All Forum Posts by: Patrick Menefee

@Bryan Larsen are you planning to live in one of the units? The VA loan can only be used to purchase a primary residence, not on a straight investment property. If so, you're all good.

The difficult part about a VA loan is the cash flow since your payment is higher. When you factor in the 2.10% origination fee (financed into the mortgage) and no money down, you're financing 102.1% of the purchase price. That's much harder to cash flow than a property where only 80% of the price is financed.

That said, if you can find the deal where you still get positive cash flow, I would absolutely do it. If you can get 4 doors cashflowing with no cash out of pocket, that’s incredible. As long as you buy smart, the equity should take care of itself in the long run.

So in short, if you can find one where the numbers work for positive cash flow (after factoring in vacancy, repairs, capex, and management), I think it’d absolutely be worth it!

Best of luck.

@Michael Mulroy to put it in simple terms, if you were to pay off $33k today on property 2, it would increase your cash flow by $900 right? My math may be off, but that looks like a 33% COCROI...hard to beat with any other investment (if you do, tell me what you found so I can get in on it!)

@Aidan Mulligan congrats man, that’s fantastic. I was actually just looking back at messages and saw our conversation about this one, glad it worked out so well!

@Geordy Rostad correct I didn’t end up doing it.

Glad you brought that up on the management as I explained it poorly. The 11 or 16% was meant to capture annual expenses on a monthly basis, assuming 1 year turnover on tenants. 1 time fee + monthly rate / 12, which i think actually came out to 14% now that i think about it again (instead of 9%...forgive my confusion).

Most id seen were 1 month rent for placement plus 8% monthly (comes out to 16.3%), and this one was half month rent for placement plus 10% monthly (comes out to 14.2% monthly).

This is a little different success story than most as I don’t have a nice cashflowing property to share, but I certainly learned and will take it to the next deal.

BACKGROUND

I just purchased my first property in March, a primary residence that I’ll rent out in a year when I move. That got the ball rolling for me and since then I’ve been looking for the next investment. In the past week I decided action was better than inaction and I found what looked to be a solid deal

PROPERTY/DEAL DETAILS

4 bed 2 bath SFH in a growing neighborhood. Currently has a tenant paying just below the 1% rule, with market prices allowing me room to surpass exceed 1%. No rehab required (just some interior rework whenever the tenant eventually moved out and a few clean), property manager was going to stay on with current tenant so I'd avoid the initial fee, and COCROI was currently at 6% which would be over 10% once rent was near market rate.

Got all the info from my agent, answered all questions, and plugged the final numbers into my spreadsheet one more time.

OOPS

I made 2 big mistakes:

1) I had used a property management estimation percentage from a book rather than real examples, and I was off significantly (up to 16% from 11%)

2) my mortgage calculation was based on when I purchased my primary residence months earlier-it was not just an investment property, but it was for a mortgage under $100k...my interest rate was 1% higher, down payment was 25% instead of 20%, and I owed 1 point up front

Both my cash to close and monthly expenses increased, making for an abysmal COCROI. I was overly confident about my finances, sure of my calculations, and also extremely excited about the prospect of my first cash flowing investment property. The OTP was already drafted and I almost told my agent to send it before I realized all this.

Luckily this story ends well for today. I saved that capital to invest in an actual deal, I am now much more prepared to analyze future deals, and I even found a 4plex deal that I hope to offer on tomorrow. Alls well that ends well as they say, so I’ll call that a success story for today

Hello fellow Queens City folk! I’m an investor in Charlotte looking to start investing in small multi family properties around Charlotte, Gastonia, etc. I’ve talked to plenty of people on here from the area, so I figured why not start a discussion for people to post lessons learned, success stories, horror stories, tips and tricks, etc.

What will you do next time? What will you never do again? What local laws made NC a great or terrible place to invest? What kind of partnership did you use? Who are some local businesses to support?

Would love to see this become a go to resource for people, as well as a potential opportunity to grab a drink and talk real estate with like minded people in the area.

I’ll start by saying that Verge Realty (especially Alex Lopez and Apple Tran) are fantastic real estate agents, and MVB Mortgage (specifically Michael Caridi) have all been invaluable to me and are highly recommended. They know their area, know investors, and know their stuff.

Looking forward to sharing stories and meeting people nearby!

@Lucas Mills I like your thought process as I see some similarities in my current approach. i turned 30 in November and set a goal of $10k/mo in income by my 40th, which is no small task. I'm finding at least for now that my best bet individually in my market (Charlotte/Gastonia area) is to go the small multi family route, and then partner with someone who has more expertise on BRRRR to continue recycling the same dollars.

I don’t know how this plays out over the next 9.5 years, and I feel like I see myself moving towards larger multifamily in the future. But i think if you’re looking on your own, a decent multi can be a multiplier. You don’t necessarily need to get it to tip top shape, just rent shape. This is the approach I’ll be using until either it fails or I move on to something else.

Best of luck to you sir.

@Michael Tan thanks for posting this. I’m certainly interested as I’ve been thinking along similar lines lately...I never thought about a separate checking account per investment, but planned to have 3 separate accounts:

-Checking account, handles all major to include mortgage payment, rent collection, property manager payment, etc

-Savings account #1, to strictly hold all security deposits

-Savings account #2, to hold all reserves for repair, capex, and vacancy

Would likely just use a debit card with the checking account for any repair expenses or capex to avoid opening a new credit card, but would likely get a separate credit card to go with it all if I were doing more rehab/flips.

Very curious to hear what the benefits of a business account are...I’ve seen no major benefit unless you have a significant amount of money to cover the minimums. Personally, Ally seems to have some of the best interest rates and is what i plan to use in the near term.

I’ll be following this thread for sure. Thanks for posting.

@Joe Prillaman

Awesome story Joe, great work. Looking to do the same over here in the western side of the state.

When you talk about your network (outside of the funding question you’ve answered numerous times), did you know many of the people when you started? Or just a series of meetups and connections?

I moved to Charlotte just over a year ago and I'm the past few months have seen my REI network grow through a number of different means, just curious how you came into your network.

Thanks for the inspiration, keep it up!

@Davin Burnell

I’d have to echo @Laura Yates from what I’ve seen so far, with a possible exception being extremely heavily distressed properties. I don’t have any experience or expertise with them though so even those I can’t speak to what a good deal would look like.

I’ve put in a couple offers and the best deals I’ve seen have been buy and hold, maybe needing minor repair to increase rents.

Do you live here? Moving here? Looking to invest from a distance? What are you looking for?