All Forum Posts by: Frankie Woods

Welcome to the site @Herman Ryals !  This is a great place for learning and networking.  I wish you the best!

@Ben Biggs welcome to the site!  You have very ambitious goals, which is awesome!  Continue to learn and stay on the grind!

@Sascha Weinberg , thanks for reading!  And you're right, there is no better lesson learned than from a mistake :).  Learning hurts sometimes, but in the long run, it only makes you stronger right?

#5) 4-plex set to close at the end of October:

So, I thought I would be finished for awhile due to the fact that I'm currently deployed.  However, as luck would have it, I ended up finding another deal very close to the property I spoke of last time that I just couldn't pass up. 

This property, another 4-plex, was listed for $70k on the MLS. I offered $60k. Seller countered for $65k, and I accepted. Later, I came to find out that the seller's husband had recently died, and the seller had stage four cancer. I truly believe this seller was motivated. After obtaining the inspection report, I learned that the property was in great condition, though it needed a new roof and tuck pointing soon. Its sad (maybe) to say that I couldn't, after learning about the seller's situation, bring myself to counter at a lower price to account for these defects. Shame on me, but I figured I was still getting a great deal.

Here are the numbers:

- Purchase Price: $65k (the appraisal came in at 70k)

- ARV: $110k-120k (estimated, I still do not fully know the true ARV due to the investor activity)

- Value at CAP Rate of 10%: $98.7k

- Down payment: $17k

- Expected repairs: $20k

- Rent: $1700/month

- PM fee: $170/month (10%)

- MX: $170/month (10%)

- Vacancies: $170/month (10%...the property management company is averaging 5%)

- Reserves: $85/month (5%...I may need to raise this as the building is 90+ years old)

- PITI (Loan Principal, Interest, Taxes, Insurance): $430/Month

- Cash Flow: $650 /month

- Cash on Cash Return: 16.8%

Another good investment that meets all of my criteria (other than the needed a new roof/tuckpointing...).  I still feel like I am leaving too much on the table as an investor, especially considering the repairs needed.  But, I'm learning a ton, have found an amazing team (absolutely critical), and will continue to get better with time.  Man, I'm loving this!   

Welcome to BP! Make sure you take advantage of the VA loan up to the $417k limit. You can have multiple properties using this vehicle. Only stipulation, you must live in the home as a primary residence for at least a year. Outside resource for military/prior military members

Great discussion.  I love debt.  But I agree with most posters, it must be kept in perspective.  In other words, debt should only be used when it can generate a better return.  Additionally, when using debt, one must have the reserves on hand to cover payments when times are bad.

Welcome,

I'm really digging this forumn post.  I'm still a relative newbie, but I look for a few things:

1) > 15% CoCR with financing at ~25% down and property management

2) No foundation or sewer issues

3) No warzones, but do go into C- neighborhoods

4) $100-$200/door

5) Focus on multi-family (1-4 units)

6) Concentrate in 3 area codes in St. Louis.  Buildings tend to be > 90 years old, so I will almost always have issues (e.g., roof, tuck pointing, etc.).  Given this, I don't want my rehab to be > $20k

7) I don't quite know what the ARV is for this area as most properties are considered "investment grade", but I am confident that I am finding "deals". I decided to jump in and take advantage of these properties meeting the 2% rule before rehab costs.

8) Soaking up ideas from the post and others, and will incorporate as I grow! 

I would sign a contract on the downpayment money as a loan with little interest and maybe a balloon payment.  Then you don't have to worry about the "gift" aspect.  It looks like you are in an excellent position.  Go forth and conquer!

@Josh Johnson , welcome to BP!  You have found a great resource and excellent community!  I'm glad to see another military person on the site...we are growing daily.  I wish you well on your journey.  Don't hesitate to ask questions when they come up.  

@Vina Guichard , welcome to BP!  You seem to have a great plan in place.  I hope you keep us posted on how you progress towards your goals!