All Forum Posts by: Michael Doherty

@Dan LaFontaine thank you. I did actually. I've used them before and everything is pretty straight forward. The only downside to hard money is the draw process. Every 'draw request' they send out an inspector and it costs around $250. We found ourselves having to front the initial rehab costs on our credit cards to pay the contractor time and materials and then reimburse ourselves with the draw monies. 

However the good thing about the draw process... at least with our lender, is your only paying interest on the money you have used. For example, say your total rehab budget is 80k. Instead of paying interest on the full 80k from day 1... you only pay on the money you've withdrawn. Ideally you would try and limit it to just 1 draw but we didn't have the deep pockets to do it so we spread it out over 3 draws.  

Investment Info:

Small multi-family (2-4 units) fix & flip investment in New Britain.

Purchase price: $130,000
Cash invested: $30,000
Sale price: $270,000

@Rachael Agruso and I purchased a foreclosed 3 family house for 130k. Rehab budget was 50k, ARV was 275k. Financed with hard money. We originally attempted to BRRRR this property, but ended up flipping it.

After our full renovation we went 16k over budget. Our holding costs were $6600. It took about 6 months from purchase to sale. We sold for 270k, 5k less than asking.

Total profit (pre tax): 47k

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

We saw the new listing, knew the area well and wanted to BRRRR a property. The numbers seemed like they would work. However, after receiving an initial appraisal (projected value) we started to question BRRRR'ing it. The appraisal came in 40k below the expected ARV - but we knew we could sell for much higher. At that point we decided this would work better as a flip.

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

Foreclosure on the MLS- offered 12k over asking

How did you finance this deal?

We used a hard money lender. They financed 85% LTV on the purchase and 100% of the rehab.

Interest only payment of 9.99% 12 month no pre payment penalty, 2.25 pts

How did you add value to the deal?

- 3 new kitchens (cabinets, counter tops, appliances)
- 3 new bathrooms (flooring, vanities, toilets, bathtub surround)
- Refinish 1500 sq ft of hardwoods
- restructure garage
- new roof
- replace furnace, service 2 other furnaces
- replace 27 windows
- replace kitchen and bathroom flooring (Home Decorations LVP Flooring)
- paint walls, ceilings, trim (Sherman Williams Agreeable Grey)

What was the outcome?

We leased out 2/3 units showing a total income of $2090 upon listing. Left 1 unit vacant for possible owner occupant buyer. We ended up going 16k over budget but still turned a 47k profit pre tax on our first flip.

Lessons learned? Challenges?

Lesson learned... have everything in writing with your contractor. There were multiple times when he would come back for more money after not estimating well enough.
Lesson #2 learned: don't waste time trying to sell your property off market. We had monthly interest only payments to make so each week that dragged by was more $$ out of our pocket. After listing, it lasted 3 days on the market. Dealing with contractors was our biggest challenge. We will vet our next contractor better.

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

I sold the house as I am a licensed realtor.

Investment Info:

Small multi-family (2-4 units) fix & flip investment in New Britain.

Purchase price: $130,000
Cash invested: $30,000
Sale price: $270,000

@Rachael Agruso and I purchased a foreclosed 3 family house for 130k. Rehab budget was 50k, ARV was 275k. Financed with hard money. We originally attempted to BRRRR this property, but ended up flipping it.

After our full renovation we went 16k over budget. Our holding costs were $6600. It took about 6 months from purchase to sale. We sold for 270k, 5k less than asking.

Total profit (pre tax): 47k

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

We saw the new listing, knew the area well and wanted to BRRRR a property. The numbers seemed like they would work. However, after receiving an initial appraisal (projected value) we started to question BRRRR'ing it. The appraisal came in 40k below the expected ARV - but we knew we could sell for much higher. At that point we decided this would work better as a flip.

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

Foreclosure on the MLS- offered 12k over asking

How did you finance this deal?

We used a hard money lender. They financed 85% LTV on the purchase and 100% of the rehab.

Interest only payment of 9.99% 12 month no pre payment penalty, 2.25 pts

How did you add value to the deal?

- 3 new kitchens (cabinets, counter tops, appliances)
- 3 new bathrooms (flooring, vanities, toilets, bathtub surround)
- Refinish 1500 sq ft of hardwoods
- restructure garage
- new roof
- replace furnace, service 2 other furnaces
- replace 27 windows
- replace kitchen and bathroom flooring (Home Decorations LVP Flooring)
- paint walls, ceilings, trim (Sherman Williams Agreeable Grey)

Leased out 2/3 units showing a total income of $2090. Left 1 unit vacant for possible owner occupant buyer.

What was the outcome?

We ended up going 16k over budget but still turned a 47k profit pre tax on our first flip.

Lessons learned? Challenges?

