My first Deal after 1 week on BiggerPockets

[Anthony Smoke]

I received a deal from a wholesaler on BiggerPockets (I gave a reference to the wholesaler). This is a single family home located in Wilmington, NC. The deal was $80K for a 2 bed / 2 bath 1140 sqft property. It has renters paying $1,000 / month. The renovation is estimated between $20K - 35K for ARV of $140K. This is a cash purchase for me using my funds from a Solo 401K. The closing will be next week. I will post my BRRRR calculations once we close on the property.

[Sahil Sethi]

@Tasbeeh Corporan-Francois - sent you a message with a wholesaler that may help in your search in miami. 

@Anthony Smoke - Really great stuff. Keep up the good work and now lets find deal #2

[John Burtle]

That’s awesome!!!

I’ll be following along.

Very inspiring as well.

[Matthew Morrow]

@Anthony Smoke

Nice job Anthony! Keep it up

[Bob Anthes]

@Sandy Sciales. Sandy I use Britt Law in Wilmington. They are great especially with title searches on the older homes when the records weren’t really well kept. They are on 3rd St.

[Sandy Sciales]

Thanks for that I am going to use them!

[Robins Dorvil]

Great work @Anthony Smoke. Wasted no time. That's how you take action. 

[Matt Skog]

@Anthony Smoke,

Can you afford to put the current tenant up in a short term stay hotel, while doing the rehab? That way, IMO, you can lock them in for whatever timeframe their remodeled home stays affordable for them. Then you can decide whether to (sell, rent, option) the property. That's my $0.02 worth.

[Crystal Mcdaniel]

@Anthony Smoke where did you meet your wholesaler ? I am new to bigger pockets and just trying to learn. My husband and I are wanting to purchase some rental property in Wilmington to hold.

[Anthony Smoke]

@Crystal Mcdaniel - He found me on BiggerPockets. I gave him a referral if you are interested. 

[Anthony Smoke]

@Matt Skog - I have considered that, but currently I am trying to see what the storm does. 

[Tim Spollen]

@Justin Robert @Anthony Smoke

Greetings - I am a solo 401k investor who has been researching Wilmington for ~ a year now (kudos to @Anthony Smoke for taking action!). For @Justin Robert - interested in your comment on BRRR not being great strategy with Solo 401k. Could you provide your thoughts? From my research, financing definitely higher and not sure yet if there are non-recourse vendors who do delayed financing option as discussed by @Alexander Felice (have a call into MC Mortgage Group out of Wilmington NC). 

However, my thought was with a solo 401k is you can still purchase with cash, pay for rehab with cash, let season 6 months and then refi and show comps with higher ARV. The downside is we (solo 401k investors) would have to leave more money in the deal than our conventional bretheren. For example, with a $50k purchase, $20k rehab and say a $100k ARV, conventional investors can pull all their funds ($70k) out with refi whereas solo 401k investors will be lucky to pull $60k or $50k out. Now, even if we can only get 50% LTV which would mean leaving $20k in the deal, assuming your rent numbers provide ~ $200 cashflow monthly would still be 12% interest on your funds ($2400 cashflow annually/$20,000 in the deal).

So, while not a "true" BRRR - could still perform same steps as BRRR just will not get access to initial funds right away and most likely will have to leave funds in the deal. But again - interested in your thoughts (or others).

Tim Spollen

[Anthony Smoke]

@Tim 

@Tim Spollen Hello Tim, I agree with your assessment. I am using my Solo 401K to buy properties with cash. I then plan to use the money to rehab the properties and then rent them for rental income. The last piece is the refinancing. With the requirement of the non-recourse loans, the BRRRR is not as good as it is for someone doing it with after tax money. My research into non-recourse loans are leaving 40 - 50% equity in the property with 8% or higher interests rates. So the Solo 401K works well with the Buy and Rehab portions of the BRRRR strategy, but not as well with the Refinance portion. It still allows you to continue purchasing properties, but you will not be able to continue the process indefinitely because at some point, all of your cash will be tied up in your properties. I haven't done any rehabs yet since I just purchased my first property, but once I do, then I can find out how much money I can pull out. That will be the deciding factor on my refinancing. I am performing my calculations so that I am getting a good enough ROI even if I leave all the cash in the property. I still have time before I need to refinance.

[Justin Robert]

@Tim Spollen I just didn't think it looks ideal in a Self Directed Retirement plan due to UBIT at 35% after approx $9K in profit, in addition to the above points. Of course, I have limited funds in mine as well so that is part of my opinion. 

[Mindy Jensen]

Originally posted by @Justin Robert:

@Tim Spollen I just didn't think it looks ideal in a Self Directed Retirement plan due to UBIT at 35% after approx $9K in profit, in addition to the above points. Of course, I have limited funds in mine as well so that is part of my opinion. 

I believe UBIT only applies to SDIRA, not SD 401(k).  

[Justin Robert]

@Mindy Jensen Thanks for the clarification

. I only have the SD IRA so that would make sense as far as what I was told.

[Don Taylor]

Congrats!! Looking forward to the updates on it @Anthony Smoke

[Nick Murray]

@Anthony Smoke congrats on your first! I’m currently working on finding my first as well. Thanks for sharing and look forward to hearing about more of your successes