All Forum Posts by: Brian Ellis

Welcome to BP. And thank you for your service!

VA loan house hack is a great option. You will get some really good terms going that route.

The challenge will be finding something of value that isnt in need of repairs. VA loans are very strict with the condition of the property.

Try not to look at it like a homerun investment, especially for the first one. You will be pretty much relying on Appreciation and cashflow alone. Look for places where you can get creative: Adding a bedroom, finishing the basement, adding square footage, etc. 

My advice here, is not to be too picky so you can get your feet wet. Just make sure you will cash flow when you move out.

Some of the expenses that are overlooked are items like: trash, sewer and water, and then any type of fees your town/city charges. For example rental inspection fees.

Quote from @Jacob St. Martin:

I don't think we will start to see a increase in supply until there is a big push for building, probably through legislation. I live in Charlottesville VA and there is still a housing crisis here and the city is talking about rezoning to allow for more high density multifamily. I think it is things like that that need to happen.

 I agree with this 100%

Zoning restrictions and all the red tape doesn’t make things any better.

towns/cities need to ease up 

In the past, I had one inspector miss a completely rotted sill plate which was a big job to replace.

I had another miss the smoke detectors.

These are things that shouldnt be missed. But they miss them, time and time again.

I havent had one inspection done since. You will always find something that was missed initially, and you will always have things come up after the fact that cant be seen (like a newly leaking roof). Ive seen brand new roofs leak, and 20 year old roofs without a sign of water. 

It seems like the reports arent the issue, but the buyers may be the problem using that as an excuse to back out of the deal. 

Crunch your numbers, be conservative and use the no inspection report to your advantage. Thats my take.

We all know that interest rates are up, and will continue to go up until inflation is controlled.

But at what point will we start seeing more supply? I dont know much about any other market other than my own, but we are NOT seeing supply rise. In fact, we have less supply than this time last year.  And the average days on market is 34, same as last year.

This is still very much a sellers market. I figured we would see some real shockwaves by now given the interest rates. 

@Steve Vaughan 

Looked at the property.

There was one issue that we saw. The structural integrity was a little scary. The exterior and roof need replacement which isnt a big deal to us unless the historic gives us a hard time on permitting.

So there are a few variables at play here. We would need to repair these things prior to closing in order to get commercial financing. If we purchased at the right price, we could essentially get paid to own this thing at closing BUT we would need to fund the repair work ourselves before ever owning anything. This is a little scary for me as I have no experience with this level of repair work prior to closing in order to satisfy the bank.

Do you have any input on this matter? As I mentioned before, my state is difficult and the only time I have ever been able to get a property that produces a good return, is through some type of creativity. But this just happens to be at a much higher level than what im used to. 

Quote from @James Wise:

Quote from @Brian Ellis:

My location is very difficult to invest.

1. It is a tenant friendly state

2. It’s very expensive

3. Returns are minimal


so now that you guys know that, I have a question for the experienced investor. I’ve been doing this for 5 years now and have a total of 5 units. But scaling has been incredibly tough. Now I’m looking to get into commercial 5+ units. I feel it is a safer investment going into this volatile market. With rates increasing, but rent prices stabilized, I feel it is a better avenue to pursue.  

The deal in question;

5 unit 385k purchase price 

20% coc with a purchase cap rate of 8.5% with one unit vacant.

ARV roughly 500k and it needs about 65k in work.

The problem: the property was built in 1800. It is in historic and requires special permitting for renovation. But otherwise Is In fair shape. These buildings built back then were pretty solid. 

Would you pass on the age of the home? I know homeowners insurance will be high. And it may steer away future buyers.

 Stay away from Blue states bro. Blue states are landlord kryptonite.

 as the saying goes... you pay to play!

Quote from @Patrick Drury:

@Brian Ellis
Seems like a good deal. Just factor in how much the permits will cost and if there will be any additional costs since you said it requires special permitting. I wouldn't be concerned by the age of the home. In Columbus and Cleveland, practically everything was built in 1920-1940 and the more historic stuff was built in the 1800s. If the numbers work go for it. 

 Appreciate your feedback! 

Quote from @Steve Vaughan:

@Brian Ellis  Sounds like a solid deal. The age is worthy of concern for sure.

Are the utilities separated? I passed on a professional office builidng this year because of that.   We all 'work it out' every month.  No thanks. 

My oldest building was a 1906 mixed-use.  The reason I bought it was because it had a nice TPO roof, newer sewer line and completely upgraded and separated electrical.    It also had electric baseboard heat, not an old octupus furnace or boiler.   I held it for 17 years and it was a great building.  The cast iron drain lines and galvanized plumbing started to go by 2020.

 Those are the big ones to me.  Roof, sewer, electrical, mechanical, foundation.  Keep us posted!

Always appreciate your feedback, Steve!

it has separate meters, which was a big concern for me. It was renovated back in 2000 I believe. So I was happy to know the electrical must’ve been part of that. Not that old tube and wire stuff!

These older homes have gas space heaters, it’s pretty typical for this area. But from what I’ve heard they are inexpensive to replace and heat the homes well.

numbers work for sure, it will cashflow handsomely. 

My location is very difficult to invest.

1. It is a tenant friendly state

2. It’s very expensive

3. Returns are minimal


so now that you guys know that, I have a question for the experienced investor. I’ve been doing this for 5 years now and have a total of 5 units. But scaling has been incredibly tough. Now I’m looking to get into commercial 5+ units. I feel it is a safer investment going into this volatile market. With rates increasing, but rent prices stabilized, I feel it is a better avenue to pursue.  

The deal in question;

5 unit 385k purchase price 

20% coc with a purchase cap rate of 8.5% with one unit vacant.

ARV roughly 500k and it needs about 65k in work.

The problem: the property was built in 1800. It is in historic and requires special permitting for renovation. But otherwise Is In fair shape. These buildings built back then were pretty solid. 

Would you pass on the age of the home? I know homeowners insurance will be high. And it may steer away future buyers.