All Forum Posts by: Ben Mell

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $107,000 (Band Owned)
Cash invested: $90,000

I purchased a single-family home (one side of a twin) in Bridgeport in 2014 with the intent to live in it, then rent it out when I had saved up enough for a second home. Well, a $65k rehab budget ballooned into a $90-93k "budget" and we ended up staying a little longer than expected.

We finally moved and rented it out just 2 months ago (2020).

What made you interested in investing in this type of deal?

For my area outside Philadelphia, this town had a great school district with lower home prices when compared with most towns in the area. The location is connected to lots of major highways without being congested or noisy. Rental rates looked like they would make sense for a buy and hold. The property was bank-owned, which made it spooky as a first deal, but it worked out.

How did you find this deal and how did you negotiate it?

Just poking around online. The bank wasn't interested in negotiating.

How did you finance this deal?

We used a renovation mortgage.

How did you add value to the deal?

This is my first rental property so I didn't have much value to add beyond funding and managing the project based on what I have learned.

What was the outcome?

New wiring and plumbing, bathrooms, and kitchen were all part of the plan but we also ended up restudding almost the entire thing because it was in such bad shape. A better house in the end but a bit more costly up front.

Lessons learned? Challenges?

Have your contractor itemize as much as possible. I assumed more was included but it ended up being change-ordered in as the project was underway.

Thanks for the encouraging note, David! I've made 6 or 7 offers at this point, 3 were accepted and then went south during inspections. I've only looked at the analyzer superficially. I'll dig into it more later.

I'm starting to think I should start with something smaller so that my debt to income isn't toast too soon, anyway.

Hi Colleen,

Thanks for the insight! It looks like the expense is more than I'm qualified to take on at this point. Back to looking for another property.

I am under contract to purchase a 4-bedroom SFH that includes a Carriage House and a 1000 square foot Garage outside Philadelphia. The inspection just turned up a lot more work than anticipated: between $75 and $100k. Because it is bank owned and winterized, we cannot turn on the water. Concerns are: cracks in foundation, hot water (radiant) heat is suspect, electrical in each portion of the property needs to be redone, plaster ceiling in carriage house is crumbling at its center suggesting water damage to the roof. The $100k estimate was given to me by a contractor I worked for when I was younger that recently retired into consulting. He said it would ensure the work can be done and I can be protected.

Expense Numbers:

$184,000 Purchase price, comps for only a 4 BR SFH excluding carriage house and garage are $245,000

$140,000 Repairs/improvements, including addition of a 2nd floor to the carriage house. My family would live here.

$324,000 Total Cost

Holding Numbers:

$2,100 Principle Interest Taxes Insurance

$1,900 Rent from 4-bedroom SFH (with 7% vacancy this drops to $1,767)

$1,300 Rent from myself in renovated 2-bedroom Carriage house

$967 Profit with 7% vacancy on the 4-bedroom rental

The garage could potentially rent for $300-800, but I'm not factoring it in because I'm not sure of how legal that is.

This is my first purchase. I'm a little nervous to spend this much money even though I think the numbers make sense. Any insights?

Thanks,

Ben