All Forum Posts by: Douglas Mcqueen

Week 3 update to our Hampton Roads 8 Unit located in Norfolk Virginia

This week we had a tenant move out so we got to start fresh in another unit.  Move out inspection was at 2pm and we had the unit torn out and in the trailer by 5.

Unit 11: Cabinets are starting to go up and we got the bathroom floor tiled.  Found a great cabinet supplier with cabinets in stock and pre assembled, white shakers with good sliders and plywood construction for a price we couldn't match, even in a cheaper grade.  We loaded a 6x12 trailer full of them.

Hallways: started sanding and prepping for paint, then stairs will get all new treads and risers.

Unit 55: Not much happened in here this week, will get floors and cabinets next.

Unit 77:  Tennant moved out and we got it torn out.  New outlets and switches went in.  Unit completely re-piped, submeter installed and dry wall repaired.  Ceiling fans installed.  New Water heater is ready to be installed

Laundry Room: automatic door closer and keypad lock with auto lock function installed. Hose bib torn out and replaced, was not working previously, at some point the isolation valve in the wall was drywalled over.  Looks like the exterminator is doing a great job as we have found a ton of dead insects (roaches) but haven't found any live ones yet.

All in all a good week, we had all hands on deck and lots of work got done For more pictures and information follow along with us at www.facebook.com/BulMacPropert....

For crime mapping in norfolk I use https://www.crimemapping.com/m...

The city feeds them the data and will list reported crimes by address and incident type, gives you a better gauge on what’s going on. From the general area down to the property specific info over your determined length of time.

Would have to agree with Patti and Sean, South Norfolk has some beautiful properties and pockets of nice areas filled with good people, unfortunately it also has the opposite.   If your looking in that area I would also suggest as they have that you observe the property during the morning afternoon and evening during the week and weekends. 

@Ed BrancheauSo far really the only "hard spot" has been the polybutylene (Quest) piping.  We were not ready for it when we found it and although we knew we would have to do some plumbing (sub metering and repairs) we were not initially tracking a complete re-pipe.  Unfortunately that's where we are, day one the morning following closing we were poking around pulling off cabinets and had the shut off valve explode at the fitting, then another fitting blew so had to kill the water to the building for an hour or so while we got a temp repair in place.  That stuff is a ticking time bomb but at least we know now and shouldn't have to worry about plumbing headaches once we get it all done

We closed on an 8 unit building in the Hampton Roads region of Virginia on 19 Mar 2021, more specifically in the Ocean View section of Norfolk not far from Virginia Beach. the specifics of the property are as follows:

Address: 1600 Queens Land Ave. 

Unit Count: 8 

Unit break down: 2 BR, 1 BA

Unit SqFt: 650 

Build Date: 03/07/1985 

Original Sales Price: 50,000.00

Assessed Value: 477,300.00 

Strike Price: 500,000.00 

Contract Price: 481,000.00

Final Sales Price: 476,500.00

EST ARV: 750,000.00

Rehab budget: 60,000.00

Parcel size: 9,500 SqFt 

Contract Date: 02/12/2021 

Closed Date: 03/19/2021

Occupancy: 6 of 8 rented, 1 moving out within 30 days of close.

Lease Status: 5 of 6 residents on month to month, 1 resident under lease till Nov 2021

Current monthly rental income: 4,265.00

Projected Monthly income post stabilization: 7,200.00

Due Diligence Issues Found: Leaking roof over laundry room, Quest piping throughout, Parking lot in need of repair, lackluster accounting, old outdated leases, no real management present and a ton of deferred maintenance.

The process leading up to this point is detailed here: https://www.biggerpockets.com/...

I will document the process as best I can here and try to provide at least weekly updates.

Week 1:

We are in the building and tenants have been notified of the change of hands in management and ownership.  We have two vacant units with another one coming vacant soon and we have begun tear out.  Concurrently we have started working on the laundry room which is a disaster.  All the old cabinets, vanities, fixtures, flooring, polybutylene (quest) plumbing and appliances have been removed. 

Week 2:

All new toilets, vanities have been obtained.  Water meters have arrived to submeter all 8 units, 3600lbs of porcelain tile and ceiling fans are here as well.  Electrical in the vacant units (outlets, switches, ceiling fans, light fixtures, faceplates, gfi's) has been removed and replaced.  Laundry room has new electrical as well, lighting with motion switch new door and drywall repairs complete.  Subfloors have been screwed down to alleviate creeks and squeaks, kitchens and bathrooms have been prepped for tile.  Plumbing in the vacant units have been re-piped in PEX and sub meters are installed.  

@Adam Kan the Virginia Beach and Norfolk areas are great, as mentioned the market is tough right now, supply is down. But that being said there are still deals to be had.

Congrats!! Glad it all worked out, as best it could given the circumstance.

  If you haven’t already pick up a copy of Set For life, by Scott Trench.  It’s a quick easy read but is pretty profound.

@Delfino Garcia Thanks for reaching out, I believe my partner sent you a direct message, he is a wealth of knowledge!  Its easier than you think, I did a blog post a while back, this outlined my whole process from A-Z, its here https://www.biggerpockets.com/... .  

Investment Info:

Large multi-family (5+ units) buy & hold investment in Norfolk.

Purchase price: $476,500
Cash invested: $476,500

Contributors:
Neil Schoepp

Property consist of 8, 2 Bedroom, 1 Bathroom units situated in the Oceanview section of Norfolk Virginia. Seller reached out after a targeted direct mail campaign of Multi-Family units that fit our criteria in Norfolk and Surrounding Area's of Virginia Beach and Chesapeake. The Owner had purchased the property new in 1985 and held it, with little or no updates for 35 years, 6 of 8 units were occupied rents hadn't been raised in 10 years. We finalized the deal 1k under city assessment.

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

We target B&C class large multifamily properties and apply a BRRRR approach bringing them up to market and stabilizing the property before pulling out the initial investment and moving to the next.

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

We found the property through driving for dollars essentially, and reached out through direct mail as part of a larger direct mail campaign that was handled 100% in house. Negotiations were handled directly between us and the owner, our initial strike price was $500k, after touring the property owner disclosed he had another offer and his price in mind was $510k (High Anchor), we issued LOI at $465k. In response owner disclosed 2nd offer was 480k we countered at $481K.

How did you finance this deal?

Initially all cash as a negotiation tool, with financing after rehab as the goal

How did you add value to the deal?

All units will be rehabbed. We added Value to the negotiation by offering all cash, no repairs and a quick close.

What was the outcome?

Our offer of $481k was then bettered and they received a counter from the other party at $490k utilizing a line of credit. Owner notified us and at that point we issued an ultimatum and a contract, they had 24 hours to review, sign and except our offer of $481k or we would formally pull the offer. At hour 18 they returned the executed contract. We executed due diligence efficiently, ran into a few snags but worked them out quick, we then offered to close two weeks early for a $5k reduction.

Lessons learned? Challenges?

Money is not the only motivator, if you can relate to the owner and understand their motivation for selling you can make your offer more enticing without throwing money at it. In this instance we ultimately secured it $15k under the other offer on the table. Communication is key listen to what the other party is saying but also hear what they are telling you and use this during your negotiation. Have a solid team in place so when its time to move you can do so effectively and efficiently.

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

I have a real estate license however this was 100% off market. I work with two wonderful partners, we all have our area of expertise and area of responsibilities for deals in various stages, we hold each other accountable and we communicate DAILY. For closing attorney we used Alperin Law in VA beach, AshLee is the POC and they were amazing as always, they are top notch professionals and they have performed on 6 deals for me. For insurance Josh Dress at Goosehead is the best in the business.