All Forum Posts by: Jiri B.

@Jeremy Reid Good plan! As you said it, this market is tough. There is extremely little inventory in this price range, but yes, if you go out an hour or so, you should be fine. That does not mean you just simply pay less, it will have effect on your entire investment (longer commutes to check on things, lets buyers / renters, more days on market, lower rents, lower appreciation, etc).

You will still need about 30-50k in cash to make this happen (20-25% down, repairs, closing cost and other expenses so keep that in mind.

You also said "cashflow from day 1". Probably not realistic if you do repairs but probably more like few months without any cashflow depending on the amount of work. That will make a dent in your budget so i would make sure to account for that.

Totally agree, quality contracts are the key. But prepare to pay more for those. The more work you leave out to others, the less cashflow you will have. So it might still be tough to get cashflow with those plans.

Overall still solid plan! I would stay, go for it! Don't wait around just go and make it happen!

I have never met an investor who said "I wish i would never started". They all say "I wish I would have started earlier"

Good luck!

@Keith Boom you are thinking just like me when i started investing, but here is what i learned over the years that goes beyond just the numbers..

Most towhomes in Raleigh area have HOA and it can be $60-200 or even more. They do typically maintain the outdoors / landscaping, the exterior and the roof. However, if they don't have enough collected funds to cover new roofs or decks, they will just do a special assessment and you might get a bill for $3000 for new roof. So just because you pay HOA, that does not mean the cost will not go up or that you won't have to pay for anything else.

Mainly for that reason, i don't like HOA or townhomes as much as Single Family Homes.

Now for SFH. I actually don't mind paying a small HOA fees, like $20-40/mo. They typically make sure the neighborhood stays nice and clean and enforce the HOA rules so its much easier to rent the property or to even sell if the neighborhood looks nice. So it does impact your property value and the rentability.

Not a tax accountant but you might be able to deduct the cost of HOA on your investment so its not as bad to have some deduction.

I don't really care about the landscaping / yard maintenance as you typically have your tenants to be responsible for that, so i would not include that assumption your calculations..

Hope this helps!

@Sunshine Bizz totally agree with the responses. But here is something i noticed, and it might already be your plan or might not, so i will mention it.

What really stands out to me, is your Property #5. You virtually have 120k cash available and you also already hold couple of properties under 100k so you must be comfortable with that.

So here is what i would do in your case.

I would use your HELOC and find a distressed property and buy it cash. Find something that would normally not qualify for typical conventional loan and that needs fast closing. You can get pretty decent discounts doing it that way over a typical buyer that needs to get a loan. Then use the rest of the heloc to rehab. If you do this right, you should be able to refinance it after you are done and pull all the money you put in including the rebab cost back.

You will end up with a great rental property with 70-75% LTV and your original 120k HELOC.

This is a great model that will give you unlimited and very scalable way of acquiring properties. You can probably do 1-2 properties like that every year and be very comfortable with it. Still keeping all your cash and getting couple of properties with no cost to you and your renters paying the loans / equity.

@Josh Sisley i don't see anything wrong with doing that.. Are you buying cash or loan? In most cases people do this to get a low downpayment so they do it as primary residence. I think when you are getting the loan for that, your intention has to be to live it not, not flip it.

As for the renovation itself, it really depends on your situation. If you single or married and your wife is onboard, that it might be ok. My experience is that it will always take you longer then you think so if you don't mind living in work zone, then go for it. You save money on rent.. 

I have a young kids so there is no way my wife would let me do that.

I would also be cautious about properties build before 1978. If they have asbestos or lead based paint, i would not live in while remodeling it. That would be my bottom line.

As for as finding the properties, you are Realtor so probably the first thing would be MLS. Then i would try for sale by owner. Being a realtor is great since your clients might know personally someone who wants to sell and you might find a property that way because they all know, you are the Realtor :)

Welcome to Bigger Pockets @Nick Vondrachek and to Raleigh investing as well! Both great places :)

I'm a one of the local small investors here. Single Family Homes and Townhomes and mostly BRRR strategy. Also a Realtor (but PSST that's a secret :) )

Lots of great information in this forum and great members. Definitely worth searching here for some info or asking questions and helping others!

