All Forum Posts by: Rob Barry

@Brian Adams - This is exactly the kind of example that makes a community like this so valuable. Will PM for more info.

@Robin Boyer - Rent is $1095 a month. 1,500 sq ft, 3/2.5 with garage. 

@Dan Mahoney - Yeah I suppose it does seem high. Well, it was a way to get started. Whether or not I do more deals the same way remains to be seen. Thanks again!

@Ryan Johnston - Thanks for the encouragement! I bought in Lithonia, about a mile from the big shopping complex.

@Chase Beasley - 7-8 years is not terrible. At this point I'm really looking to begin scaling up a larger portfolio, and will worry about being free-and-clear on assets next decade. For the next investment.... well I've been thinking to pump the market for a few more of these if I can find them, and get to a cluster of 5-10 under the same management. Though I will admit, I'm beginning to think about giving multis a long study.  I may be moving to Austin in a year and there seems to be much growth in numerous areas in Texas. Austin is a sexy market, but Fort Worth might be more lucrative. Need to study more.

@Dan Mahoney - 1)I was working with a buyer's agent who specializes in these kinds of foreclosure deals and charges a flat $7,000 to source and vet them.  It does add some cost, but the deal still did come in at a slight discount to market price and I didn't have to fly in from the UK. Is it unusual for buyer's agents to charge like this? 

2) Yes we shall see. The management is family-run (Husband, wife and daughter team) and they've got some 400 units under management. The seller's agent negotiated the 8% to offer good cap rates to her international buyers and volume to the managment co. Everyone seems very transparent in this and they all came recommended by a colleague who did 30 deals with them. But if their incremental costs creep up despite the very new state of all the fixtures, I can always fire them. But I do appreciate the advice. I'll be sure to keep a close track on expenses and cap rates.

3) HOA was represented per year.

My very first tenant moved in on Thursday, making me officially a landlord. As exciting as this was, I'm the more eager to push to the next one. I bought in a suburb of Atlanta, GA.

The Numbers (all annualized):

Paid Cash: $77,400

Rehab: $21,000 ( estimate was $16k, but when we turned the power on after closing, the HVAC unit was dead).

Closing, commission, legal and other: 10,000

All in: $108,400

Current comps: $115,000

Rent: $13,140 

Management: $1051.20

Insurance: $700

HOA: $150

Property tax: $1,527 

NOI: $9,711.8

Cap rate: 8.4%

The HVAC unit cost 5 grand and was an unpleasant surprise. But the bright side is it's a 2002 construction and now virtually everything inside is brand new. Obviously not a home-run deal but I'm more or less pleased. Will be happy once I get 70% of that equity out to move to the next deal

So in the grand scheme of things, how do you think this looks? If you were relatively cashed up, would you buy more deals like this to build a SFH "backbone" for your future portfolio, or go straight after bigger deals? I'm looking strictly for cashflow.

I just got started in out of state BRRRR investing. I live in London and just bought in Atlanta suburbs. Reno is done and tenant applications are in. Process has been fairly smooth, save for one HVAC $urpri$e and some delayed window glass. But it'll do >1% RTV. So I'm not too worried. It's a big leap to place trust in a team so far away. But it's very important to have that trust because you can't just pop over to verify the condition of things. I found my people like most do, by networking. My main concern isn't if the team will be great over time. I'll watch things like a hawk and replace them if they aren't. Mainly I'm concerned with finding enough good deals fast enough, and enough lending to support it all. Things are just so slow in the beginning. But it's probably for the better.

The LLC is mainly to insulate you from liability, such as a tenant slipping, falling and lawyering up. A few hundred dollars to set up and a small annual fee depending on where you do it, and it protects your personal assets. But it is optional and you can set it up later. I do try to avoid commingling business and personal assets to be on the safe side.

Hi Jason, I'm sure experts here will have clearer information, but I am in a similar boat to you, having bought a foreclosure for cash, rehabbed it and about to rent it. Now we need to get that equity out to buy more! I believe the cash-out refi is the option we would want. I don't think lenders would balk at this as long as you show a history of steady income, don't have a bunch of loans outstanding, and the loan will be in first position on the property. I believe the typical minimum seasoning time is 6 months, though I have read it can be as little as four under certain specific circumstances. My plan, when I'm around done "seasoning" is to call around to a few area lenders and explain that I am in need of a cash-out refinance loan on a property. Explain that I would like the loan secured against my personal assets (to avoid the commercial rate) but explain that the property will be held in an LLC. I will explain that I would like to build a relationship with the lender so as to build a portfolio together and if would bring in my LLC's banking as well. You can't expect a low owner-occupied rate but it certainly would beat a commercial loan. Regarding the HELOC on your primary, I can't comment from experience. But it's not like you HAVE to take the money out and it could be a useful tool to have if a good cash deal comes across your radar, or for flipping. If it were me, I would be disciplined about a HELOC on the primary - only planning on taking out money that could be repaid within 12 months in full. Again I am not an expert and welcome anyone to correct my thinking.

How far in advance are these scheduled? I'd love to attend in June, when I come to visit my first SFH for the first time. I'd schedule my flight around it!

Hi Sam,

I'm also a new investor, starting with Atlanta. Just bought my first BRRRR property (a foreclosure). It was an okay deal but not a home run. Will probably cap 13%. A busted HVAC unit took a bite out of my initial equity position. While I'm looking in the suburbs surrounding Atlanta - and not the metro area - my impression thus far is that it's much trickier to find amazing deals than what I see from even a year or two ago. It seems to have gone from "Get in now while it's cheap!" to "Looks decent because prices are still rising."

There is quite a bit of migration of blue collar families to the area and the employment outlook looks quite good. So the economic factors seem to support long-term health of rentals. But you'll likely have to really work to find a home run of a deal.

I'm buying in cash, rehabbing and then going for financing. There seems to be a decent amount of inventory if you're cashed up at least. But I think the gold rush is over and I feel like I'm rooting for scraps.

The reason I settled on Atlanta was because I found good people there to work with, which business has taught me is generally more valuable than how a given deal looks on paper. I had also been looking at Tampa and Orlando, Florida and  Austin, Texas (too tenant friendly).

Good luck!

The only thing I can think of is if you put it in an LLC, you could pay rent to the LLC which is then treated as rental income by the LLC and a rent expense by you. If it were were held under a Self-Directed IRA, the net could possibly remain pre tax. (Disclosure, I am not an accountant or financial expert). Just a thought. Personally, I don't see much point to holding your primary residence in an LLC except to shield it from personal liabilities and damages, or from those of any other LLCs you may have.