All Forum Posts by: James Back

I bought a four unit property near Oh in June 2023 and inherited 4 tenants.  One tenant in particular has been late with rent every month since we have bought the property. They always have a story on why its late, and always promises to deliver the rent a certain date then tells me they needs a few more days.  They are typically 2-3 weeks late each month.  They are $300 below market rent, i just raised there rent $100 starting January 1st, but he has yet to make a payment including the increase.  Also, they have roaches and will not take the proper steps to help with getting rid of them.  We have had a vacant unit next door since the end of November because we don't want to move a new tenant in until the roaches are gone.  I even offered to rent them a POD to place out back to move all of there stuff in temporarily until we could rid the place of roaches because there unit is packed with stuff but they would never respond and wont help declutter or clean.  Once again this month they are a week late on rent but this time I went ahead and issued a 3 day notice to vacate and will have my attorney start the eviction process Monday.  I just want some opinions on if anyone would handle this a different way?   Thanks in advance for any input.

Investment Info:

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

Purchase price: $295,000

4 Unit apartment building in Hamilton Ohio. Previous owner owned since built brand new in 1984. I used batchleads to do some prospecting in 2020 using a text message campaign to "tired" multi unit owners in and around Hamilton. The campaign wasn't successful at all, but i did start a relationship with one of the owners. It turned out he was a unique investor that did a lot of note investing and a lot of creative financing and was starting to try his hand at modular home development. We met for coffee and just chatted all things real estate. We didn't talk about the 4 unit much, just pushed that interest aside and tried to learn from him. Over the next 3 years we met up at least once per quarter just to talk real estate. He reached out in May 2023 wanting to meeting to discuss the possibility of selling his 4 unit. We reached an agreement on price and did an all cash deal at 295k. Two of the units had been "Updated", but this was the typical tired landloard update which included a poor cabinet paint job, the cheapest flooring, and single color all flat paint everywhere. When purchased all of the units were occupied but not without their issues that were undisclosed. One unit was at $650, and the renter has been there for 28 years, but never has asked for any maintenance, so nothing in the unit has been updated for 28 years. The next unit was 1 year into a two year lease at $900 per month but allowed to have pets, and turned out to have three rabbits, one dog, and three cats, all in 1000 square feet. The couple ended up getting divorced in November and wanted to break the lease. I allowed them too because the pets were a nuisance. It took $2500 to get the unit back into rentable condition, but was able to re rent it at $1000 per month. The third unit had tenants in it that have been there for 3 years with no lease at $700/month. The previous landlord disclosed their rent to me at $750, but i had no proof of this so allowed the tenants to continue 2023 at $700, but gave them a 30 days notice of rent increase beginning January 2024. The fourth unit was a disaster. It was the most updated, but the tenants in it had only been there for 2 months when we purchased it. The day after closing i went and introduced myself to everyone, but the tenants in this unit weren't there. Turns out that they didn't have enough money to put down the deposit for the utilities to go into their name when the old owner took them out of his. This should have been red flag number 1 but i gave them the benefit of the doubt and turned the utilities back on for them in my name. The first of the month came and i got a sob story about how the boyfriend was in jail for a probation violation, red flag number two. Being their landlord for less than two weeks i again gave them the benefit of the doubt i gave them a two week extension which proved to not be effective. I filed for eviction, and two weeks later had the apartment emptied but only by force from the bailiff. The unit took three weeks and $3400 to turn over. I was able to get it filled with tenants rented out at $1000 per month.

In the end this deal taught me a lot of lessons, but the value of the property in this current market is right around $365k but not without it's headaches. This is still a good long term investment.

Financing: The seller needed to close quickly with cash for a different business opportunity so i had to find hard money to close. The timing couldn't have worked out better, one of my contacts was looking for a place to invest some cash so he was eager to lend money. We agreed to an interest only monthly payment of $1400 with a 1 year baloon payment of $295k. This allowed us to cashflow a good amount of money each month while getting the property up to market rents.

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

I know the area well and know the most are "tired" landlords with low rents and lots of growth potential.

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

I made a connection prospecting in 2020 kept in touch and eventually they were ready to sell.

How did you finance this deal?

I found a hard money lender that financed the whole $295,000 with a balloon payment due after 12 months with interest only payment of $1400/month.

How did you add value to the deal?

Redid the front siding on the exterior and removed non paying renters and put in new renters at market rents.

What was the outcome?

The deal is currently cash flowing with tenants that pay on time.

Lessons learned? Challenges?

Get copies of all leases up front, have multiple exit plans, form relationships with other investors based on mutual interests and not focused on specific deals.

@Jason Towles Im also in the cincinnati area, i invest in hamilton and fairfield right now.  I always use "Butler County Auditor" site for searches, you can run reports off of there that will show you delinquent tax homes.  Also, you can go to the "Butler County Court Records" website and perform searches on foreclosure filings and pull the address out of the site.  Im sure Hamilton County has the same thing, I'm just not as familiar with it.

