All Forum Posts by: Matthew Shea

@Greg Kasmer The property appraised just over $1.7M. It's a duplex and each side rents for $4k+ fully furnished on an annual basis. The new mortgage is right at $7k with 40% equity left in the property. I was able to cash out just around $400k which reimbursed the rehab funds plus some. After expenses, I cashflow just over $1,000/month. 

Note: When I purchased the property I figured the ARV would be about $1.1-1.2M. I based the initial renovations off this estimation. Shortly after buying there were several sales nearby that boosted that ARV higher than I could imagine. That encouraged me to pour more into the property and trust mine would appraise as well, which it did. I own a rental same size, farther from town, that was already making $4k/month long term where the average rentals were $2,500. So I had confidence I could retrieve a higher rental rate, especially since this one was walking distance to a downtown area. I just didn't realize how much I could cash out by improving it until afterwards.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $672,000
Cash invested: $360,000

This project implemented the BRRR (buy, rehab, rent, refinance) strategy. I purchased the property in an appreciating market where the ARV ceiling was very high. That allowed for renovations to be done at a higher quality and to really maximize the return on investment by adding value at every turn. I was able to get a very good appraisal after all work was completed and make it a successful cash-out refinance, as well as hold it long term as a positive cash-flowing asset.

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

The surrounding market. I saw the potential in it to rehab and hold.

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

It was sitting on the market for 8 days in the middle of December (dead time for real estate in Florida). I negotiated the price by addressing my concerns with market volatility and rehab unknowns.

How did you finance this deal?

I purchased it with a conventional mortgage.

How did you add value to the deal?

I completely gutted the property and rehabbed the inside and outside. The inside was restructured to be more functional and meet today's standards. The outside landscape was completely redone to appeal to higher end renters.

What was the outcome?

The property appraised at the top of surrounding comps. It's value holds because of its location. I was able to cash out all of my rehab funds plus extra, all while leaving in the necessary amount to keep my mortgage where it was. This allowed me to maintain a healthy cash-flow after all expenses were paid.

Lessons learned? Challenges?

The challenging parts were managing rehab funds and allocating them to the right places which add the most value.

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

I am a real estate agent myself and complete most of my work in-house unless subbed out for contracting.

Investment Info:

SFR Buy & Hold Investment in Clearwater, FL.

Purchase price: $430,000
Cash invested: $85,000

I bought the property partially renovated on the interior, then proceeded to do updates to increase value. I also completely renovated the exterior. I.e. - New windows, AC ducts, attic insulation, gutters, appliances, fans & lighting, paint, and tile. New irrigation, sod, plants, trees, rocks/shell, paver patio, driveway, exterior lighting, and fence.

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

It was a cut and dry project and since it was my first deal it was an easy entry having already been slightly remodeled. I'm not handy at all, but I am good at design and can do small things like landscaping. I also liked the fact that it was structurally sound with concrete block construction, a tile roof, and high elevation. Ultimately I had a vision for how this particular home could easily be improved and rented for top market without much headache.

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

It was sitting on the market. It was essentially a half-done, bad flip that didn't sell as expected. I submitted a low-ball offer and it got rejected. So I waited a couple months, and they reduced the price. Then I submitted a lower offer of the same ratio as before. This time the seller was anxious to get it off his books and sold to me.

How did you finance this deal?

Since it was going to be my primary home, I used 5% down, conventional financing.

How did you add value to the deal?

I added value by doing cosmetic updates and transforming the curb-appeal.

What was the outcome?

I was able to rent it furnished long term for $1,500 more than the average long term rent in the area. I self-manage and produce $700 in pure cash flow each month.

Lessons learned? Challenges?

I wish I had known more about landscaping at the time, and didn't go cheap when it came to contractors. There were several things in the yard I had to re-do because I didn't think them through well enough at the beginning. I also had to re-renovate a bathroom and some other interior work because I used cheap contractors the first time. I learned that it's better to go for quality the first time if you want it to last.

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

I am a real estate agent so I represented myself on the deal. I watch the market constantly and knew that the area was improving quickly and that it was a desirable place to rent. I would be more than happy to help anyone looking to start investing in the areas of Florida that I service.