Closed ON 1st Deal With HM in NYC!

Closed ON 1st Deal With HM in NYC!

Investor · New York, NY · Member since 2014 · 153 posts · 126 votes

Hello BP! 

So I have been meaning to post for quite some time but have been very busy getting the renovations going. I Finally have some time SO HERE it go's (Please be empathetic as it is my first post on BP)

Closed on The property on MAY 18TH, 2017.

The Deal: 

This was a distressed 2 Family house sitting on an oversized lot. The Short-sale process was VERY lengthy , It took 2 years to have it approved. YES! 2 Loooong years but I did not give up!  btw- Theres nothing "SHORT" about a short-sale! 

I was able to purchase the property with a HML who gave me 85% of the purchase price @ 10% with 2 points due at closing & 100% of the rehab funds. DM me to discuss HML terms if interested, ill be happy to share.

The Numbers: 

 Purchase price: $275,000 - I was paid a 6% RE commission as I hold a license :) 

 Renovation Loan: $120,000

Funds I Brough to closing: came out to about $85,000. 

 - 25% of Purchase price 

- HML Closing cost (Along with appraisals, attorney fees, etc)

- Purchase Closing Cost 

Exist Strategies: 

 Because I was able to secure the property at the price I did, multiple exist strategies were created. Before I even closed, I had another investor offer me $425,000 so he can renovate and flip. I declined the offer because of my "WHY" - the reason I got into real estate investing (become a developer/Buy & hold investor). I want the experience which I know will make me MILLIONS of dollars moving forward.  Okay so here are the strategies: 

Exit 1: Sell it to another investor  for $425k & have him do the work. Make $100k+ in less then 30 days after closing. Not bad 

Exit 2: Keep the house Renovate the home myself & sell for $680k-$700k+. Make around $320k+- (-) Closing cost...

Exit 3: Keep the house , Renovate it & executed the BRRR strategy (Cash-out Refinance 70-80%) & rent it out for $500-$900 in cashflow.

ooh.... Remember I said the property was seating on an oversized lot!? Well, I had a zoning analysis done & I am able to subdivided the lots &  build 2 more homes on the it! Yes! 2 more multifamily homes. I would have a total of 3 multifamily homes. 

Exit 4: Build the additional 2 homes (1,200sf) at about $200-$250psf  & keep or sell at about $680-$700k. If exercise this strategy  then this would bring my profits to a little under $1M. Not bad for a 1st flip huh?

Sooo, I'm currently renovating the existing homes on the lot and getting ready to sub-divide the lot.  Would love to hear which strategy would you go with & why?

I will post pictures of progress as things start to take shape :-)

Jorge P. 

7Reply
51 views

Most Popular Reply

Investor · New York City, NY · Member since 2017 · 18 posts · 4 votes
9y

Congratulations Jorge! I commend you for hanging in there. Sounds like it was worth the wait!

See this reply in the discussion

27 Replies

Jump to latestLatest
  • Investor · New York City, NY · Member since 2017 · 18 posts · 4 votes
    9y

    Congratulations Jorge! I commend you for hanging in there. Sounds like it was worth the wait!

  • Nashville, TN · Member since 2017 · 82 posts · 22 votes
    9y

    @Jorge P.

    Good stuff!!. If i was in your position I would probably take exit strategy 4. Since you own the land and have the option to subdivide. Wouldn't be bad idea to build the two additional properties while renovating the initial one, knocking it out all in one swoop. Thus opening more options. 

    Overall nice perseverance through the whole process.

  • Wholesaler · Newark, DE · Member since 2015 · 303 posts · 80 votes
    9y

    @Jorge P. That is awesome man! Congratulations on the acquisition. Definitely keep us posted with how everything goes.

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Sean Carroll Thank you so much Sean, I really appreciate it. It was a very frustrating process but  Im glad I was able to see the short-sale through. Just have to execute now :-)

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Dennis L Lewis Jr  Thank you for the suggestion! Exit 4 is a very appealing option, def one of my top choices. The process to build the other 2 homes would be a new venture in itself but I'm totally open to making it happen. very exciting!

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Dustin Verley Thank you Dustin! I will def. be posting pictures of the renovation soon and give updates on milestones as I reach them.  

  • Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    9y
    Why not keep the house, rent it for cash flow, then subdivide the lots and sell them to invest into more properties?
  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Jason D. Thats a great point Jason. Its def. something I'm seriously considering. I have a call with my architect today to start the subdivisions :-)

  • Real Estate Investor · Middle Island, NY · Member since 2016 · 147 posts · 68 votes
    9y

    Congratulations on an AWESOME first deal! Keep us posted on how everything goes with the subdivisions!

