All Forum Posts by: Stephen Predmore

@Janine Hoke  Thank you.   What part of the city were looking to buy?

@Matthew Wang.  Thanks.  Business checking account setup at PNC bank.  Nothing special.

I setup my Maryland LLC myself through the state website ($100). I talked to a few other local investors (met thru meetups) and asked how they did it. I was able to borrow a few of their documents and just tweak a few things for myself. It is a very basic, Single Member LLC. I did not use a lawyer. If I could have qualified for a conventional loan I may not have even filed an LLC (and just had an umbrella insurance policy), but the commercial loan product really forced my hand. Mortgage rates are definitely higher for LLC's.

@Josh Turansky.  Thank you.  Baltimore is definitely a good cashflow market, and you probably won't see in these kinds of numbers in California.  As with any big city, there are lots of systemic problems, silly regulations, high taxes and fees, but if you can get past that and see the opportunity, Baltimore is a gold mine.

@Jack Quin  Thank you.  Since this is my first deal I don't have anything to compare it against, but my policy did not seem that expensive $639/yr  ($53/month).   It looks like a typical residential Landlord policy.  There is no language in it that specifies a commercial loan was used.   I used Luray insurance.

@Megan Roe  I'm a new investor myself from Lutherville.  I just finished  (& posted) my first deal after listening to podcasts/studying on BP for about 2 years.  The lack of in-person meetups for the last 5 months has certainly been a bummer.  We definitely need to stay active on BP.   I also love the very active  'Maryland Investors Network' Facebook group.

@Tyler Dalton @Account Closed  Thank you.  $1400 was a market tenant. I was hesitant to go the voucher route on my first deal.  My listing agent did her homework and we agreed on that price.  I'm definitely going into future rehabs with a voucher tenant in mind.

@Rebecca Winslow Thanks!  Looking forward to seeing your deal breakdown here in the forums.

My contractor arranged & paid for my inspections.  He had one guy do both the lead inspection and the Baltimore City rental inspection.  Both of these resulted in an official inspection document that I needed to scan and submit online.

+Baltimore City rental reg $30  https://dhcd.baltimorecity.gov/pi/rental-property-registration-and-licensing
This needs needs to be redone every 2 or 3 years.  The City will notify you when it needs to be re-done.

+Lead inspection reg  https://securemde.mde.state.md.us/
(I needed to email them to get a MDE Tracking # first, which needs to be written on the inspection doc).   This inspection need to be redone on every tenant turnover.

I did not do Section 8, which would have been an additional Section 8 inspection.  This would need to be redone yearly. 

My bank also required a mold/particle test since there were definite mold issues pre-rehab.  This was an expensive PITA and had to be done twice since it's very sensitive to construction dust on walls.

Apartments.com has been wonderful, easy and free for rent collection.

Another website that I've also just gotten into for bookkeeping is Stessa.com Love it! I connected it to my business checking account and automatically uploaded all my REI transactions. I then classify each of them. I've heard you can export all this data and send it to your CPA during next year's tax season. Again, easy and free.

@George Lang Thank you. I was not able to BRRRR this deal because there really wasn't enough meat on the bone. Cost + rehab (65+35=100k), ARV 115k. If I refi'd at 75% ARV, I'd only have gotten back 86k (plus another set of closing costs). I knew this going in. The commercial loan I got also has pre-payment penalties for exiting it under 5 years.

If I am to find my next deal and try to BRRRR:

1) Needs to be a great deal

2) Need to be all in (acquisition + rehab) for 75% ARV (preferably using cash or HML)

3) Force value thru rehab (2/1 -> 3/1 ?)

4) Find a great tenant.  I'm leaning toward Section 8 which tends to have higher rents.

5) Need to refi into a conventional loan with low interest rate (probably won't use my LLC)

BRRRR deals are really hard to get 100% of your money back. How much money you are willing to leave in the deal to make it worth it? I've also been studying the 'delayed financing' strategy used by @Alexander Felice (BP podcast #301) where you include all rehab and insurance costs on the HUD-1 closing sheet. Then you're able to get back a bigger chunk of your initial $$ on the refi. Sounds awesome. The caveat is that you need to pay all (full acquisition + full rehab) costs upfront at closing.

@LaToya Martin  Thank you.  Where are your 2 rentals located?   I agree that some stuff is just way too much for me to take on.  I was just looking at some other properties (west side) this week and wow! there are a ton of distressed properties, board ups and shells in certain areas.  I'm not ready for that.   Definitely need to drive the streets prior to making those offers.  There are still great opportunities in the city/county however, for those willing to put in the work.

ARV was 115k. This was done by the bank prior to any rehab work. I did not get another appraisal post-rehab since I'm holding it for the foreseeable future. I feel it may be worth more (don't we all?) since I think we did a pretty good job :)

@Tom Harkins Thank you.  I originally planned to use Cozy. I went to the Cozy website and it re-directed me to Apartments.com for the rent collection.  It looks like they are merging and all Cozy accounts will slowly transition over by mid-2021.  

https://cozy.co/future-of-cozy/