All Forum Posts by: David Collier Jr

@Fred Cannon, I like the idea of having a clause in the lease touching on the event of damage/uninhabitable premises. Going to add to my leases. How did you handle moving the tenant out in regards to time and potential assistance with the cost of moving etc if any was offered? 

If purchasing in S FL take into account roof age and avoid flat roofs when possible. Insurance market is currently a mess down here. Carriers not writing, higher requirements higher rates. Get a wind mit and 4 point inspection and send it over to an insurance broker ASAP. The numbers can throw the deal. I pay over $4k per duplex. 

I used PenFed on a duplex I had as a primary. Ok rates. They order an in person appraisal which you pay for. 

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Pompano Beach.

Purchase price: $315,000
Cash invested: $40,000

Buy and hold duplex in up and coming area. Forced appreciation and room to drastically increase rents.

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

The duplex shared a driveway with one I currently own. I now own two large lots side by side. Each duplex is the same build so I am very familiar with the structure and layout.

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

When I was doing the inspections on my first duplex I told the property manager that I was his buyer for the one next door. It took two years of bugging he and the owner but she finally agreed to sell.

How did you finance this deal?

3.5% FHA loan; personal cash for down payment and rehab.

How did you add value to the deal?

Currently updating the units and property. Adding central AC, impact windows, floors, landscaping, etc.

What was the outcome?

Should cash flow around $1250 after primary res seasoned, tenants in place and REFI.

Lessons learned? Challenges?

Never give up on reminding an owner you are willing to purchase their property. Spend the money to get things up to date such as central AC versus window shakers. If the property is buy and hold the good upgrades will mean less repair and maintenance in the future.

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

Off market deal. I am also a licensed RE agent however there was no commission on my side.

Hey Connor, I've done two FHA duplex house hacks. You assume and have to honor whatever lease is in place. FHA will require you to take occupancy within 59 days. So you can do one of two thing if there is a long term lease in place.

Find a property with a lease coming up within a 3-5 months of contract date. The closing process with FHA will buy you 60 days so by the time you close, you will be within the 59 day requirement and able to provide the current tenant a notice of non renewal

Ask the owner to renegotiate the current lease with the tenant. Unlikely as you could walk but you can get creative ie increase purchase price and or deposit to allow the owner to give the current tenant “cash for keys.” 

I also would be surprised if you were able to cash flow as a house hack unless there are 3 or more units. What owner occ will do is dramatically lower your cost of living especially if you are currently renting as whatever your difference in monthly note is at least you are applying it to equity build and not rent. 

Upgrade the units and increase the rents. That will close the gap on the mortgage payment difference. At this point my first property almost pays for both after a remodel and rent increases. 

Hope that helps. 

Its not really a mobile home community type of area. There are a few communities. Many of them would be considered D class. The others are more retirement 55+ and C to B. Lived here 36 years. 

Hey Ben, welcome! Im in Pompano Beach just N of Fort Lauderdale. I currently own two MF properties and also actively buy/sell RE as a licensed agent (for friends and myself not as a profession). I think you should first narrow down your criteria i.e. price point and area. Price point will really dictate your target area. For example going N of Broward Blvd east of 95 will mean D class where as S of Broward Blvd is more C+/B. 

The market is on fire down here so finding a single family BRRR is going to be tough unless it is off market. BRRR is difficult here as prices are being pushed higher with low inventory. You'll really need to find an off market deal at the moment for the best return.

Same goes for Multifamily. Unless you are buying cash many deals simply do not cash flow. The deal I just purchased was off market and original owner so the price was below market. Most listings on the MLS right now simply do not make much sense financed.

Again, figure out your price point and that will dictate the target area. Hope that helps. 

In my opinion as long as you don't have delinquent tenants currently occupying the property and the deal makes sense in regards to your numbers who cares what the market is doing if its a long term hold. 

I think the safest play is the C to B markets as in a recession like economy, A tenants will fall to B and B will fall to C. That way you still get quality tenants that will pay their rents. C tenants generally won't want to live in D properties so they'll pay rent and D tenants generally stay in D areas and are also more likely to default on rent unless you go Section 8. 

I am closing on a duplex next week. Off market deal on a property I have been bugging the owner to sell to me for 2 years. C+ up and coming market in Broward. Good hard working tenants that have stable employment. i wouldn't get into a deal where the tenants are in a vulnerable industry unless their leases were coming up soon and I could non renew.  

There are opportunities even in "todays market." You just need to utilize different deal finding strategies, many of which are talked about on BP. You're not going to be able to sit and wait for your property to be listed in my opinion. Remember, there are people closing on your ideal deal every single day in the tr-county area. Most of which are probably not listed on MLS.

It is very difficult to find the deals you are looking for listed on the MLS. If you come across one you need to be prepared to make an offer site unseen within a short time of it listing and you getting the alert in your inbox. Check those emails immediately if MLS is going to be your deal finding strategy. I made a site unseen full price offer on my first duplex in Broward within 20 mins of list as I knew they listed at a price to get rid of the asset (ending up being due to divorce).

The second I am under contract on (next door to mine) was an off mkt deal. I told the property manager the day I had the inspections on mine that I was the buyer the the one next door. For two years I mailed the owner letters and kept in touch with the property manager to express my interest. I finally got the call to buy. The owner is ready to retire and wants to liquidate. 

Id say do what you can to find those deals. Right now there may be long time owners looking to unload and retire (10,000 people a day turning 65) especially if they have been having rent payment issues the last few months. Drive your target areas and mail letters. You need to reduce your "net" to a couple of target areas. 

In reference to a Realtor, I'm sure your friend is a nice person and may be knowledge in SF but that doesnt translate into MF. It is rare to find a Realtor that understands what a MF investor needs for a deal to make sense. They understand comps. Teach him something basic like the 1% rule etc. 

Remember you can also make offers on anything he's sending you at the numbers that make sense to you. Worst they can say is "no."