@Jason Chopin that's a great way to start! You will also lock in a good interest for 30 years so can't really beat that.

By multifamily i'm guessing you are looking for 1-4 units and would live in one?

What is your price range and what areas are you looking at? Depending on the location, you will be probably looking at 250k+ for duplexes and 400k+ for fourplexes.. 

@Hether Klitzing I purchase lots of foreclosures and REO's. It really depends on the house and the bank but typically banks are not very motivated to sell.. What you are willing to pay and what the bank is willing to accept are two completely separate things.

You can try to ask the listing firm / agent about what the bank is expecting. They might or might not provide you any useful info. I have seen properties listed above market value because that is what the bank wanted recover and sat on the market for years. I have also seen when the bank just listed for a price, but would not expect anything under much higher price.

I typically just go with my best offer of what i'm willing to pay for the property. It either works or it does not. It's an investment so no hurt feelings. 

You could say that the longer it sits on the market, the better chance you have for the bank accepting lower price. But that is not always the case. 

In my opinion if the property was just listed and you offer way below the asking price, there is little change they will even respond to you. Some banks might also say, they will not accept any offers until the property is x days on the market..

I know this is not a straight answer but that just how those things works.. it all depends. Those are my most common experiences.

@Alex Gordon This might actually be good thing for you. Mold is a material fact that needs to be disclosed by the realtor so if you told the seller there is mold, they will have to tell every potential buyer about that mold. That might scare both the seller as the potential buyers.

I purchase properties with mold before and if handled well, it's not a big issue. The #1 is to stop the source of the mold, which in your case is the old leaking roof and the ventilation. So doing new roof as you mentioned should take care of that. The price you mentioned sounds about ok but it really just depends on the size of the roof, the style and slope.

Once you get that taken care of, then you just need to get rid of the actual mold. Since most attics are isolated, there is a good change the isolation will also contains mold. I would get a quote from an expert on the mold remediation. It might be as simple as running an ozone machine in the attic or it could be as bad as replacing all contaminated materials (isolations, etc). That can get costly. I would just get a quote fo that and just go back to the seller and ask for a price reduction. You can really ask for the cost of the roof as that is probably that was already accounted for in the current price.

Great feedback in the above posts so not going to repeat that.

Im addition, most lenders will not refinance sooner then 6-12 months so you will need to hold the property for that time.

Make sure you have enough cash to start. You will need at least 20% down or about 1/3 cash up front for rehab loans

Majority of my investments are BRRR. However I don't usually refinance right away but that just depends on your personal situation and strategy. It cost money to refi and since I get in with 20% down conventional I don't mind holding it for 2-3 years before pulling money out and get another 20% from market growth..

I'm not an attorney so this is from experience and from what i know so not a legal advice.. 

If the property is occupied by a tenant and they have valid lease, then have to honer the lease. At the closing you would get the security deposit (if any) and the prorated rent. Unless the tenant have any breach of lease, you would need to wait until the end of the lease to get them out.. But in most cases, you can just try to pay them off, help them find a new home and pay the moving cost to agree to move out..

If its an owner occupied, you can just file the eviction notice for possession. Just search on bigger pocket, there are several threads about that topic for North Carolina. Very cheap in terms of fees and typically takes 4-6 weeks.

The real problem however is, the might be not very happy about moving out and they might trash the place a lot.. They are already loosing the home so the chances are that you will recover any cost is pretty slim. So you are taking pretty big gamble with this. That's why those houses come cheaper as you taking on the risk.

And in most cases, you cannot even access the home to see it, so you don't really know what you are buying.

Not sure if i would do it as my first investment property, seems too risky.