All Forum Posts by: Ari Newman

@Victor S.  I'm hoping my numbers are correct, and I always tend to lean towards the conservative side in all my estimates.  I appreciate you & everyone else's feedback!  It's really helpful to get lots of different opinions on the same set of hard data.

@Dennis M.  I was eager to get started, was buying an off-market property below market rates and didn't have access to the BP calculator :)

But seriously, I knew it wasn't the greatest deal ever but went in it banking on appreciation.  It seems like many investors in our market (in-town Atlanta) are buying cash-flow neutral deals and holding for appreciation.  Is this approach inherently flawed?  Does a property need to cash flow (if you aren't dependent on the cash NOW) in a hot market like Atlanta?

@Brent Coombs Yes, those are all questions that I've entertained and don't have definite answers too. The CMA my agent put together had some really good, local (3 doors down) comps that give me assurance on ARV. My background in construction gives me fairly high confidence on the Rehab numbers, but I also know about the typical overages. The appraisal part is unknown, and rents in the area (and demand) support a rate of $1100. All that being said, I don't want to speculate on cash flow and getting my cash back during a Refi. I'd like to figure out a way to keep this property and make the numbers work...

 Yes, the current lease expires end of July.  They're paying $675/month and I'm confident I can rent for $1100 after the rehab.  I'm pretty sure that's the figure I used in the calc.

Hi,

I bought this tenant occupied property about two months ago. The current tenant is paying way below market rate and the house needs some updating. I intended to update the kitchen and bath, refinance and then rent it out. I paid cash using a HELOC on my primary residence. I've got a teaser rate of 3.25% until November and then it'll jump up to around 6.5% At this point, I'm all in for $103,500.

I've run the BRRR calc below, using vary conservative numbers for everything. If the projections are correct, the cash flow isn't where I'd like it to be but not the end of the world since I've purchased this property for my retirement portfolio.

View report (BRRRR)

I also ran the report as a quick flip using both the Flip Calc & Wholesale calc.

View report (flip) View report (wholesale)

Ultimately, the BRRR strategy will work best for me as I'd like to free up the cash to move on to the next project. However, I know that there will be opportunities to Wholesale or Quick Flip (& 1031 exchange) as the deal might not work well as a BRRRR. I'd love some feedback on my numbers (did I miss anything?) and overall strategy!

Thanks,

Ari

@Surgess Santacruz  I've worked in the business for over 15 years and started my company about 10 years ago.  I've reached out to local custom home developers just trying to start a conversation about what we do.  There's typically very little interest and even spending $3500 for a basic wiring package in a home that will sell for over $1 million, is a bit of a hard sell.  We've always had the best success developing a working relationship with custom home builders who will then introduce us directly to their buyers.  The homeowner is typically the one who wants an integrated home and the builder is happy not to have to be the middleman and negotiate all the details.

Another thought for you...What if you created a basic alarm package (like Honeywell Lyric) and offered to lease or sell it to flippers?  I'm guessing that there might be many flippers who want to protect their asset during the renovation phase, but don't want to sign a long-term contract.   You could offer equipment & monitoring for maybe $50 /month or sell them the gear and then move the system to their next home.  Just an idea I had. (but not the time to implement :)

Send me a PM if you'd like to discuss this further.

Ari

So I've always wanted to own the house next to our primary residence...

I've reached out to the current owner about 3 times in the last year and 1/2.  He's told me twice that he wasn't interested in selling and the 3rd time ignored me entirely. (I had sent a formal offer and he went so far as to tell his tenants that he was avoiding me :)  The current tenants are moving out at the end of the month and I just saw that he listed the house for rent on CL.  So it seems like the time is ripe for me to ask him again;  considering his previous responses, I'm reluctant as I want to stay on good terms with him. (He lives out of state, but has occupied the house in the past)  So all that being said, at what point does my persistence become an annoyance and potentially damaged my (remaining) goodwill with my neighbor? 

Part two of this equation is the house itself. It's in need of some TLC and maintenance that has been deferred for too long. A roof leak that went un-repaired for almost a year has turned into an airborne mold issue. The HVAC needs some service, the windows leak like a sieve, etc., etc. For a time in the past, I was the property manager for this home (under the previous owners) so I have a pretty good idea of what I'm getting into if I were able to buy the home. It's not a great deal, but would cash flow neutral under my conservative calculations. There are strong emotional forces driving this interest, mainly the proximity to our house (12') and the ability to self manage and select who will be occupying it. It would also be a nice addition into my BRRRR portfolio.

So I'm curious to hear other's thoughts on this matter and other situations where your persistence paid off or where it damaged a relationship.

thanks,

Ari

@Rick Baggenstoss Yes, me too.  I've been listening to BP Podcasts while I drive all over the city.  Getting great ideas for process management and developing ways to apply them to my integration business.

Yes Mitch, I'm definitely planning on collecting rents online, but have to honor this existing lease until expires.  What platform do you use for your rental properties?  I've looked at Cozy at it seems to offer everything I'll need.

Hi everyone,

My name is Ari Newman, and I live in the Reynoldstown neighborhood a few miles east of Downtown Atlanta. I've owned a home-automation and low-voltage integration company since 2007 and have just now dipped my toe into the world of real estate investing. With over 15 years experience working in other people's homes (& a major renovation of my own) I saw the potential for these skills to translate well to REI. My primary interest is buy & hold properties which I will manage myself for the next few years. My long term goal is to build a portfolio of properties that will fund my family's retirement.

So I decided to jump in with both feet and purchased my 1st investment property (SFR 3/1) about 6 weeks ago. It's currently tenant occupied, and since I'm honoring the existing terms of the lease, I drive to the property once a week to pickup a cash payment. (and some coins too ;) When the current lease ends in a few months, I'll update the kitchen & bath, refinance and then move on to the next one.

I love analyzing deals and playing with numbers so I'm open & intrigued to learn about all the facets of REI. If anyone is interested in talking shop, please send a PM and we can grab a cup of coffee!

cheers,

Ari