All Forum Posts by: Luke Grogan

@Jerry Ciesielski Good point, that should be the obvious one, but I left it out. I don't trust my judgement completely, so I will be using an contractor. 

Good reminder on the list of improvements because they have been improved. 

Help Please!

When evaluating a home purchase with a current renter in place, what are some must-haves during the DD phase? Also, what red flags should I watch out for? There are elements of the deal that make it a little specialized, i.e., not on the MLS, properties owned by an LLLP, lump sum for total properties rather than price per unit (other than average price per unit) and mostly self managed properties.

Here's what I'm asking for, what am I missing?

• Existing leases and rental applications for current tenants
• Detailed breakout of security deposits, pet deposits, utility deposits, etc. for each property
• Rent rolls for past two years
• Tax filings associated with the LLLP
• LLLP documents
• Mortgage statements and payoff amounts
• Property Management Contracts/Agreements

Can you add anything else to the list or any general advise on completing due diligence? The package is more than one home, so some of this will be DD on the holding company and some on individual properties and leases.

Thanks!

This sounds like an interesting tool. Believe it or not, I send my tenants deposit slips for my national bank account and just have them deposit rent each month. I don't have many young tenants, so not sure how they'd respond to an online system, but as I grow, an automated system with reporting sounds pretty good. 

As the title says, I'm looking for commercial real estate lenders in Central Florida for a ~$3MM SFH portfolio. I am especially interested in any company that investors have worked with and closed a deal with, but I am open to suggestions.

The deal metrics look good, but it's a little larger than the banks' target investment size that I'm talking with. I need suggestions to move forward on an LOI. Any thoughts would be appreciated. I don't mind brokers, but so far, the ones I've called have proven worthless...

Thanks for any suggestion. 

I've had similar questions and concerns and here's what I decided to do: 

Number one, I raise the rents. Get on Zillow, call a realtor, look up houses on Craigslist, whatever, just find out what homes like yours are renting for. My market is different, but my guess is you've got $2-400 in rent that you're leaving on the table. Good tenants will stay. If not, get it on the market and rent for market rent. I raised rents 15-20% and one almost 30%. I was surprised because at first I was only going to try to get 8% before talking with a local realtor. 

Number 2, I opened a HELOC to take advantage of any deals I found that were excellent cash flow deals to cover the payment and give me a great return. I was able to buy a house with the cash front HELOC, but you may not be able to find $120k homes that rent for $1500+. Either way, you have the money available of you find a deal and many credit unions have great options on HELOCS so you can BRRR or flip or find a buy and hold and refi later without betting the farm.

The nice thing was closing costs were almost non existent and I didn't have to use the equity to pay the loan back if I didn't have a deal lined up. When I had the deal, the money was in my account that day, I made a cash offer, negotiated the deal and closed in three weeks. 

Not sure about using a HELOC as a source for a down payment on a mortgage, but food for thought because you still get the tax benefit, don't pay capital gains, and free up the equity to reinvest. Just do you best to use the equity very wisely because leverage works both ways...

I think you hit one nail on the head that I had to do also: just get a deal done. Find a deal you're comfortable with, make sure you've got cash reserves, and pull the trigger. That is a heck of a motivator to get your team together and make sure you're off and running. 

My first two purchases were not home runs, but solid doubles and that was what I needed to build momentum and scour for better deals and build a better network. 

Nice work and keep going. I am now in your situation looking at deals out of state and considering the best plan of action. Keep us apprised...

Hey Zachary. I actually enjoyed reading your thread and the responses. I unerstand your frustrations here because I have many of the same...

Over the past three years I've picked up eight SFH in Brevard, mostly (four) in Port St. John, and the other four in MI, Cape Canaveral, Rockledge and Titusville.

I think PSJ makes an attractive rental and flip market, but I'm on the sidelines a bit since I'm not in the area right now and after picking up homes in the $50-60k range, I'm not super thrilled to buy at $90k+ when they still need $10k in rehab and rent for ~$1100. 

However, there is a great buyers agent that I could recommend to you in PSJ that could be very helpful showing you around and the type of places myself and one of my partners invest in. Shoot me a PM if you'd like a reference. 

I need to do some tax planning and need to clean up my corporate structure for both tax and liability concerns and wanted to get recommendations on Florida tax attorneys. 

I have nine rental homes and a separate consulting business and I'm currently set up as a sole member LLC. At a minimum, I need to pull out a few homes into separate LLCs but I think it would be best for me to have a comprehensive plan that involves both tax liability and asset protection strategies.

I do not need someone exclusively in or even based in Orlando, but anyone in central or south Florida would be great. Please let me know if you've worked with anyone or if it's a general recommendation. 

Thanks!

 No worries. I totally understand... I figured I'd throw it out there in case it was something easier than I expected. I'm searching and trying to build something myself, so if I do, I'll let you know so you don't put more effort into it.

Thanks again for the offer.

LG

@Sachin

Thanks for the help. I think what I'm going for could be unique, but I've been having a tough time coming up with the perfect spreadsheet, so I need to simplify it.

After thinking about it, I probably just need a calculation to analyze IRR. That way I'm just comparing returns in equal metrics, rather than scenario specific. Do you have a rental property specific spreadsheet for IRR and could I input each scenario in it's own page and then have a fourth page that shows the raw comparisons?

If it's too much, please let me know how to simplify.

For dummy numbers, let's assume $100k purchase price, 75% appreciation at current market value and 75% cash out refinance vs. selling at 92% of asking price (price minus commission). Does that work or is it just best to keep the values blank and just create the IRR formula?