All Forum Posts by: James Denon

@Tom Rheault Thanks for the pointers. do you know of any de-leading contractors who would give me an honest quote? I dont want someone to quote me the cadillac of de-leading with unnecessary work and cause me to walk away from the property. I need someone reasonable and fair to give me an honest quote.

It is a smaller 3 family so vinyl siding would probably be around 10K.

Thats what I am thinking to @Jeff B. I need to understand the costs.

@Nick Montville Thanks. Am I understanding you correctly? : If someone did an extensive rehab, they could have by default removed the lead paint without the intentions of doing so. There is a good likelihood that there is no lead paint leftover from the renovation. 

So, before making rash decisions of cancelling the contract, maybe I should get lead inspection done. Not sure if the sellers would agree to that. If lead is found, I would let them know. Then they would have to take action or they cannot plead ignorance to the next customer trying to buy the house. They would have to disclose it. 

I have a 3 family under contract in massachusetts. The closing date is end of the month. It is a house built in 1914 and I just received a disclosure from the seller indicating that "seller has no knowledge of lead paint". 

There are 3 tenants living in the property. So, I will inherit them.

Does anyone have investing experience in a property where lead status is unknown?

I guess per MA state law, you cant rent to someone with a child younger than 6yrs of age.

Even if the kid is 8yrs old, I cant stop him from peeling 5 layers of paint and eating the layer with lead paint. 

I also cannot control people reproducing in the house and giving birth to less than 6yr old offspring after they move into the apartment:) Do they have to move out because they just had a kid in a "lead status unknown" property?

I like the deal. It is a quiet area. Cashflow and the condition of the property is decent. I dont want to throw away the contract because of lead but I would like to hear from investors in MA and maybe in Maryland MD.

@Michael Noto 

1. I can do either type of loan. I am prequlified for >500K loan

2. Deals seem scarce. I can do all cash or finance it whatever makes sense. Do you have anything that comes close to 20-25% equity after refi after I pull all the initial investment(purchase+rehab) out? Preferably multi family..

@Filipe Pereira As an example if the furnace is 20 yrs old rather than new, it is more likely to need repairs on a consistent basis and increasing the maintenance costs. I also may need to take into account more the 5% capex assuming that I would need to replace it in the next 5 yrs.

I am flexible though. If know it is hard to find the perfect property.

Thanks everyone for the insightful responses. This deal was DOA for me. The reason why I posted was, I was hoping someone would come out and say, I am being a wuss and people make money off these type of properties all the time :) When the discussion involves carrying a glock, I guess thats where one should draw the line..

At this point, I am looking for either one of the 3:

1. 35-40% Cash on cash return properties with none to little deferred maintenance in CT market as @Rick Santasiere and @Filipe Pereira stated that kind of cashflow would beat any appreciation.

2. BRRRR in CT market

3. BRRRR service provider who will get me instant 20-25% equity after refi good markets in US. This would be tough to remotely oversee a provider from a distance. Not sure if anyone successfully done that.

@Jennifer Slaughter That is exactly what I am trying to do.. finding a turnkey provider who has the flexibility to do BRRRR.

@Scott King @James WachobHow does it work? Do I buy the property from Auction.com and you do the rehab and manage it? Do you also help find the right market and property?

@Brent Coombs I will pay the acquisition cost and rehab cost. The provider can make the money on both of these which can still make the exit strategy viable for the end investor. Overpaying for a turnkey above market that only cash flows $200 makes it difficult not only for exit strategy but also capex. If you have a capital expense of 10K on the 4th year, you just wiped all the cashflow. Nothing should fail on 4th year since they are rehabbed 4 years ago but you never know.

So either you need to have a high cashflow position (~$600/door) or a high upfront equity position via BRRRR (20%) entering into it.

@Rick Santasiere  good points about CT market and nice meeting you at the CT meetup. I made 2 offers in CT  that had 30-40% cash on cash return and with none to little deferred maintenance. I missed them since someone outbid me. Next time I might get lucky and more aggressive.

You are right about avoidance of analysis paralysis if you want everything in a single property. I have been all over the map but I am coming to the realization that I need to pursue both CT and some investor friendly markets both BRRR which would enable~20% equity position when appraised OR +35-40% cash on cash return properties with no deferred maintenance.

Ideally one would like to buy a NNN property with 20 year corporate backed lease (Maybe a Walgreens) which is 15% CAP, appreciates 10% a year, you can get a non-recourse loan that brings your cash on cash return to ~40% but that probably does not exist :-) I might have invited different type crowd into the post by using these keywords.