All Forum Posts by: Jonathan New

If you plan on holding and treat it like a business (save CAPX, vacancy, etc), leverage 100%!  

VA loans are powerful! Ask for 3-4% CCA and actually get money back at closing. I say go 4-plex only because I like to maximize potential and learn in the deep end.

I love Poway.  I'd take my kids to the farmers market and train ride every weekend when I was stationed in San Diego.  Beautiful area.  

When I calculate BRRRR viability, I don't even think about COC. COC is infinite in BRRRR or 80%+ at worst. If the deal comes short of 100% COC, I'd probably just flip it. What kind of CF do you look for as a minimum?

1.  Take all of the "stay away" recommendations with a grain of salt.  They very well could be right that it's a rough area by their standards (subjective to each investor), but there is a market for that type of neighborhood.  I'd say that your chances of getting a bad tenant are greater than in say PVB, but you'll get a bad tenant in ANY neighborhood (A+ down to D-).  Also, when people say beware, ask them what experience they have investing in these neighborhoods.  I don't mean to discredit the posters above as I've seen them make great points in other threads, but just because a property won't appreciate or attract anything but struggling people doesn't equate to "beware" or "move elsewhere."  One person's C neighborhood, is another's D or B or A, which is why I never listen to other people's subjective opinions on a zip code.  

2.  @Nicholas White brings up some great points about the downside of this turn key deal. The CAPX combined with the types of tenants that you're most likely (but in no way guaranteed) to get could turn the deal sour in a year or so. Then again, once you buy a new AC, roof, etc, you don't have to again for a decade or so. Then your cash flow catches back up. I like the idea of flip to rents (BRRRR), so you don't have to worry about the immediate CAPX expenditures.

Again, I'm not saying that the posts above are incorrect. It's a rough area, but that could be exactly what you're looking for - max out cash flow. PVB (just an example of the opposite grade neighborhood) won't cash flow without significant money down. Ignore nay sayers and make your own decision about what fits best into your vision whether that be million dollar flips, slum lording, BRRRR, notes, SF/MF, etc. Man, investing is so similar to parenting - everyone has an opinion on what's best for your kids and they will absolutely tell you about exactly how you're messing up (like I am doing,.. damn hypocrite).

Welcome! It can be done (military and serious REI and being a parent). I've started doing all three for the past 6 months. While I am just doing a single flip right now, it's a big one, and I hope to parlay its gains into several smaller deals to see how much volume I can handle. There are several other military investors that I've networked with in the area. It's tough for sure, but with the right team and right attitude, you can really make the best situation across all three of your highly demanding rolls.

I am using Walnut Street Financing out of Richmond. It's my first HML deal, and no issues whatsoever yet. Closing was easy, but I have not got to the point yet of having to coordinate draws for my contractor. Still, I'd recommend them.

that's huge!  Well done!

Numbers look solid.  Obviously, there's more to a deal than raw data, but raw data is ultimately the most important decision criteria.  I am a fan of how you didn't factor in any assumed appreciation.  Appreciation is just an added bonus.  

I do agree with the above slight concern over $10k rehab numbers, but all of the deals that I gravitate towards are flips/BRRRRs, not near turn key buy/holds, so due to my experience bias, I yield to your judgement.  Good luck!

A realtor's job is to advise and execute the client's (your) plan even if the chance for success is ~0%.  Plain and simple.  If they think that it's a waste of time and won't submit the offer, find a different realtor.  I had to do that to a realtor in FL who told me that the wholesaler would laugh at the offer and that the realtor's rep would take a hit.  Offer submission should never hurt a realtor's rep.   Offer non-submission hurts the rep significantly more.  

As mentioned above, offer what makes your numbers work.  Keep trying until you find a deal that works.  Your deal rate may be low with low ball offers, but your chance of success per deal will be higher.  

All boils down to risk tolerance and what you're doing with the project.  Example, my last deal, I didn't include an inspection contingency because I was taking it to studs anyways and had a profit margin of $75k, with everything getting redone.  I took the gamble that possible mold remediation in the basement and structural deficiences wouldn't be a greater than $75k issue.  I still got an inspection done though, just to know what problems I had to formally address - can't let the sell fall through at the flip.

I don't think that I'd remove it for most deals though, so my example is the exception to the rule.  Rules are, however, meant to be broken when it makes sense.

I'm fairly new to the area. The worst area in Norfolk is probably going to be Park Place (like 24/26th street). Like a Jonathan New D+ neighborhood. There's a little bit of gentrification going on there though, so I don't think there's an area in Norfolk/VA Beach that I would avoid at all costs, especially if you're in it for cash flow. However, that area would be my last option if there were no deals elsewhere. The A-D neighborhood rating is so subjective.

Portsmouth and Newport News certainly have more scary areas though. I toured a property in Prentis Park that had two "tenants" unconcious/not just asleep on the floor or a matress on the floor. Still not sure one of them was even alive. Good times in REI...

I ended up buying a triplex in Historic Ghent that I'm converting to a SFH for a big project flip. Truely good times in REI.