All Forum Posts by: David Marshall

@Dan Weber it sounds like you have an opportunity to pass along the biggest utility expense. It has been the trend in Portland for awhile.

In a three unit in Harpswell, I added heat pumps in each unit. The tenants love the heat pumps. There is an old oil furnace for back up but it was not needed last winter. 

In a house in Auburn, I replaced the oil furnace with a natural gas furnace. Unitil brought gas from the street to the house for no charge. The high efficiency natural gas furnace was reasonable in price and connected into the existing duct system. 

If there is natural gas in the street, then I would check with the City of Portland to see if the street in on the street opening moratorium list. If it is on the list, then I would go with heat pumps. If the street can be opened, then I'd weigh the costs and benefits of either gas or heat pumps.  

The good thing about natural gas and electric is that the utilities are provided throughout the winter even if the tenant stops paying, unlike oil. 

Hi Raisa,

The cities you mentioned all have some multifamily properties that have good numbers for appreciation and cashflow. If your focus is primarily on strong cashflow, then consider Lewiston- Auburn and Sanford. 

@Michael Walker, if the wood is pressure treated the construction is solid without rot or corrosion, then have a coat of oil based stain applied to all of the wood. The stain will make it look much better and provide a longer life to the wood. Cabot makes a quality oil modified stain that sells for $45 per gallon at Lowe's and one coat of the stain repels water. I recently applied Cabot stain to an old pressure treated deck in Maine and it looks much better and one coat makes water bead on the surface when it rains.

If there is any wood rot or corrosion of the metal fasteners, then get three quotes from reputable carpenters for repair. If the carpenters indicate that full replacement is needed, then check with the permitting and code enforcement office to see if outdoor staircases are still allowed. Some municipalities in Maine no longer allow outdoor staircases, such as Portland.  

@Ellie Ryan It actually can be a good time to buy right now as many buyers have been scared away. Prior to coronvirus outbreak, most residential properties in Portland were receiving multiple offers. My wife and I bought a house in Portland a month ago. The MLS is the best source for sales data. My experience is that Zillow usually shows outdated comparable sales in this market and will mix different property types.

@Cody DeLong, the whole loan that I received was $85k, which covered the costs to purchase it originally. In order to get back the repair costs, I'll need to refinance it again or get a HELOC on it.

@Eddie Gonnella Thank you, this is the first property I've done a BRRRR with. The other properties I have I bought with livable conditions and improved over years.

Here are some details on the house:

4 bedrooms, 2 full bathrooms 

1856 SQ FT

The purchase and rental of this property is a personal deal and does not involve eXp Realty, LLC, which is the company that I am an independent contractor for real estate sales purposes.

Investment Info:

Single-family residence buy & hold investment in Auburn.

Purchase price: $80,250
Cash invested: $45,000

Completed a BRRRR and getting ready for the next one. Bought a single family bungalow from an auction website. Rehab included adding a full bathroom on the second floor, new kitchen base cabinets and sink, restored plaster walls, full interior paint job, repaired porches, new furnace, new flooring, hard wood floor restoration and electrical rewire. Rented it in January, 3.5 months after purchase. Refinanced it in February. Getting ready to repeat.

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

While I like the idea of doing a flip, I always want to hold onto properties after improvements are done. The BRRRR strategy has allowed me to flip it to myself and keep the cash flow. When I saw the bungalow on auction, I ran the numbers through the BP BRRRR Calculator and I saw a wide spread.

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

This was a purchase that I made from an auction website after looking at dozens of potential properties online. The purchase price was the minimum the bank would accept.

How did you finance this deal?

Cash and loans.

How did you add value to the deal?

Rehab included adding a full bathroom on the second floor, new kitchen base cabinets and sink, restored plaster walls, full interior paint job, repaired porches, new furnace, new flooring, hard wood floor restoration and electrical rewire.

What was the outcome?

Rented it 3.5 months after purchase in the middle of January. Refinanced it in February and got back $85,000. The property now cash flows at $765 monthly.

Lessons learned? Challenges?

The auction website would not allow interior viewings or inspections prior to closing. It was challenging to create a budget for the rehab without seeing the interior. The cost of the rehab exceeded the budget. The six month rule for the refi meant we could only get part of our investment back. The bonus is the cash flow better with a smaller loan amount. Also, there is potential for getting a line of credit.

Hi Emily,

Welcome to BP! The auction websites like Hubzu.com and Auction.com are a couple of options. Also, foreclosure.com is a paid service that has a free trial. HUDHomeStore.com is another place to look and offers are required to go through a real estate agent that is registered with HUD Home Store, like myself. There are other methods of finding foreclosures that can be done for free and online through some tedious research. Hope this helps you out. Feel free to PM me to discuss further.

Hi @Timothy Swenton, on Friday I filed the LLC formation paperwork after reviewing the form with my attorney. First, I asked the attorney for the form and confirmed the attorney was willing to review it. I filled it out and checked the box "Date of This Filing" under the section titled "Filing Date" and emailed it over. The attorney called me back and we talked about it. After updating the form based on attorney advice, I printed it, brought it to the post office with a check for the filing fee, and I mailed it to the secretary of state. There are a couple of options on the cover page for the formation paperwork to pay an extra fee to expedite the processing:

Expedited filing - 24 hour service ($50 additional filing fee per entity, per service)
Expedited filing - Immediate service ($100 additional filing fee per entity, per service)

I also sent a draft operating agreement to the attorney to review and I was told that I could send in the formation paperwork and file for an EIN while the formation paperwork was being reviewed. It sounds like you have other LLCs so you may be able to use the operating agreement from an existing LLC and modify it for your new LLC prior to sending it to your attorney. By having my attorney just review the paperwork and not file it, I was able to file faster and save on legal costs.