All Forum Posts by: Matt Jones

Is your property a condo that has a policy included in the HOA dues to cover the building? Many condo policies here are much cheaper than a policy on a townhome or single family home since the owner only needs to insure the interior and their contents instead of having to insure the whole structure.

@John Devereaux Welcome to Pensacola John!  This is a good market for investing but Caleb is right about GC's here.  Good ones are tough to find and often their clients won't share their info because they don't want to risk losing them.  Several Pensacola contractors have gotten in trouble for taking money from people and never starting or never finishing the job.  Google Pensacola Contractor arrested and you'll see a few names pop up in recent articles.  If you have the time and if your renovation project is mostly cosmetic and/or includes things that are usually done by turn-key type vendors like Plumbing,HVAC,Electrical, ,flooring, appliances, foundation repair, etc.. then you may find that you can schedule those things directly and save a good bit of money over running it all through a GC.  Not sure if that'll work for your situation but it can be a good option.

On Lending, Regions Bank actually called my wife yesterday to see if we wanted to do a HELOC so I know they are doing them. I believe that SouthState Bank & Cadence Bank on Bayou Blvd have both been advertising HELOC's recently so check them out as well.

@Justin Rush  Where are you going to school with your GI Bill? What is your living situation? House hacking might be a good alternative option that still allows you to get started as an investor and also keep the majority of your $80k in hand so that you can invest or lend it out when you find the right opportunity.

Pensacola is a great market for investing but as another commenter mentioned it's hard to cash flow right now. STR owners, especially the ones who aren't right on the beach, are facing increased competition and mostly lower profits. This is driving many of them to experiment with MTR which ultimately causes the same issue there. It's not impossible to find a good STR or MTR in this market but it's gotten exponentially harder in the last 24 months. Personally, I love multifamily but I will say that we don't have a ton of multifamily inventory here so it can take some very serious searching and some patience to find a viable property. You also mentioned lending, I think in any market that can be a good fit. Lending on notes or as an HML is more about income today than creating the generational wealth that you mentioned but it can be a good way to earn a solid return. Personally, I wouldn't lock my money up in lending for a long term but lending for up to a year to earn a return on your money while you see what happens with the RE market isn't a bad idea.

One of the biggest mistakes that I am seeing these days is that a lot of investors pressing to get an investment property and they buy something that doesn't look likely to be a great investment.  I can sense your passion and your excitement to get started.  That's awesome and it will help you as long as you don't let that excitement talk you into buying an investment that will turn out to be an anchor.  Your first investment property isn't likely to make you financially free all on it's own and that's fine but it is important that you make sure not to buy something in haste that will slow down your future investing.  Bottom Line: Choose a strategy, study it in detail and be ready to invest when you find the right deal but don't jump into a bad deal just to be investing.

It's definitely possible in the Pensacola market but the key is finding the right deal. In addition to scouring on and off market sources for potential deals, I would recommend working to line up some extra funding for renovation in the event that you need it because hoping to find a deal that your $30k will be enough for both the downpayment and renovation on it's own is probably slim. Possibly your bank and definitely some online lenders offer personal loans that you can leverage if you have good credit & verifiable income. Potential ways you could structure a BRRRR deal with your $30k:

1) Combine the BRRRR with a house hack and use a low down payment loan to acquire the property and then your remaining funds to add value through improvements. Rent it out and refinance it after a year.

2) Find a Hard Money Lender that works with first time investors and use your $30k as the downpayment and use their money for the renovation

3) Use your money as a downpayment for an investment property loan and line up funding for the renovation expenses.

4) Find someone willing to owner finance with little to nothing down and use your $30k to renovate.(This is probably the least likely scenario but it does happen is a great option if you can find the right seller)

5) Find a partner that you trust and combine your money. $30k on it's own may not be enough if you are having to make a downpayment AND renovate. If someone else brought another $30k your combined $60k has a lot better chance of being enough to make a BRRRR deal work

Good luck & I'm local so let me know if I can help!

I have worked with section 8 tenants and the local housing authority in both Escambia(Pensacola) and Santa Rosa county(Gulf Breeze, Milton, Pace) when I was managing properties for others and took over management of section 8 units.  Both were relatively easy to work with and were good experiences overall.  I think it’s important that you still screen your tenants well because, like any tenants, quality of section 8 tenants vary. You’ll also have to keep your property up to their minimum standards but I didn’t find that hard to do.  There seems to be a shortage of housing here that is willing to accept section 8/vouchers and I received calls on almost every rental listing that I posted asking if we accepted vouchers so it will likely increase the demand for your rental.  

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $305,000
Cash invested: $106,000

3 Duplexes located next to each other a couple of miles from NAS Pensacola. All 2 bed 1 Bath units with central HVAC & W/D connections. Total purchase price for all 3 duplexes was $305k.

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

BRRRR Multifamily deals are exactly what I am looking for so I new immediately when these properties came to my attention that I wanted to try and buy them.

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

My property manager reached out to me to see if I would be interested and I jumped on these immediately. 1 of the 3 duplexes needed a lot of work and I discovered a foundation issue during due diligence and was able to negotiate an additional $25k off of the purchase price.

How did you finance this deal?

20% down commercial loan with a local bank. 5 year term and 20 year amortization.

How did you add value to the deal?

Other than the sheetrock & kitchen cabinets everything in the worst duplex was replaced/fixed/painted. I also repaired the foundation issue. To repair the foundation plus renovate both units was right at $40k but added tons of value to the property.

What was the outcome?

The two renovated units are now renting for $1100 per side. The duplex in the best condition at the time I purchased had tenants that are in a 1 year lease that have yet to expire and rents are a little below market rates, the 3rd duplex had month to month tenants and I raised the rents slightly and will likely do so again this fall. I could, and may, refi this property and pull all of my money back out of it when interest rates improve.

Lessons learned? Challenges?

I did more work personally on this project than I usually do and while I enjoyed being hands on it likely slowed down the work and wasn't the best use of my time.

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

I was my own agent for this deal and Renasant Bank did the financing. I'm happy to share my lenders contact info for those that are interested.

I'll PM you some foundation repair companies and a structural engineer.

A foundation company will very frequently recommend a solution that utilizes their services so @Caleb Brown has a good point but an engineer might not be the most timely or cost effective option if you are on a tight timeline.  A foundation company in our area can generally come out within a week or less and they usually do not charge for the initial consultation.  A structural engineer will almost certainly charge for his/her time and they are often booked out a few weeks.  Personally, because of the typical inspection timelines, I tend to start with the foundation company and use that as my likely worst case scenario for running my numbers and negotiation and then get a second opinion from a structural engineer as time allows or if I move forward to closing.  

Hi Leah,

I am always interested in a good deal for myself or the buyers that I work with.  Can you send me the details?

Hey @Arsen Atanasovski,

I'm a full time agent and investor here in the Pensacola market. I have experience with flips, STR and LTR both personally and as an agent. Let me know if I can help!

Hi Shireen, Pensacola is a great market for STR and has several distinct areas that do well with STR like Pensacola Beach, Downtown and Perdido Key. What area are you thinking about?