All Forum Posts by: Patrick Menefee

Thanks to the group for showing up! Looking forward to doing it again next month (I created the event early this time!!!)

Join us for our monthly Friday meetup in the month of November! This will be the fifth that we've hosted at Angry Ale's, and we're excited to see the increasing interest and attendance! 

We've had a core group who has shown up to the last few, and it's become a great opportunity to check in and keep everybody accountable for their progress month-to-month. Thank you all for showing up, and I'm excited to keep it going!

For those of you (such as myself) who travel or are unavailable during the week for the fantastic meetup that @Chris T. has put together, or just want another opportunity to meet like-minded investors, join us for some drinks and real estate talk at Angry Ale's bar in Montford!

There is a sectioned off room in the back right of the bar when you walk in and we will meet back there. Please RSVP so we get a feel for how many to expect, and tell your friends!

What: friendly, informal meetup to network with fellow investors, share your experiences, and have a few drinks

Where: Angry Ale's bar in Montford (near the Park Road Shopping Center), Friday November 15 @ 6:30pm

When: the third Friday of every month

Who: anyone interested in networking, talking real estate, or just enjoying a drink with good company

Please pass the word to any friends or family who may be interested, and I look forward to seeing you there!!

@Jon Lotti ya it’s my fault, i forgot to put it on here sooner. Sorry! Looking forward to seeing you at the next one

@Jon Lotti most times have had around 10 or so!

Join us for our monthly Friday meetup in the month of October! This will be the fourth that we've hosted at Angry Ale's, and we're excited to see the increasing interest and attendance! For those of you (such as myself) who travel or are unavailable during the week for the fantastic meetup that @Chris T. has put together, or just want another opportunity to meet like-minded investors, join us for some drinks and real estate talk at Angry Ale's bar in Montford!

There is a sectioned off room in the back right of the bar when you walk in and we will meet back there. Please RSVP so we get a feel for how many to expect, and tell your friends!

What: friendly, informal meetup to network with fellow investors, share your experiences, and have a few drinks

Where: Angry Ale's bar in Montford (near the Park Road Shopping Center), Friday October 18 @ 6:30pm

When: the third Friday of every month

Who: anyone interested in networking, talking real estate, or just enjoying a drink with good company

Please pass the word to any friends or family who may be interested, and I look forward to seeing you there!!

@Scott Passman great question, and my answer today is absolutely different than what it will be a year from now.

For me, it’s adjusting my initial strategy of slowly snowballing via primary residences and just taking massive action. In June I made the decision to switch, when my current plan was to buy again in early 2020. In 6 weeks I had 10 units under contract (just closed on them this month) and had learned more than i would’ve in the entire year otherwise.

@Patrick Helms sounds good based on the limited information you provided, but those are simply 2 data points out of many. Some other things to consider:

What are market rent comps you can expect when it goes vacant?

Are there HOA fees?

Who pays utilities? (If it’s you, there goes all your cashflow)

How much is property tax & insurance?

How are you going to pay for it/can you get a conventional mortgage?

How long is the current lease?

Do the tenants actually pay on time and in full?

These are all important to consider from a numbers standpoint, and analyzing a property off of nothing more than price and expected rent is a huge gamble.

The tenant piece is critical. Seeing the numbers on something rented out can look appealing, but because it’s “rented out” for $650 doesn’t mean the tenants are actually paying that regularly and on time.

@Aaron Yang I pay $120/mo for management, plus 50% first months rent for placement. So i factor 4.2% + $120 every month

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $155,000
Cash invested: $10,000

This is a group of three separate duplexes side-by-side on the same property. Each of the six units are 1br/1ba/500sqft.

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

Multi-family is currently my bread and butter (I don't have a lot of bread or butter, but I do have 2 multifamily...)

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

This had been listed on the MLS for a couple of months. The units are unique, as is the situation of having three separate buildings on a single property, which is why I believe it sat on the market as long as it did despite the attractive rent roll. It was listed for just under $180,000, and my max purchase price was $160,000. I put in an offer and they countered at $155k!

How did you finance this deal?

Because it was a single parcel with 6 units, I couldn't secure conventional financing and instead had to get a commercial loan. I used 25% down, 5 year balloon (I think? More on that below), and went in with a partner who provided 90% of the up front cash

How did you add value to the deal?

**Just closed, so updates are not yet underway**
3 of the units have been recently updated (not the best work), are in pretty good condition, and have increased rents. The other 3 units need some touch-ups in order to raise rent, to include flooring in the kitchen and bathroom, a deep cleaning, interior paint, and possibly new appliances in the kitchen.

Additionally, I am hiring a surveyor to go out and subdivide the lot into two, with two duplexes on one and a single duplex on the other

What was the outcome?

Once I get the units repaired and get the property subdivided, I'll refinance into two conventional mortgages. This will also be an "accidental" BRRRR where based on the ARV I will be able to pull out the majority of the cash invested. I'm looking at an ARV of ~$210k, and between $10-13k in repairs depending on the cost to split water. At a $13k estimate for repairs, I'll pull out all but around $8,000 while receiving $745/mo cash flow and a 106% COCROI

Lessons learned? Challenges?

Funding was a challenge. Many lenders want a commercial loan to be at least $200k, and many have a prepayment penalty which would hurt when I refinance. Additionally, my partner was looking to be a silent investor and not be on a mortgage which added to the challenge. Ultimately, shopping around for a local lender who could do what I was looking for was invaluable and was well worth the patience

Fantastic question! I have a lender that will refinance for 80% rather than 75%, which brings me $164,000. That covers the loan + down payment, but only covers $4,000 of the $7,000 in closing costs. So you're right, I didn't pull out ALL of the initial cash...but all but $3k works for me!!

You caught me...I rounded. You weren't supposed to do the math :D