All Forum Posts by: Sara Frank

Welcome to BP! You've found a great community. 

Canton is a great neighborhood because its equidistant between Johns Hopkins Main Campus and Bayview Campus. Federal Hill/Ridgelys Delight is good for students/nurses at University of Maryland Medical Center. 

Quote from @Pamela Gordon:

@Sara Frank that is great. One of the things I love about RE is that it can be so creative and there is always something new to learn. I am familiar with an FHA loan, but wasn't aware of FHA 203K loan. So, glad we have a platform like BP to share our knowledge and bounce ideas off of one another.

 Thank you! I agree 100%. The 203k is definitely a bear but it can be a great tool! 

Quote from @Joshua Janus:

This is awesome! Congrats on getting it done @23. How did the renovation process go? So far I have only dealt with turnkey or little rehab properties. 

Thank you! It was definitely rough especially since I was managing it from ~2 hours away. I was lucky to have friends in the area who would check in for me. The hardest part was definitely staying on schedule with the supply chain shortages. Luckily with the 203k you're able to pay for some stuff out of pocket and be reimbursed by the contractor, so that's what I did to make sure I got appliances in time. 

Something I want to add on here to the lessons learned. I don't think from a traditional 'BRRRR' perspective it was wise of me to add a second bathroom upstairs. I don't think its necessary if I were to turn around and sell the property. However, I wouldn't be able to charge the rent I do upstairs if that room didn't have its own bathroom. So from a cash flow perspective, it makes sense. The moral of the story being there is no "one way" to make money in a deal, and 'mistakes' for one strategy might be beneficial if you take a step back and adjust in a different direction.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $250,000
Cash invested: $12,000

Bought this property using an FHA 203k loan. Using a combination of seller credits and FHA financing I was able to bring only $12,000 of my own money to closing on a 325k loan.

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

I wanted to reduce my living expenses as much as possible and also bring as little money as possible to close (as one does when they are in their early 20's!)

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

I found this deal on the MLS via my agent. We negotiated the purchase price in exchange for a full 6% subsidy from the seller to cover closing costs.

How did you finance this deal?

Using an FHA 203k renovation loan.

How did you add value to the deal?

At the time of purchase it was a 2 bed, 1.5 bath row-home. I put about 70k into renovating it, adding two bathrooms and creating a studio apartment in the basement to rent on airbnb. After renovation it is a 3 bed 3 bath home. ARV is currently sitting in the high 300's. Phase II of the reno will be this summer when I add a roof deck and finish out the kitchen. ARV after phase II

What was the outcome?

PITI (including PMI) is $2200, utilities are $300 for a total monthly cost of $2500. I rent the basement on airbnb for around $1700-2200/month and rent the second bedroom upstairs for $700/month so my total out of pocket cost to live there is. between $0-300/month. I plan to refinance at the end of the summer to remove the PMI.

Lessons learned? Challenges?

This house was in decent condition when I bought it and in a great neighborhood. To unlock the full power of the 203k I would have found a crappier house. I think at the time I was nervous about doing a total gut rehab but now that I have this deal under my belt I would go for a nastier place so I can add maximum value and then pull my money back out at refi.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Chris Loughlin at First Home Mortgage was a great resource to me throughout the whole process. I also used Bill Evans as my 203k consultant and would recommend him.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $250,000
Cash invested: $12,000

Bought this property using an FHA 203k loan. Using a combination of seller credits and FHA financing I was able to bring only $12,000 of my own money to closing. At the time of purchase it was a 2 bed, 1.5 bath row-home. I put about 70k into renovating it, adding two bathrooms and creating a studio apartment in the basement to rent on airbnb. After renovation it is a 3 bed 3 bath home.

ARV is currently sitting in the high 300's.

Phase II of the reno will be this summer when I add a roof deck and finish out the kitchen. ARV after phase II will sit in the low 400's.

PITI (including PMI) is $2200, utilities are $300 for a total monthly cost of $2500. I rent the basement on airbnb for around $1700-2200/month and rent the second bedroom upstairs for $700/month so my total out of pocket cost to live there is. between $0-300/month. I plan to refinance at the end of the summer to remove the PMI.

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

I wanted to reduce my living expenses as much as possible and also bring as little money as possible to close.

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

I found this deal on the MLS via my agent. We negotiated the purchase price in exchange for a full 6% subsidy from the seller to cover closing costs.

How did you finance this deal?

Using an FHA 203k renovation loan.

How did you add value to the deal?

By adding 2 additional bathrooms, upgrading the kitchen and appliances, and creating an airbnb suite in the basement.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Chris Loughlin at First Home Mortgage was a great resource to me throughout the whole process. I also used Bill Evans as my 203k consultant and would recommend him.

Once again I agree with @Ozzy Sirimsi - Baltimore can be a great market especially if you have a good team on the ground, but investing here just to get those cheap price points is generally a bad idea. IMO, the power of owning rentals in Baltimore is the hospitals. Theres no guesswork on employment data like there is for other states. There is always a demand for healthcare workers and therefore always a demand for housing those workers. Invest near a hospital like Hopkins or Maryland, find a good property manager and you're golden. Hope this helps. 

Quote from @Roberto Hernandez:

I'm trying to build a network, find connections, and mentors in the DMV area to begin my real estate journey.

A little backstory, I'm active duty stationed in the DMV area (Bethesda), living in Bowie, MD. I had the mindset that I needed to be educated before I jump into real estate and that the DMV area was too expensive for a beginner but that mindset started to become an excuse. I connected with a friend in NC whose building a large real estate portfolio, and he had me start driving for dollars. He wanted me to learn my area, and start developing an eye for off-market distressed homes so I could wholesale to build financial capital to invest myself.

I have a 9-year goal, to retire from the military with enough of a real estate portfolio that I wouldn't need to do a day over 20 years. I understand being full-time military and building a real estate portfolio can be difficult but again that's an excuse. It has been done before so I intend to do just that, serve my country and build financial freedom.

I cannot build this on my own, if your in the DMV area I would love to connect, ask questions, and build meaningful relationships

 Hi Roberto, congrats on getting into real estate and for doing the work to build your network. The rest will follow! This has probably been iterated already, but definitely consider joining your local MAREIA, there are tons of free or affordable events with local investors and soon-to-be investors. https://www.mareia.com

Happy to connect with you as well, I'm a Baltimore resident and local investor. 

Goodluck! 

Hi Jacqueline, my apologies about your tough situation and I love that you're thinking forward for you and your daughters future. Just the fact that you found this platform and are thinking about these hard questions means you're on a great path. 

My first question would be about your home in Baltimore. How long have you owned it, and do you think you have enough equity in it to refinance and pull some money out instead of selling it? Additionally, do you have any idea what the land might be worth in Avon Park?