All Forum Posts by: Anthony Gayden

I recently rented out my first property in North Jersey and the township require me to register the property and pay a registration fee every year. Is this normal?

@Anthony Gayden Peony Park in District 66.

Investment Info:

Single-family residence buy & hold investment in Omaha.

Purchase price: $85,000
Cash invested: $40,051
Sale price: $155,000

First BRRRR house!
Will rent for $1250 (low end)

Will Refinance at the beginning of the year, and should appraise at $150,000

**Update With Final Numbers***
Bought for $85,000
Closing, Holding, Rehab - $40,051
All in: 130,051
January 2020 Appraisal: $155,000
80% Cashout Refi (5/30ARM) = 124,000
Own the house for: $6,051
But also added $31,000 in equity

Rent: 1250 + 15 (pet rent) + $25 nonrefundable pet deposit ($300/12 = 25) = $1,290 per month
Yearly Rent: 1290*12 = $15,480
Yearly Mortgage: $10,750
15480-10750 = $4730 Per year
5% CapEx: 236.50
Cash Flow Per Year: $4,493.50
Cash Flow Per Month: $375.46

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

Reading David Greene's BRRRR Book

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

Facebook Marketplace!

I figured it needed $20,000 in reno, and figured about $10,000 in holding/closing/Fees

How did you finance this deal?

Hard money lender. They would pay me 70% of the total ARV. They said the ARV was going to be $140,000 and only gave me $98,000, so I had to come with the rest. I bet on myself, and I won.

How did you add value to the deal?

Basement was unfinished, so we added drain tiles and a sump pump to keep it from flooding. Finished the basement to add about 550 sqft in the basement. Added a bathroom and bedroom in the basement and changed the house from a 2bd - 1bath, to a 3bd - 2bath. Tiled the upstairs bathroom, tiled the kitchen, new appliances, and refinished the wood floors.

What was the outcome?

I had to fire my first GC, which increased my holding costs by $5,000 and increased my reno by $5,000, and went $10,000 over budget. However; the appraisal came back higher than expected and I was able to cash out $124,000, while my all in costs were $130,051, and now own the house for $6,051 out of pocket, while increasing equity by $31,000

Lessons learned? Challenges?

Pay for a good GC upfront because it will cost you more money in the end.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Chad Blythe of Nebraska Reality really helped walk me through the process. This was a wholesale deal and so my agent did not get any money out of the deal, but I have bought 2 houses from Chad in the past, so we have a good relationship and he was a big asset.

Is it just me or everyone playing it safe? Recently I’ve been catch a ton of flack on this forum for suggesting things like:

1) Maximizing leverage while carrying hefty reserves.

2) Buying for appreciation in western markets.

3) Buying properties that barely cash flow (for appreciation) and following each up with a STR to supplement cash flow.

I feel like the general vibe is hesitation. Market uncertainty. Fear. These suggestions are being received as total noob blabbering.

While I’m no expert, I do work for one of the top multifamily developers in Arizona and I have first hand knowledge that developers are NOT playing a scared game right now.

Why is this nontraditional route receiving so much push back?!?

I'm reading The Millionaire Real Estate Investor by Gary Keller and Jay Papasan and I came across this tip about managing single family houses.

"Many single-family investors sidestep the issue( in regards to hiring a PM) through home warranties and lease agreements. For example, they purchase a warranty for their property that covers common repairs with a $50 deductible. They then write into the lease that all repairs are the tenant’s responsibility, along with the deductible. This can be marketed as a win for both the owner and the occupant, since the renter can call for any repairs at any time for a small out-of-pocket cost, while the owner doesn’t have to book repairs around the tenant’s schedule."

Has anyone had experience with home warranties? Are there more convenient ways of making self management more hands off than this technique?

Thank you

@Jay Hinrichs I bought each one on a conventional loan with 5% down, lived in it for a year, turned it into a rental. Rinse and repeat x3.

@Anthony Gayden any particular reason you’ve settled on $50k? It seems like a market melt down could quickly seize the credit market and wipe that out if rents were to take a drastic dive.

Ok here goes.... I’ve finally put some of the useful knowledge I’ve acquired over the years on BP into action. My strategy is buy and hold and I’ve just acquired my third deal. I now have approx $1M in rentals but am 90% leveraged. My properties barely cash flow because I’ve only put 5% down on each. Rents in my market (Phoenix) are improving drastically at the moment and appreciation has been EXTREMELY healthy over the last 5 years. Normally if I read a post like this from anyone else I’d advise caution but bear with me....

My strategy is based around maximum leverage to acquire as many rentals as I can right now. My safety net is that I carry a hefty reserve. My question to the group is, given this set of circumstances.....what kind of cash reserve would you be comfortable with?