All Forum Posts by: P.J. Bremner

Hi BP!

My partner and I have a couple projects going on at the moment in the Cleveland market, but currently don't have someone to take legit pictures or shoot video of the whole process (I like to have good before/afters to keep track of what we've done and attract investors).  I originally thought it would make sense to ask for a local newbie to tag along, learn and help out by handling this, but it might make more sense to document it professionally.  Does anyone have any experience in finding good artists that can handle this type of job?  The only time I've had experience with this was for my wedding, but it almost seemed like you have to roll the dice lol I'm hoping someone can show me otherwise!

If any newbies in the Cleveland area are interested, we would still consider it - just hit me up and we can chat.  We are working on a medium sized multifamily and a single family flip, so it's a good mix to learn.

@Justin Frye

I have 2 that I've used personally - over $250k worth of work done in the last year alone and I would be more than happy to pass their info along to you.  PM me for info, I prefer to not blast their info online.

@Joanna Golden

There are certainly private money lenders and hard money lenders that will do these kinds of loans, but my personal opinion if I were in your shoes, would be to stay far away from them if at all possible. Hard money for me is a last resort - if the deal is good enough and nobody else will lend on it, I look to HML.

I recently closed 2 loans with a bank that lends nationwide.  They weren't quite as low as what you want, but they did say they will do lower-priced properties.  Their closing costs were very reasonable too, each loan was about $1,200 plus $550 appraisal for ~$100k per loan.  I closed both at 5.5% for 30 years fixed.  I had her run a $50k loan scenario and the closing costs went up by like $300 or so (they get less lender credit on smaller loan sizes, so they can't cover as much of the closing costs for you) and the rate would go up to 5.75%.

I went through Costco actually and one of the bank in there was Bank of Internet.  Give them a try, super easy to work with and did everything remotely.  I worked with a lady that I'll be happy to refer you to if you like?  I have no affiliation with them, nor do I benefit any by referring anyone to their bank, but she did a great job and I try to help the people out that helped.

@Matthew Jure

I have a duplex in Cleveland that I pay roughly $700 per year on, a Duplex in Lakewood that runs me around $900 per year and a Duplex in Shaker Heights that runs around $1,100 per year.  From what I can tell, the nicer the area, the more expensive the insurance.  I'm not sure exactly why, because my Lakewood property appraised about $180k this year and the Shaker property at $150k, but the insurance is a bit higher for Shaker.

I did recently switch my insurance, I was paying $900, $1,100 and $1,500 respectively with my previous company (even though they sound a lot higher, they were actually the cheapest of 4 different companies that I shopped who were all local in OH!  It's madness lol).  There really is no good way to estimate insurance costs unless you have a similar property already in that area.  I always run my numbers with a higher estimate to make sure, then get quotes from my insurance agent before I close on the property.

I hope that helps!

@Courtney M.

Welcome to BP!  It's very exciting to start your investment journey, hopefully you can find some useful nuggets on here to help you along your way.

Be weary of people who try to tell you what's best; I see a lot of people who try to convince others one way or another with a very limit scope of experience.  My personal opinion is that investing should be very subjective.  What works for me may or may not work for most others and vice versa.  Typically I like to give a brief overview of my experiences and the benefits I've gained and let others pick and choose what is useful to them rather than "You should do X because it's the best".  

I started buying real estate in 2012 locally and "house hacked" a single family home for my first deal. The home prices were much less back then, my first property selling for $250k. I used an FHA loan with 3.5% down and was able to live in an upstairs "mini apartment" (it was 2 bedrooms and 1 bathroom, I added a door to the main hallway so it was private, like my own little suite) and rented the other 4 bedrooms out. After about 6 months, I want more and split my 2 bedroom up and rented the other. I was able to repeat this process 3 times and pick up a 4th property in 2015 with an investor (4 properties owned or managed). By renting the rooms out, I was able to collect more than 2x the amount of rent compared to a regular lease. It's more work, but much more reward so I kept at it.

Within a few years, my rental portfolio was earning more than my six figure job so I quit and went off on my own. I currently buy out of state because I cannot get anything locally to make sense. I've tried my hardest to keep it local, but after 2 years of trying, I made the switch to going out of state. Within a year, I was able to buy 3 duplexes that I BRRRRR'ed and the following year I partnered with another investor on a 37 unit building. We are looking at a 48 unit building now along with a few other commercial deals, but who knows where the future will lead!

A few takeaways from my experiences that I like to share:

- If you want to leave your job, DO NOT do it too early.  I wish I had stayed a little longer to get one more property before I left.  It's not impossible to get financing once you are self employed (I just finished several cash out refi, fannie/freddie loans).

- If you have a lot of money and a good income, it's much easier to experiment on your own and learn all you can with your first couple deals.  If you're short on money and don't have a lot of "play money" to invest with, then it might make sense to look for a partnership in the beginning so you don't lose your @$$.  When I bought my first property, I was making six figures per year, I had literally 0 debt other than a student loan for $350 per month, lived well below my means and the mortgage was $1,700 per month.  If my room rental idea flopped, I would have just paid the mortgage the same way I would have an apartment.  I had the extra income to support big mistakes.  If I made very little money, I would have approached it differently because any mistake would have bankrupted me.

