All Forum Posts by: Jeffrey Holst

@Victor S.  I didnt on this example but the fees were rolled into loan so the cash on cash return is the same.  

@Mark Hughes exactly. It worked out well for me. I don't always use BRRR but when I do I make insane returns over the long haul.

Prices are climbing through out the state.  We have about 200 units in Metro Detroit and are still doing quite well but it is getting harder to find new purchases.  A lot depends on what price point you are looking at.  There are still decent deals to be had in Oak Park for instance properties for 50-75K with rents of 850+ these dont quite meet the 2% rule but arent too bad.  I like Roseville and Eastpointe as well.  Further out Lansing has lots of duplexes in the sub 80K range that get pretty solid returns.  Forget about the west side unless you find a great deal prices in Grand Rapids are way up over last 18 months. 

Most property managers I know are super busy and dont make much money.  I recall a company that offered a flat fee of 90/unit awhile back but they no longer exist probably because its expensive to run a management company.  Typically what I see is you need about 200 units to get to break even. 

@Ryan Stahr I used Southern Heritage Bank and the rate was just under 5% however this wasnt in last month and rates are climbing.  

We call that an infinite return and those are the best

 I'm glad it helped.  Vacancy varies of course and I self manage so I actually do better than these numbers show but I think 10% is a safe number for management

We are buying now before rates go further up.  We are working on closing loans totaling about 2 million before rates go up further.  Locking in the cheap money now.  We would do even more but we need to hedge against a market down turn resulting from higher rates.  What we buy now is cash flow if it pays for it self and has a healthy margin than I say buy it and lock in a rate as soon as possible. 

I bought a duplex last year in Chattanooga off of the local MLS for 58K and spent about 26K doing a rehab on the property. When I bought it someone had hit a brick wall with a truck and the resulting hole was covered by plywood. It needed all new flooring, windows, painting, HVAC and appliances but I was able to turn it around in about 2 months and get it rented for 775 and 700 for a total monthly rent of 1475.

I was all in at 86K we got it appraised at 95K (which i think is low) the local bank I work with agreed to refi up to 80% of appraised or 90% of cost which ever was less, in this case it meant that I was able to pull back 76K which meant I only left in 10K.  

I am easily cash flowing more than $200 a month per unit.  

Rents are $17,700  with tenants paying their own utilities and total costs are $12,030 including the mortgage payment.

(10% management $1770, 5% vacancy factor $885, maintenance $885, lawn care  $900, 10 % Cap ex $1770, Payments $5820)

This leaves $5670 dollars a year in cash flow for a ridiculous 56.7% cash on cash return!  It wasn't super easy but it also wasn't that hard.  Deals are tight but they exist and this can be done.  

Partner may be your only option, but maybe you could try a partner with a preferred rate of return so that you have majority equity.  Something like investor puts up 700K gets first profits until they receive 8% return on 700K (first 56K of cash flow) then the equity split is 80% you 20% them.  With you retaining an option to buy him or her out at a fixed return