  • Marlon FongPro Member
    BiggerPockets Support · Bridge City, TX · Member since 2016 · 1k+ posts · 367 votes
    9y

    Congratulations @Jorge P.! Keet it up!

    BiggerPockets
  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @James Caruso Thank you very much James I really appreciate it! I will def keep the  updates coming along with some pictures pre-renovation , etc. Thank you again! 

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Marlon Fong Thank you buddy! I will keep it going , I'm looking for the 2nd deal as we speak :-)

  • Investor · NYC · Member since 2016 · 51 posts · 45 votes
    9y

    Congratulations on your deal! Can't wait to hear more about the new updates and which exit strategy you chose. Would definitely like to hear about the HML terms too.

  • Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    9y

    Congrats and great exit strategies! I would advise you to get through this one first before hooking a 2nd deal especially since this is all new to you. Take it from a guy who took 12 property acquisitions in 1.5 years, it really really takes a toll on your mental/physical health

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Pierre A. Thank you very much I really appreciate it.  Will keep the updates coming 

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @David Zheng Thank you for the advise David. Luckily I have a construction project managing background and have been a real estate inviting broker for 10+ years, so I don't feel as intimidated. However, thank you very much for the advise, well said. 

  • Real Estate Professional · Miami, FL · Member since 2016 · 58 posts · 12 votes
    9y

    Personally, I would flip the house. Unless i am receiving rent over 2% of the purchase price, it just is not worth the hold. There are many opportunities out there that you can invest less money and generate a better COC than the property you are renovating. As for the other two lots, if you have experience building homes, i'd say go for it. Since you are looking to be a developer, it would make sense to start with your first ground up project. As David advised, I would concentrate on putting your effort and energy into one before focusing on multiple projects at once. Building a house is alot different then renovating one. This can be a frustrating and lengthy experience. You don't want to be juggling everything and miss deadlines, or have too much on your plate to really learn and appreciate the process.

    Use each experience as a case for yourself, to learn what you could have done better. So that your next project comes out with greater efficiency and FASTER! Good luck!

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Josh Malenfant thank you  for the advise!  I could be wrong but I don't think the 2% rule applies to higher end markets. You would never be able to get 2% of the purchase price in rent in NYC. You can't expect to get $13,000 in rent on a $650k home . If you can find me one, please let me know.. Ill be happy to buy it :-)  

  • Real Estate Professional · Miami, FL · Member since 2016 · 58 posts · 12 votes
    9y

    It definitely doesn't apply to everywhere. Especially dense populated areas with heavy competition. My question is why would you want to tie up that much money, when there are many opportunities with higher returns. Instead you could have multiple properties generating income, instead of just having one. It also diversifies the risk, in case a property becomes vacant. @Jorge P.

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Josh Malenfant  your pro flipping the home, got it. Thanks Josh. How long have you been investing? how many flips have you done or how many buy& holds do you own if you don't mind me asking?

  • Real Estate Professional · Miami, FL · Member since 2016 · 58 posts · 12 votes
    9y

    @Jorge P. Currently on my first flip. Not doing a whole entire rehab, just a prehab to flip over to an investor in Miami. Looking for my first buy and hold in Florida. Looking to do some deals up in Jacksonville, Orlando and the South Florida area. Can get properties up in Jacksonville for 40-50K. 

    Every area is a different and I am no expert in your market. Every body has different goals, cash flow, appreciation etc. 

  • Real Estate Investor · San Francisco, CA · Member since 2016 · 42 posts · 12 votes
    9y
    Jorge Pena Damn!!! That is an impressive start to an investing career! You've got great options for days! Can't wait to see which path you take..keep us posted..congratulations!!!
  • Winter Garden, FL · Member since 2016 · 28 posts · 10 votes
    9y
    Holy Moly! That is an awesome first deal. Goes to show you that persistence pays! Why did you decide to go with HML, over other options like conventional, private or find a partner?
  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Joshua Ferrey Thank you Joshua! I really appreciate that, I'm super excited! I will def keep the updates coming as i move along the renovation. 

  • Investor · New York, NY · Member since 2014 · 153 posts · 126 votes
    9y

    @Alex Boyce Thanks Alex! Man it was a loooong time but I kept at it. 

    Why did I use a HML oppose to other financing..? That's a great question. The honest truth is I show to little of an annual income on my taxes. A traditional bank would had not given me the loan amount needed to purchase & rehab (203k loan). This is why I seeked out an asset base HML lender who saw how great a deal it was. It would had beeen great to get a lower rate from a bank , maybe on the next one.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.