- Aside from getting a good deal, the one thing that I can attribute to my success has to be the people around me that helped me out.  For example, the handyman that I used for all of my local remodels literally saved me hundreds of thousands of dollars.  Lots of contractors take money and run, do poor work or charge you way too much.  My contractor did the work for cheap, did it with good quality and minimal supervision.  For the first property or two, he told me what should be done because I had no clue what I was doing lol.  Had he been a shotty contractor, I would have been screwed for sure.  I owe pretty much everything to the people that helped me out.

- Do not underestimate the power of a good partnership.  I did almost everything on my own in the beginning of my investing career.  Who else could do a better job than me, right?  Turns out pretty much everyone lol.  I've been able to grow exponentially with a partner that I trust wholeheartedly.  If I had to do it over again, I wish I had done my first out of state deals as a partnership.  My best estimates are that I would have made at least an extra $50k on the 3 duplexes I did on my own and they would have been rent-ready much sooner and collecting rent faster.

I wish you the best of luck with your investing!  Feel free to reach out in the future if you want to chat or run some ideas back and forth.  I'm fairly local to you, on the edge of Inland Empire in Claremont so I know this market reasonably well (I have my license in CA and can run comps, analyse deals you're looking at, etc. if you need it.)

True, they have very high taxes. My strategy for this is to buy REALLY run down or damaged properties in order to get the purchase price as low as possible. I've been able to pick up a property in Shaker for $27k which will cut $9k annual tax bill down to way less than half of that. Plus, since these properties need so much work, i'm able to get my all in cost at about 65% - 70% of ARV which is perfect for the BRRRR strategy. The only problem is, this isn't a very stable business model (not enough properties will sell in this price range). It's great for the one-off deal for the year, but certainly not something you can go from 0 to 100 units in a couple years doing.

PM me for the agent info, I would rather not blast her info and have the noobs that have no ability to buy properties take up her time.  Not trying to sound rude or harsh btw!  I'm just very protective of the professionals I use as I would expect the same level of respect from them as well.

Quick follow up:

The city did their investigation and the insurance company has determined they are not going to cover any of the damages.  Their reasoning is that damages caused by the city line were not known to the city prior to it rupturing.  The only time they cover damages is when they know there is a problem and decide not to fix it, then later the issue arises again and causes damages.  Basically, I'm SOL lol

@Ahmad Kakar  It really depends on the strategy you are looking to deploy.  When I first started buying MFH in the Cleveland area, I only looked at B class areas and up.  As an out-of-state investor myself, my primary concern was getting an asset that would be steady/stable and had decent cash flow.  The numbers for Cleveland are very attractive on paper, but without the team or experience in place, I felt like my odds of losing my investment were much higher and decided to look at suburbs of Cleveland where cash flow is a bit less, but far safer.  Here are the areas that I personal look at on a daily basis:

Lakewood, Shaker Heights, Cleveland Heights, Parma, Berea, South Euclid.

I look in the other areas as well, but I'm MUCH more cautious.  When I see a property profile and the school districts are shown as 1 out of 10 for K-12, I slow down and look for reasons not to buy.  As the saying goes, "It's better to miss out on a good deal than close on a bad one".

I hope this helps!  As for the realtor reference, I'll be more than happy to share who I use.  I've had to fire 3 agents in the span of a year since I started investing out there and I must say, having a bad agent upfront can cost you tens of thousands of dollars, even at $100k price point.  I've bought 3 MFH so far and in contract for my 4th and finally found an awesome pair of agents that work together.  Make sure you get good references and be aware of any bias (people who personally benefit from you using their reference specifically).

Here is an update on the situation:

I decided to not move forward with any legal action.  There is very little chance that I would be able to produce concrete proof that the previous owner covered up flood damage and failed to disclose the flood incident.  The lawyer stated that, "The best way to have proof of this is to look up the previous owner's bank statements and look for repair bills and inquire with the company who was paid.  It will be nearly impossible for a judge to allow you access to someone else's bank account information."  Another possibility is checking with the city for previous flood or city pipe issues, which they have none on record.  It's very difficult to prove when an incident happened without written records.

I also decided to speak directly with the city's law department and file a claim with them, which they forwarded to their insurance carrier.  They are currently investigating the incident and will make a determination as to what, if anything, is covered.  My fingers are crossed hoping that they cover at least some of the damages, but mentally I've already moved on with the costs and absorbed them into my tax write offs.  C'est la vie!

With Wells Fargo, I did individual HELOC per property since I don't think they offer a package HELOC. There are certainly companies out there that will do multiple property HELOCs, but I have not done enough research to confidently say the costs, rates, LTVs, etc. so that would certainly be something to look into.