Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
Thought I'd post the numbers and pics from our most recent rehab project in Tallmadge, Ohio (a suburb of Akron). We bought the property in July 2016 off the MLS using our own cash and private funds; after owning the property for a little over a month and completing the majority of the rehab, we used delayed financing, cashed out the initial purchase price, and paid back the private loans. The rehab took about 8 weeks, and we have tenants moving in this week.
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
10y
Forgot to add that we bought the property as a 2/1.5, and were able to convert to a 3/1.5 by finishing the attic. We then marketed as a 3-4 bedroom, because we added a door to the basement rec room (it's a finished walk-out basement with a 1/2 bath and full size windows on 2 walls of the rec room).
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
10y
@Account Closed - thank you! We have done 4 live-in flips, and one other rental rehab, where we did much of the rehab work ourselves, so we have honed our DIY skills over the years. Our goal with each property has been to do less work on our own and contract out more - it gets easier as our personal time over the years has become more valuable, and as we develop more contractor contacts who offer a good quality-price ratio.
Real Estate Agent · Cuyahoga Falls, OH · Member since 2016 · 13 posts · 2 votes
10y
Hi Jen-
What exactly is meant by delayed financing? Is this just referring to the refinance portion? It is there something else that this means?
Thanks.
Real Estate Agent · Cuyahoga Falls, OH · Member since 2016 · 13 posts · 2 votes
10y
Jen, Thanks! A couple of technical questions...
Many of the banks I have talked to told me that the property would need to be seasoned for 1 year to complete the cash out refinance. I'm thinking that maybe this was possible because you used your own money for the initial purchase?
1) How did you get around that? What bank was it?
2) Was the property initially titled to you?
3) Do you carry your properties in an LLC or personal name?
4) What LTV did the bank allow you go to for the refinance.
My reason for asking the detailed questions is because I am also in the Akron area and running into a couple snags on a similar deal that your information might help me with.
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
10y
@Kevin Wasie, I am by no means an expert in this field, but I will try to answer your questions to the best of my ability!
1. We purchased the property with cash; I don't believe that delayed financing would have been a possibility had we used traditional financing when we purchased. We use a mortgage broker located in Fairlawn (I would be happy to share his info if you message me).
2. Yes
3. We (my husband and I) carry this property in our personal name, but are currently considering moving to an LLC.
4. Our broker will lend 100% of the purchase price + closing costs, up to 70% of appraised value for a delayed finance deal.
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
10y
@Michael Ferry, thank you! We actually didn't touch the siding. It's vinyl, and the apparent difference in color is due to the time of day that I took the pics. The exterior of this house was in pretty good shape; we just painted the exterior doors and some fencing (can't see in pics), cleaned up the landscaping, removed the awnings, and brought in some gravel for the portion of the drive that isn't concrete.
Akron/Canton, OH · Member since 2016 · 2 posts · 0 votes
10y
That is a great and inspiring BRRRR story. Thanks for sharing. How and how long did your education process last before you dug in and started doing the work?
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
10y
@Rich Moore - that's a tricky question...we first became accidental landlords when we couldn't sell our personal home back in 2007. We made a ton of mistakes and eventually sold that property for a loss. I consider those beginning years of struggling the start of my "education process", so I guess for me the learning and doing happened concurrently. I highly recommend to those starting out to read as much as they can, but start taking action steps as soon as possible (e.g. talk to banks and line up financing; attend some REIA meetings and start building a network; look at properties and run the numbers; eventually start making offers!). I hope that helps!
@Kevin Wasie - delayed financing is a cash-out refinance option, when the refinance is completed within 6 months from the purchase date.
My guess is that if you had waited six months, a new appraisal might have meant that you could have got ALL your money back, rather than having to leave your rehab costs on the table?
Don't forget, this report is BRRR. We await your next R (Repeat) report. Congrats so far...
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
10y
@Adam Adams - thank you! This is our second in the past year; our goal is one/year, as at this point my husband and I both have other jobs that we love and real estate is our "retirement" plan. I read your profile; are you involved in many deals in this area?
Investor · Tallmadge, OH · Member since 2015 · 259 posts · 275 votes
10y
@Brent Coombs - yes, we could have waited 6 months and pulled out our rehab costs as well, but there were a couple of reasons we chose not to: this is the first house that we used private funds to purchase and rehab, and as these were funds from individuals we had personal relationships with, I wanted to pay them back as quickly as possible (for my own peace of mind). Secondly, I like the extra cash flow cushion that we get from not pulling out the entire investment right away. Instead, our strategy thus far has been to lock in the mortgage where we want it to give us the cash flow we like, and then we wait a year and open a HELOC on the property as well. That gives us access to the rest of our cash as we need it. Make sense?