Lesson learned... have everything in writing with your contractor. There were multiple times when he would come back for more money after not estimating well enough.
Lesson #2 learned: don't waste time trying to sell your property off market. We had monthly interest only payments to make so each week that dragged by was more $$ out of our pocket. After listing, it lasted 3 days on the market. Dealing with contractors was our biggest challenge. We will vet our next contractor better.

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

I sold the house as I am a licensed realtor.

Investment Info:

Small multi-family (2-4 units) fix & flip investment in New Britain.

Purchase price: $130,000
Cash invested: $30,000
Sale price: $270,000

@Rachael Agruso and I purchased a foreclosed 3 family house for 130k. Rehab budget was 50k, ARV was 275k. Financed with hard money: 85% LTV 100% rehab for 9.99% 2.25 points. We originally attempted to BRRRR this property, but ended up flipping it.
Scope of rehab included:
- 3 new kitchens (cabinets, counter tops, appliances)
- 3 new bathrooms (flooring, vanities, toilets, bathtub surround)
- Refinish 1500 sq ft of hardwood floors
- restructure garage
- new roof
- replace furnace and service 2 other furnaces
- replace 27 windows
- replace kitchen and bathroom flooring (used Home Decorations LVP Flooring)
- Paint walls, ceilings, trim (used Sherman Williams Agreeable Grey)
- landscaping

After our full renovation we went 16k over budget. Our holding costs were $6600. It took about 6 months from purchase to sale. We sold for 270k, 5k less than asking.

Total profit (pre tax): 47k

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

We saw the new listing, knew the area well and wanted to BRRRR a property. The numbers seemed like they would work. However, after receiving an initial appraisal (projected value) we started to question BRRRR'ing it. The appraisal came in 40k below the expected ARV - but we knew we could sell for much higher. At that point we decided this would work better as a flip.

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

Foreclosure on the MLS- offered 12k over asking

How did you finance this deal?

We used a hard money lender. They financed 85% LTV on the purchase and 100% of the rehab.

How did you add value to the deal?

We completely remodeled all three units- total rehab cost was 66k

What was the outcome?

We ended up going 16k over budget but still turned a 47k profit pre tax on our first flip.

Lessons learned? Challenges?

Lesson learned... have everything in writing with your contractor. There were multiple times when he would come back for more money after not estimating well enough.
Lesson #2 learned: don't waste time trying to sell your property off market. We had monthly interest only payments to make so each week that dragged by was more $$ out of our pocket. After listing, it lasted 3 days on the market. Dealing with contractors was our biggest challenge. We will vet our next contractor better.

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

I sold the house as I am a licensed realtor.

I've Used @Jon F. of Capital Three Sixty on 3 projects here in Ct. I completed both the purchase and cash out with Jon. Overall it was a good experience. Jon can provide more details but there was never any pre payment penalty with his products. They have interest only loans up to 12 months. You will pay points at closing but that is pretty typical with any hard money lender. Another great thing about his products is you only pay interest on the funds you draw. 

I wrote a pretty detailed article on the BRRRR I did from start to finish. Maybe this will be helpful? Let me know if you have any questions.

https://www.biggerpockets.com/forums/223/topics/759152-1st-brrrr-success-ish?highlight_post=4499040&page=1

@James Wise Hey James- as promised- I wanted to follow up on the status of the flip I mentioned a few months back. We finally closed! We turned at 47k profit (pre tax) after all expenses and holding costs. This was our first flip and it was a roller coaster. Learned a lot, acquired a few extra grey's but the experience was priceless. The total project from start to close was 6 months. Let me know if we can be of any help!

@Mike Guenther congrats on getting started Mike, you definitely came to the right place for information and connections. Keep educating yourself by listening to podcasts and commenting on the forums. There's 2 local meetups that meet once a month I would suggest attending if you have the time. 

The first meeting is in Manchester, Ct. @Scott Hollister hosts the meeting.... many awesome guest speakers that provide tons of free value add information. 

The second local meeting is in Glastonbury.  @Stephanie Cabral hosts this meeting and it's a great way to get your name out there and connect with like minded people (also very valuable). 

Let me know if you have any question or if I can be a resource in anyway. 

Count me in!

@Matt Bouthet Run the numbers as if you aren't living there because some day you wont. If it seems like a good investment from a cash flow standpoint after running the numbers with your unit 'rented out' then pull the trigger. If it still does not cash flow even with you not living there, keep looking. 

My gf and I went through a similar situation. I bought a duplex with an FHA loan and house hacked 2017-2019. Then last year my gf bought a 3 fam with an FHA loan and we are currently house hacking her property. If I could go back and do it all over I would have bought a 3-4 unit building to really take advantage of the low down loan first time home buyer program.

Congrats on getting started and educating yourself, sounds like you are on the right track. 

@Huy Pham it just needs your signature and anyone who is on the lease and plans to live in the unit. Meaning if you are renting to husband and wife or bf and gf- they both should sign. 

That way they are both liable if one moves out or if they break up ect ect.