All Forum Posts by: Bruce Jones

Hey Brian - what's up buddy. Welcome to BP - Good group. 

No dog in this fight above - lender requirements may vary loan type/lender company but as a local Realtor, I wanted to throw a contact out there as far as structural engineers are concerned, I've referred Zach Shepherd (757-434-0020) numerous times and my clients have always had great things to say. 

Quote from @Claudio Valdivia:

Nice work Bruce!  What did you roll the proceeds of this sale into? 

Thank you!! With so much uncertainty in the market I kept around $100,000 and put aside and then I used the rest on a purchase of another similar home in Bishopgate. Neighborhood in general is selling for $850,000+ and I was able to negotiate a great deal at $730,000. One of my neighbors recently just sold at $904,000 so hoping to make the changes necessary and be sitting on a property worth around $900,000-925,000. 

Quote from @Heather Brown:

@Bruce Jones Thanks for sharing your great deal. Always interesting to see specific real life examples. Curious about some of the property details as this is pretty high dollar for a townhome. How many beds/baths? SqFt? General location? I own a townhome in Chesapeake so interested for comparison. 

Hey Heather - The townhouse I sold was near the Chesapeake Bay, within walking distance. I know it is the oldest adage in real estate but it really is location, location, location. You'll want to compare your townhouse amongst others in your neighborhood. There's a lot of variables attached to price; age of roof, HVAC, windows, upgrades, general square feet, end unit etc. Then there's factors such as absorption rates / DOM in your neighborhood. If every agent is selling a house in your neighborhood in 3 days then they've probably long been under pricing homes there and your neighborhood/community is due for a large jump in price. If the average market time in your neighborhood is 4x longer then whatever the average market time is of the entire city/MLS then they've probably already experienced a large jump in the last 6 months or so and are probably struggling to find they're new place amongst competing neighborhoods.

In short - there's homes on Bay Island that are 1,500 square foot ranches that could bring in over 1 million dollars and then there's 1,500 square foot ranches in Huntersville, Norfolk that couldn't break $50,000. Your neighborhood or community largely decides the starting point and then you are making adjustments to fine tune specifically where you should be. 

If you have any questions about your specific neighborhood I'm happy to help you out, you can give me a call or send me an email. I'm pretty easy to find online. 

Investment Info:

Townhouse fix & flip investment.

Purchase price: $270,000
Cash invested: $30,000
Sale price: $465,000

Lived there for 5 years while renting the first floor for $800 a month to a buddy and then later on a family member. Purchased via owner financing with a 5 year balloon payment. Sold for $465,000 but as a Realtor chose to run no commission and sold to someone in the neighborhood who also purchased w/o representation so the sales price was closer to $492,900 which would have been a record sales price. In fact I think the $465,000 was a record sales price in the neighborhood at the time.

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

It was an opportunity for my seller. They didn't need the cash and the house needed a lot of work so owner financing matched up well with both our needs. Gave me an opportunity earlier in my career to jump in and own some real estate. My background in construction allowed me to do all the work myself except the purchase of a new HVAC in 2021.

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

Clients of mine - I have sold numerous homes for them. They were liquidating a lot of their real estate holdings. This was the only one that really need to be gutted and they lived hours away.

How did you finance this deal?

Owner financing with a 5 year balloon payment.

How did you add value to the deal?

Gutted each floor. Did the remodel as cheap as I could but still quality work. That meant purchasing floors off craigslist. Tile on the first floor I purchased for a total of $250. Flooring on the 2nd and 3rd floor I purchased from a wholesaler for $1,000. The entire first floor cost me around $1,000. The entire second floor ran me around $2,500 - largely because I chose to do the MDF ceiling, 3rd floor ran me around $1,500. Additional costs $6,000 roof, $9,500 HVAC, $5,000 back/front, $1,000 WH

What was the outcome?

By the time I sold - I owed $185,000 on the property. Sold for $465,000 with zero commissions. I was very pleased with it. Especially because during the 5-6 years I was there I was charging $900 a month for a bedroom on the first floor which brought in an additional $50,000-60,000.

Lessons learned? Challenges?

Wish I had the property better suited to sell since it was a personal home which meant as I was moving into my new home I was scrambling last minute a lot that last month with little projects.

