All Forum Posts by: Scott P.

I've made a few calls, the owner said it might need 6 more years. He did, however mention that there was walnut, red and white oak and hard maple. Size would be the issue.

Just got my first property under contract.  ...  It's south of Grand Rapids, MI, and near Caledonia, MI.  The property is in Middleville, MI.

There is an efficiency apartment on the property, and a house with a 1 bedroom on one side, and a full 3 bedroom house.  Beautiful kept up house, but owner needs to sell.  

40 acres, 30 of which are wooded.  I don't know what you could sell the lumber/timber for?  Or how one would work on getting a road and developing that 30 acre.  

efficiency rents I estimate at $350

1br I estimate at $700

3/1 house, I would estimate at $1800 due to land, view and location.

There is a Verizon tower lease for $825/month with a 2% increase annually. 

However, the entire property is either wood or propane heat and I'm not currently sure how the fuel is distributed.

With the addition of an egress window, bathroom and kitchen, there is also room in the basement that could be converted into a 4th unit as a one bedroom.

Contract is for $600,000

I am consulting bank about financing.  

I am consulting people about the value of the timber.  And I will be consulting local farmers about clearing the back 30 acres to farm.  Both of these options would help to make the property cashflow better.  

Development might also be an option, but I'm not sure how to start that process.

I would love to partner or wholesale this property for 10%, as it has lots of potential.  Let me know what you think.

Any advice would be appreciated.

Can't post a google link to maps.  Street view was updated in 2015.  Cell tower was already there.

42.7141959,-85.5395366

Caleb, I would be interested in hearing what you have to say. But, as someone new here, I do not have access to PM you at the moment.

I can double check the appraisal again. Why would it be a better idea to pay the heloc more slowly with cashflow rather than refi and pay off the risk more quickly? I understand I would be eating up more of the equity in the apartments but it would reduce my cash outlay to about $60,000 thus far.

I have commuted to the property...that being said, my roofer is a real estate investor (with 40 properties) and he said he didn't have a property this nice. I'm not going to get emotional with this, however, even though we are excited about our first purchase. I'm not sure how to calculate the payback. Do I use the money invested to perform the deferred maintenance, or do I add the down payment? After paying for the roof and landscaping out of pocket, I have planned for 12,000 replacement reserves for catastrophic replacements, as well as 10,000 for expenses and repairs (this after the 10% management company fee). The ARV is calculated from the after roof repair value from the appraisal. The loan appraisal was reduced to $620,000 due to the needed roof. NOI I'm currently calculating at $52,000 Commercial loan is at 4.9%, amortized over 20 with a balloon at 5. Calling different banks in the area, this appears normal (for someone with my experience). I'm not experience enough to know the average cap rate for my area in 5+ units. I ran my numbers, however, on a 9% and calculated a 10.6%.

No one wants to talk to a new guy?

Are you per chance part of the Meetup, MI epic REI. They network and will be playing cash flow on July 1. We did this a bit backwards. I bought the property before I had networked a bit. We are starting to network more now.

Hello all, my wife and I are south of Grand Rapids, Michigan.  And we just purchased our first deal at the end of March.  While I have been introducing students to Rich Dad Poor Dad for years, we never pulled the trigger and bought our own property.  We decided to start small with a 16 unit multi-family and while it's a ton of work at the beginning we are enjoying the prospects of having the property in top shape.

This is my first purchase.  It's awesome and has been a ton of work and investment so far.  So here is the question... Should I refi in 4 months (or pull out the rest of the equity with a second) to pay off most or all of my heloc?

Here is the property background

Property - pair of 8 unit brick buildings (16 units total)  Purchase price $490,000

14 two bedroom, 2 one bedroom, one coin-op washer and dryer per building

Needed - Roof (and 92 sheets of plywood) as well as properly running ducts from the stove to prevent premature failure of roof again ($40,000)

Needed - Landscaping to properly grade around buildings to prevent future water damage and to remove two unsightly mounds of dirt left by previous owner (to come into compliance with the city) ($3700)

Bummer - washing machine was working great, and the bearing went out.  Bought a new break too...learned how to fix it myself ($200)

Painting three newly empty units (bought full, but... half the leases were up at purchase)

Management company 10% (glad to have them, as this is my first purchase)

Putting in a sidewalk, as the previous owner ripped out the old one to the laundry ($400)

That being said..... I've had the property now for only 2.5 months. What a great, exciting learning curve. I financed 75% with a commercial loan, pulled $130,000 from my personal home HELOC and paid cash from savings (and some ROTH money that was in for more than 5 years). The HELOC and personal cash (as well as currently collected rents) were used to pay the downpayment and the needed repairs.

ARV - $680,000

Listening to one of the BP podcasts while painting and digging the sidewalk today, the mentioned something about people new to property investing being sorry that they didn't buy with an equity position the first time. That being said, though I've used nearly every last scrap of easily accessible savings to pull this off, I believe I bought well. However, I did create a $130,000 HELOC...so does that mean that I didn't buy well? And, I was planning on either a refi or second mortgage to that my primary residence isn't leveraged. This would make the deal nearly zero dollars down (after the first 6 months). That sounds good in principal, but is there any reason not roll the HELOC?