won't work. There is a large lanai in the back of the house with an ac and heat combo unit. I'm afraid potential renters may see that as a third bedroom. I wasn't in the market for a long distance property but opportunity knocked and I have to answer.

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  • Eric Munson
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    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    The septic inspection is scheduled for tomorrow. This could make or break the deal. Also, the Title Company will be getting back to us with their findings tomorrow. Hopefully all goes well so we can close within a week or two. It should go quick without banks involved.

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  • Eric Munson
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    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    The septic inspection tank and load test went well however one of the covers was broken and needs to be replaced to get the system certification. The cover replacement cost is $190.00.

    So far the home inspection cost was $275. and septic was $210. 

    The house is solid and we should be closing within the next two weeks.

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  • Eric Munson
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    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    The title company got back to me this afternoon. She is waiting on one more document from the sellers and we are ready to close. They provided me with a preliminary settlement statement. My projected closing cost is $1,100.00. I had to mail the $100.00 deposit to the title co this morning and it will need to clear before closing.

    They think we will be able to close next week. This is quicker than I anticipated. I need to purchase insurance and start transferring utilities into my name. I also need to finalize scope of work and level contractor bids that I recieved.

    I am thinking about using a week of vacation to paint, carpet, install toilets and sinks etc. next month. Somebody please slap me:) 

    The closing cost, deposit, inspections and insurance will come from my unsecured loan which is in my bank account. 

    The market is getting hot in Fl and I am hoping to get some market appreciation on top of what I was given for ARV from the local agents.

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  • Eric Munson
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    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    The title company sent me a draft of the note and mortgage this afternoon for review.

    They set the closing date for next Thursday.

    They are sending the docs to us for signature and we will return asap. 

    Let the fun begin. 

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  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
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    @Eric Munson

     I am not sure how I missed this.  This is an awesome thread and i know from talking to you about this deal that it seems to be going according to plan.  The house looks solid.

    Good luck on the closing, and I will be following this thread now.

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  • Eric Munson
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    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    Thanks @Michael Noto -it's a nice little property in a good area. Hope there are no surprises once the rehab gets started.

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  • Eric Munson
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    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    I recieved the closing documents including the note and mortgage in the mail today. I will be getting all of the documents signed, notarized and returned overnight tomorrow for our Thursday closing. My closing costs ended up being a little over $700. 

    I will be getting ins tomorrow. 

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  • Barbara G.
    Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
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    You seem to be such aa  careful investor.  We have just been charging along like Mr Magoo,

    I can't see how you can do anything but really well on this property.  you seem to have every base covered and what a bargan it seems to be.  How in world did  you find this .  The sellers seem so co operative

    Keep us in the loop.

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  • Eric Munson
    OP
    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    The sellers are family friends. They are more motivated than cooperative. I almost gave up on the deal because it was impacting our relationship. I spoke with the owners today and they are happier than I am. They are so glad that this burden is off their plate. 

    I didn't get into the story of how they had squatters to evict right after they inherited the property...they had a bad and expensive experience with this property. That's one of the reasons I want to cash them out quickly. I would love to take advantage of the 0% financing for two years but I will do right by them as they have helped me acquire another asset without laying out cash. 

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  • Stephen Collins
    Boston, MA · Member since 2014 · 48 posts · 6 votes
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    With BRRR, what do most people use, a second mortgage, or do they refinance the original?

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  • Eric Munson
    OP
    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    @Stephen Collins- I will be refinancing the owner financed mortgage which is in the first position. I will be looking to do a cash out refi to replace the first lien and payoff the unsecured note as well so I will have the house without using any of my money. I have two other options.

    1. Payoff the mortgage using cashflow from my properties(would need to use the full term of the loan).

    2. Sell it and take the profit. 

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  • Eric Munson
    OP
    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    The closing went very smooth without any issues. I am heading down there to check the property out and get the water turned on. I will be painting the interior of the house next week. I will be finalizing scope of work with my selected contractor and meeting with the selected PM. I will post more interior shots next week and detail scope of work and costs. 

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  • Eric Munson
    OP
    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    Forgot to mention the trip is tax deductible.

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  • Barbara G.
    Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
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    It sounds like everything yu have done here is just perfect.  It makes me so envious.  From beginning to the end nothing is amiss,  We should all be so smart, so knowledgable and so lucky

    We have bought 5 Duplexes (3 buys) and something is wrong with every one of them BUT we are still glad we bought them and they will all work out well.  We are on a tight budget and its rough going right now as we have to still completly rehab one of them  and rent it before we can refinance it.  It will be at least 3 months before we can see daylight.  You hve no money in your deal and we are all in on our buys.  

    Good luck but I think you have that already.   Keep us posted on the refinance and on the renting and your plans for this property.  Are you doing the painting yourself or just contracting it?  Are you enjoying Florida?

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  • Eric Munson
    OP
    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    @Barbara G. - I have certainly had my share of issues and learning curves along the way but I appreciate your comments. I am a commercial construction manager and my career skills have certainly helped my property investing business.

    I'm sure you will do just fine with your properties. You are experiencing short term pain for long term gain:)

    I will be painting with my daughter but we will be taking some time to enjoy Fl as well.

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  • Barbara G.
    Hartsdale, NY · Member since 2015 · 874 posts · 218 votes
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    Originally posted by @Eric Munson:

    @Barbara G. - I have certainly had my share of issues and learning curves along the way but I appreciate your comments. I am a commercial construction manager and my career skills have certainly helped my property investing business.

    I'm sure you will do just fine with your properties. You are experiencing short term pain for long term gain:)

    -----------------------------

    You have no idea how reassuring your comment of "You are experiencing short term pain for long term gain" is.  I do believe you are right and I will remember that 

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  • Eric Munson
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    Rocky Hill, CT · Member since 2014 · 200 posts · 56 votes
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    Here are a few of the before pics...we had a very productive week.

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