Investment Info:

Townhouse fix & flip investment.

Purchase price: $270,000
Cash invested: $30,000
Sale price: $465,000

Second investment property. Lived there for 5 years while renting the first floor for $800 a month to a buddy and then later on a family member. Purchased via owner financing with a 5 year balloon payment. Sold for $465,000 but as a Realtor chose to run no commission and sold to someone in the neighborhood who also purchased w/o representation so the sales price was closer to $492,900 which would have been a record sales price. In fact I think the $465,000 was a record sales price in the neighborhood at the time.

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

It was an opportunity for my seller. They didn't need the cash and the house needed a lot of work so owner financing matched up well with both our needs. Gave me an opportunity earlier in my career to jump in and own some real estate. My background in construction allowed me to do all the work myself except the purchase of a new HVAC in 2021.

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

Clients of mine - I have sold numerous homes for them. They were liquidating a lot of their real estate holdings. This was the only one that really need to be gutted and they lived hours away.

How did you finance this deal?

Owner financing with a 5 year balloon payment.

How did you add value to the deal?

Gutted each floor. Did the remodel as cheap as I could but still quality work. That meant purchasing floors off craigslist. Tile on the first floor I purchased for a total of $250. Flooring on the 2nd and 3rd floor I purchased from a wholesaler for $1,000. The entire first floor cost me around $1,000. The entire second floor ran me around $2,500 - largely because I chose to do the MDF ceiling, 3rd floor ran me around $1,500. Additional costs $6,000 roof, $9,500 HVAC, $5,000 back/front, $1,000 WH

What was the outcome?

By the time I sold - I owed $185,000 on the property. Sold for $465,000 with zero commissions. I was very pleased with it. Especially because during the 5-6 years I was there I was charging $900 a month for a bedroom on the first floor which brought in an additional $50,000-60,000.

Lessons learned? Challenges?

Wish I had the property better suited to sell since it was a personal home which meant as I was moving into my new home I was scrambling last minute a lot that last month with little projects.

Quote from @Teddi Tanitsky:

Thanks all! I really appreciate the responses, this has been super helpful I will likely reach out as I make progress and future questions come up. Will definitely continue researching and make sure I talk to someone with the city before committing to anything.

I'm going to do some research into the Norfolk area as it sounds like it could be a good option. I'm relatively new to Virginia and I've never even been to that area so I I have a lot to learn (but that's not necessarily a bad thing).

Just stay West/North Norfolk and avoid a couple of especially low spots. (I know all of Norfolk is low) but if you're buying near Ghent/Colonial Place/Larchmont/Cromwell Farms/Lochhaven/Ocean View, you're going to be in good shape long term. We're about to sell our place in Virginia Beach and we're looking specifically in Lochhaven/Larchmont. Great areas. (Lochhaven probably less for short term rentals as far as price point but can find properties nearby)

Quote from @Bobby Feinman:

Norfolk is easier to do STR properties than VA Beach. I have several clients that have invested in the Ocean View area of Norfok. May want to check that out as well.

Also, monthly furnished rentals in Norfolk and Portsmouth is very successful. People coming in for months at a time to work at the naval hospital, naval shipyard, port, military base, etc. May want to look into that as well.

Bobby

Bobby’s Correct - I don’t know of any locations within Norfolk that limit STR’s barring HOA’s or Condominium Associations etc. where it is explicit within the deed restrictions/covenants. The rumor I’ve heard is that is because Norfolk has yet to vote on it and that could change but they’ll probably have a similar grandfather system that Virginia Beach has in place for people that were already operating STR’s so that’s a really interesting option because I do think Norfolk has a lot of growing areas that have been neglected for far too long. 

Realtor here - if you're in a STR approved area, it typically is as simple as application gets approval. Virginia Beach just doesn't allow many locations to be under that STR approved area.

Also make sure you have no deed restrictions if you're part of a HOA community / condominium etc.

@Ashish Acharya I hear you. I probably didn't ask the question correctly. Basically would the clock for capital gains begin when I purchased via owner financing through a land contract deal or did the capital gains clock begin when we refinanced as a simple fee transaction in 2021.