All Forum Posts by: Bobby Valcin

Investment Info:

Single-family residence buy & hold investment in Leesburg.

Purchase price: $59,900

My first BRRRR!

This is a 3/2 that was converted into a 4/2. It was purchased through a hard money lender for $59,900 with a rehab budgeted at $41,000. I had to put 10% down on the total amount, plus the closing costs and lender fees. About 20k total.

The house needed a new roof, kitchen, flooring, bathrooms, water heater, etc. After completing the roof, I ended up parting ways with the original contractor. To make a long story short they were very slow and came up with some rather mysterious change orders. Once I had the second contractor in place, things went much smoother.

There were two things that I didn't do a thorough check on that ended up being costly. The sewer lines and the electrical. I ended up paying about 5k extra for those repairs. Add that to the exorbitant charged that I had to pay the original contractor and the result is a BRRR......R. The "Repeat" may have to wait a while since I left all of the money in the deal and then some.

The good news is that I was able to find a tenant within two weeks of listing the house for rent and I have a renovated house that cash flows over $500. Over time, God willing, I will recoup those "education" costs. There is also an opportunity to subdivide the lot and build 3-4 additional homes that I hope to explore.

All-in-all, this has been a good experience for me.

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

I generally like to invest in properties that need a total gut job. There is something about the process of remodeling a home that I really enjoy.

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

I found this deal through a wholesaler. The deal had recently been reduced by 10k, which made it the right price point for me.

How did you finance this deal?

I used a hard money lender and paid 10% down on the purchase and rehab.

How did you add value to the deal?

I added an extra bedroom.

What was the outcome?

I didn't end up pulling out the amount invested during the refinancing like I planned, however, I did end up cash-flowing well.

Lessons learned? Challenges?

I need to be more thorough with my due diligence. The original contractor was definitely the most challenging part of this. I ended up paying them an extra 10k, and they took way too long to complete the roof replacement.

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

Lima One Capital, Movement Mortgage

@Jeffrey Townsend I’m currently using Tenant Cloud with a friend of mine that currently has 5 doors. I’ve also used Propertyware and Appfolio at my job. Tenant Cloud is not as robust, however, it should be more than sufficient for your needs right now, especially taking the cost into account.

Thanks, Laurence.

Thanks again, Stephen.

@Stephen Lee-Thomas that is very interesting. I will look into that and give it a shot.

Hello BP. I'm looking for a free or inexpensive option for doing basic property inspections. Something where a report can be created with notes and photos through an app, and preferable a desktop option as well. Similar to what you would find in property management software like Appfolio or Propertyware, but not tethered to those products. Most of the products I've found have been way more than what I actually need, and hence, very expensive.

@Peter T. I’m not so sure about that, but you may know something I don’t. Do you have some evidence to back that assertion?

@Bryan Creed I may be biased because I am a property manager myself, but it sounds like the management company is being thrown under the bus prematurely. That may be justified, however, I personally would withhold judgement until I got more information.

A tenant can enter a thousand service requests if they want to, but that doesn’t necessarily mean any of them are legitimate nor does it necessarily mean that the property manager is fault.

We recently had a tenant enter about 20 work orders in a two week period; 95% of them were either minor upgrade requests or legitimate issues that weren’t issues at the time of the move-in, funny enough, a running toilet was one of them. I had a conversation with the landlord about what was going on and he happily went with all of my suggestions without a problem.

If you’ve had a conversation with the management company and they simply botched everything up, that be one thing, but I haven’t seen enough evidence based on your post to say that is necessary the case.

Just my two cents.

@Michinori Kaneko at the end of the day, the terms are always negotiable. The amount of doors factors in, the age and location of the properties factors in, and so on and so forth. I don’t own the company I work for, but I would lean more towards an a la cart model personally. I’ve seen on company recently that charges a flat $90 a month with no other costs, not even for leasing. I think that is the direction things are heading in.

@Michinori Kaneko the answer to that question is...it depends. I’ve been doing property management for about 5 years and the general consensus seems to be 8%-12% in my area. However, as technology continues improve processes and lower cost I think we will see those percentage get lower as I’ve noticed with some of the responders to this thread.