@Daniel Estepp I am an investor in the Cincinnati area. I spoke with an attorney and chose to not use an LLC yet. The main reason being is the accounts have to be completely separate from your personal accounts, the LLC offers no protection if your own personal money is moved in and out. Also, financing is typically a higher rate using an LLC. The only times I have considered an LLC is when I'm buying something with someone else so the lines don't get blurred. Like the others said, definitely consult an actual attorney, i just wanted to share my experience so far. Another side note, i have met a lot of people that are "investors" that have an LLC set up, but haven't done any deals yet, it just makes them feel as if they have made progress towards becoming an investor. It's just a waste of money until you actually need it. I have an LLC set up for another business and it only takes about 10 minutes and $100 to setup on the Ohio Secretary's website.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $87,900
Cash invested: $11,000

3 bed 1 bath home in the Historic District in Hamilton OH. The house is an all brick two story, with updated utilities and renovated interior.

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

It is in an expanding part of the city, close to downtown entertainment, and has seen a lot of appreciation.

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

My painter i use brought it to me. Him and his wife purchased it, did a very small renovation, and sold it to me with instant equity. I walked the property, gave him my offer of $85,000 with an asking of $89,900, and ended up meeting in the middle at $87,900.

How did you finance this deal?

I used a personal Heloc to purchase this deal with cash and will refi out after the six month seasoning period.

How did you add value to the deal?

Put new kitchen cabinets, countertops, and reorganized the kitchen layout.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $71,000
Cash invested: $11,000

SFH in Hamilton Ohio. Bought it from an old lady that had dimentia and needed to move in with relatives. She left the tub on and collapsed the ceiling and ruined the hardwood floors. She and her family sold it to me for payoff just to stop the bills. I completed the rehab myself, with exception of carpet and countertops. This will be a BRRR for me.

Square Feet: 843
Bedrooms: 2
Bathrooms: 1
Garage: 1 car
Basement: Yes
Monthly Rent: $1,100
Reno budget: $11,000
Purchased with: Cash from Primary Residence Heloc, rehab funded by a mix of Home Depot 12 month 0% interest, and cash from reserve account.

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

It was well below market value, didnt need a huge reno budget, was an easy BRRR decision. It is also located in a great area in the city it is in, and will have small appreciation over time.

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

Word of mouth from people that know i invest in real estate. There was no negotiation needed, they just wanted payoff, and payoff was a reasonable ask for the value of the house.

How did you finance this deal?

I purchased with a mix of cash from a Heloc on my primary residence, and cash reserves from other rentals i have.

How did you add value to the deal?

Remodeled the inside of the house, and updated the bathroom.

What was the outcome?

Still waiting to refi, but currently have tenants in place that cashflow $493/month after putting away for capex and vacancy.

Lessons learned? Challenges?

Tell everyone you know that youre involved in real estate. You never know where opportunities can come from.

Investment Info:

Condo buy & hold investment in Fairfield.

Purchase price: $36,000
Cash invested: $12,000

2 bed 1 bath ground floor condo. Complete rehab except tub, everything was already ripped out. Did all of the work myself, new stainless steel appliances. Expect to rent out at $900/month. Purchased with cash, funded the rehab with home depot financing and Heloc. Expect to Refi out all of my cash invested, so BRRR into a free (minus sweat equity) property.

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

The numbers worked.

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

My realtor brought it to me. Off market deal, another investor had too many go vacant at once and needed to get rid of the one that needed the most work.

How did you finance this deal?

Cash purchase, home depot 0% financing 24 months for materials (will pay off with refi in 6 months), Cash reserves for other materials.

How did you add value to the deal?

Complete reno to the inside.

Lessons learned? Challenges?

You can use Fannie Mae "Delayed Financing" to immediately refinance a purchase to get your cash back quick.

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

Chris Britton Union Home Mortgage

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $50,000
Cash invested: $10,000
Sale price: $84,900

2 bed 1 bath single family home with existing tenants rented at $650/month. Market rent is $750. Inherited tenants moved out, and we decided to capitalize on the hot market, sell the property, and invest in a better area. $10k rehab, and $84,900 sales price.

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

This was purchased in November 2020. It wasn't in the area we wanted to invest in, but it was one of the only deals that would instantly cashflow at the time so we jumped on it.

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

A friend that works for a broker/wholesaler brought it to us. There was no negotiation, they wanted 50k and wouldnt budge.

How did you finance this deal?

Convential loan, 20% down. We took the down payment from a Heloc on our primary residence.

How did you add value to the deal?

After the inherited tenants moved out we hired a contractor to paint, fix small items, and lay new floor.

What was the outcome?

Sold the house for $84,900

Lessons learned? Challenges?

Always change with the market, we initially bought as a buy and hold, but with the market so hot we capitalized on it and sold for a profit. We will take the profit and invest in a better area.

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

Burnett Group located in Cincinnati Ohio

 I appreciate the response.  I will go check them out this weekend!  Thanks

@Jaron Walling the only thing I was planning on using HD labor on was carpet, the local guys I've found have been about the same price.  I am going to install vinyl plank myself.  I will try to make some connections on here and see if I can find any local people.  Thanks for the response!