All Forum Posts by: Brian Gallagher

It’s a huge side by side duplex on the west side that has almost 1400 SF per side, so the ARV is a lot higher than typical duplexes in the area. It’s extremely dated with a bad roof and choppy layout, but is otherwise in good shape. There are not a ton of comps, but most of the comps I do have went between 210 and 250 for units that were in turn key condition with higher end finishes. Also, my numbers still work if I don’t quite hit 225. I guess the primary thing that this partner would bring to the table is access to capital for the future. Right now, I’m thinking I may just pass on using a partner on this deal because it’s a buy and hold play. I would like to try to do a flip after this property is wrapped up and am thinking that might be a better investment to go in on with a partner.

Thanks Todd, my goal right now is to buy 10 properties over the next 10 years, targeting mostly multi family homes in middle and upper class neighborhoods in my area. I’m 50/50 on whether I would want to use a partner. What would the basic structure of a deal for this type of property look like?

I am currently evaluating a duplex purchase in the Cleveland area. I feel pretty confident in my evaluation of the property, and think it would be a good candidate for BRRRR: Purchase Price: $130k Rehab Cost:$47k ARV: $225k Monthly Rental Income:$2400 I am currently planning on buying the property with a conventional mortgage and financing the rehab myself. After completion of the rehab, I would not have any cash outside of emergency reserves. After a year of holding the property I would refinance, collect around 40-50k, and buy another one. Over the past month, I have had a friend approach me about going in with me on a property. I have not yet put a proposal together, because frankly I’m not sure what a proposal that would be beneficial to both of us would look like. I would manage/perform all of the rehab, along with managing the tenants. If I am able to do the work with my own cash, am I gaining anything with a partnership, or am I better off doing the deal on my own?

Hey James, the property that I missed out on at was on Winchester in Lakewood, i had just gotten an agent and realized too late that it was going to auction (ended up going for 60k!). The other property had a lot more repairs than I originally thought so the numbers no longer seem to work. I sold a duplex in western Lakewood recently near Clifton, so I am very familiar what houses are going for on that side of town (It needed some big ticket repairs and I bought it when the market was low so I decided to cash out on it). I am most interested in multi family houses on the east side of Lakewood or Detroit Shoreway because those seem to be more up-and coming areas and I can still buy houses that need work for relatively cheap. I would really like to do some sfh flips eventually, but I like the idea of starting with a multi family because I would like to start off with a good cash flow base.

Thanks again for the advice, unfortunately someone beat me to an offer on the house. I guess I need to act a little quicker next time!

Thanks for the advice James! I think that is the direction that my wife and I were leaning. The neighborhood is a little rough but there are new homes and townhomes going in around it priced over 250k. There is also a police station two streets over which makes me feel a little better about the area. Any advice on what level of finishes to use? My current plan is to go “Home Depot fancy”- stock cabinets, cheap granite counters, the cheapest stainless steel appliances I can get at a scratch and dent, vinyl plank flooring (other option is to refinish the hardwoods),and wood look porcelain tile in the baths. There are a lot of young professionals moving into the newer condos and sfhs in the area, and my home would be to attract the lower end of that crowd. My experience with my previous rental in a slightly better area is that the under 30 crowd will pay a pretty good premium for what they consider high end finishes. The difficulty is that most of the rental comps in the area are pretty basic looking or beat up (although a lot of them are starting to increase rent over the $800 mark).

Good Evening,

I recently sold my first property and am trying to rough out some numbers to execute a BRRR strategy with the proceeds. At this time, I am looking at two different multi-family properties in the Cleveland area and would appreciate any advice I can get.

Property 1:

Side-by-side duplex, 1,300 SF units w/ 3 beds, 1.5 baths each. Decent bones but needs new A/C for each side, new roof in the next 5 years, and upgraded finishes. I will do about half the work and hire out the rest. B class area, family-friendly neighborhood.

Purch Price: $140,000

Est repair costs: $45,000

ARV: $215,000

Est Rent: $2,300/mo

Est. Cash flow: $1,275/mo

Property 2:

Traditional up-down duplex, 1,100 SF units w/ 3 beds 1 bath each. Someone attempted a rehab but ran out of money halfway through. Roof/siding/windows have been replaced, just needs a new driveway and finish the kitchens and baths. Again, I will perform a lot of the work myself. C-class area, but in a trendy, up-and-coming neighborhood.

Purch. Price: $72,000

Est. Repair Costs: $40,000

ARV: $150,000 (with a lot of opportunity to appreciate down the road)

Est: Rent: $1,700/mo

Est. Cash Flow: $900/mo

In either scenario, I am planning on using conventional financing with 20% down and fund the repairs w/ cash. My numbers are pretty tight for Property 1, and it is possible I would need to use a HELOC if I have any overruns. My cash flow numbers only include mortgage, insurance, taxes, routine repairs, and vacancies as expenses (I will manage and maintain the property myself). I plan on holding either property for about a year after rehab to build up some cash before refinancing. Just wanted to get some input on whether I am on the right track with my numbers, and get some opinions on which would be a better deal. My analysis says that Property 1 has better cash flow, but Property 2 has more potential.

Thanks,

Brian

Thank you Ryan!

Hello BP Community! My name is Brian and I was born and raised in Cleveland, Ohio. I work in the construction management industry and have always had a passion for real estate and re-modeling. My wife and I currently live on the west side, and we owned and rented a duplex in Lakewood over the last 4 years. We did not have any idea what we were doing when we purchased it, but after a lot of sweat equity and significant appreciation, we ended up selling the home in order to free up some cash. After doing a lot of reading/listening to podcasts, I would like to try to execute a BRRR strategy in order to hopefully turn our sale proceeds into multiple properties.

I came to BP in hopes of furthering my real estate education and networking with other investors. Any advice I can get would be greatly appreciated.

Thank you!