All Forum Posts by: Jason Brown

Well I self manage but my CoC after reserves and vacancy is 11%.

Ok ok ok.... First of all glad to see another Worcester based investor out here. I'm originally from Worcester but I've been based out of Miami for the past 10 years. There's definitely a lot of older stock multifamily and single-family homes out that way. Technically speaking an 1850's house in Mass isn't even that old to be honest. 

Now on to your actual deal. As @Nicholas L. stated you're about to put up 140K plus closing and rehab costs for 600 a month in cashflow. No one should reasonably tell you this is a good deal but to be honest a lot of our first deals usually are not.

What I would be more worried about is the actual condition of the building itself. Honestly for an 1850's property I don't even know how serious I could take a property inspection. Remember you have 2022 tenants with expectations of using a property as if it were built in 2022. Take this from an investor whose first deal was poorly rehabbing a 1950's SFH that ending being a PITA with a mountain of tenant complaints that I had to deal with afterwards.

How's the plumbing? Is it cast iron? Hopefully that's been updated because I can't imagine any 1850's plumbing being good after 170 years. Are you on sewer or septic. My house back in Mass was septic. That's a must check.

How about electrical? What's the size of the service panel? You've got 3 tenants now with 10 flat screen tvs, microwaves, ovens, internet connections, washer dryers and possibly A/C (we had a furnace). Is the wiring ok because 1850's wiring (cloth/knob and tube) may not even be legal.

Roof is easier but I would take some serious precaution. Unless the roof was recently replaced I would look to see that the same insect and moisture damage from your findings in the basement isn't also present in the joists, rafters, and sheathing in the attic.

Long story short is don't cut corners on fixing it up because every dollar saved from deferred capex will come back in the form of a problem during tenancy which will then be MUCH harder to solve.

Nothing will get you out of the landlording business faster then biweekly calls from pissed off tenants about roof leaks and damaged belongings (ask me how I know).

Best of luck!

Condo buy & hold investment.

Purchase price: $300,000
Cash invested: $90,000

Nice 2/2 condo in very high demand area in downtown Miami. Idea was to secure favorable mortgage before rising rates while also leveraging extremely competitive rental market.

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

Ideal location. Strong comps based off of square footage and bed/bath count. Ability to command a premium on rent due to real scarcity of inventory.

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

Found on MLS. Negotiated with a realtor.

How did you finance this deal?

Conventional

How did you add value to the deal?

Was able to negotiate discount on deal due to owner needing to sell and being willing to accept current tenant at below market rate for another 5 months.

What was the outcome?

Strong rental comps in area well above 3K monthly.

Lessons learned? Challenges?

Condo financing and due diligence can be challenging but it's you should look to leverage all the established HOA and property management have in the form of systems, processes, and advice.

@Anthony Phillips

Also 5 months on your first BRRRR is warp speed as far as I'm concerned.

@Anthony Phillips

If those rents are market rate then these numbers hit me more as a flip then a BRRRR. Take that 75K and move to the next. Props on getting all your money back though. I've BRRRR'd a few times and hasn't always been as clean as that😮

Hi all,

I am having some issues going through a conventional finance of a condo I am buying here in Miami. This is the second lender that I have been through that has run into problems trying to close on this condo.

The lender is asking to be named as an additional insured on the HOA Master Policy. This is not the HO6 policy for my individual unit but the HOA insurance policy itself. The HOA is refusing as they say this is highly unusual and has never been required by a lender before with other owners who have purchased in this building with financing.

The mortgage broker insists that this is a standard request in order to be in compliance with Fannie Mae guidelines.

Can anyone or any lender give me any more clarity as to what exactly is going on? I can't imagine a large HOA with hundreds of units having to update their master insurance policy to include or remove lenders every time someone with financing bought or sold a unit.

Any help or clarification on this would be really appreciated.

Thanks!  

@Michael Quang

To be honest none of the things you described as amenities actually are amenities. Describing them as such comes off as really reaching to me.

 @Joe Villeneuve but in my example I have an extra 40K in equity not 20K correct? I would be putting 20K down on a 100K property so two years later at a new value of 140K I would have 40K in additional equity as well as the the 10K from cashflow giving me a total of 50K in return in excess of my original DP. Is the move then, according your personal strategy, to still hold for an additional 10K in CF?

Obviously yes I am excluding closing costs from this just for simplicity's sake. Thanks

Thanks
  

@Joe Villeneuve

So if the above property in this example is generating 400 monthly in CF for a total of 9600 over a two year term would you still hold to recoup your 20k (DP) even with 40k in appreciation over that same period?

 Hey @Joe Villeneuve what if your built up equity from appreciation surpasses your cost (DP) well before you have recovered your DP from the cashflow? Say you are 20K into a 100K property for your all in cost (DP) but in year 2 or 3 that house is worth 140K even though you may not have fully recovered your downpayment of 20K from CF? What is your approach then?