They say that “when it rains, it pours.” That is soooo true. Last month I added 12 rentals to my portfolio. Almost all are now rented. Several of these units needed rehabbed and I worked my butt off for the last month, even working several 12 hour days. After taking most of Tuesday and all of yesterday off, I was looking forward to getting back to my normal routine of working 3-4 hours each day (which is what I did today). I had absolutely no intention of buying any more properties for at least another month or two.
Today, I received a phone call from a serious, successful local investor. In fact, this is the investor that I consider my mentor. The investor has a 7 unit apartment building with a government lease that will run a minimum of 2 years. The price is $105,000, modifications needed are about $20,000, and the GROSS RENTS ARE $3,800 PER MONTH!!! She is wholesaling it.
I’m going to look at it tomorrow. However, I know it will be in the condition she described. The big question is whether I want to spend another month working hard in exchange for the return on this building. With a commercial 20 year loan at 7.875%, the cash flow is about $900 per month and I’d pick up more than $125,000 in equity. The gross rents are a little over 3% of the cost per month!
I’m still thinking about it, but I’m guessing that I’ll be working my butt off again this month!
If deals like that were common in my area I would set up a mortgage broker in my house with a phone attached to his ear so I could find him at all times and get these things bought as quickly as damn possible.
Here’s my update on the property. I just got back from looking at the property. It is a HUGE 3 story building. It needs major modifications to make it suitable for its intended purpose. This is bigger rehab project than I like and could easily take 3 or 4 months doing it myself. In addition, I don’t like to work very high on scaffolding or ladders and the roofs are WAY UP THERE. It could be a great project for someone, but not me! I turned it down, but all is not lost. The investor has a BIG duplex with gross rents of $1,000 that I can buy for $42,500. I told her that I’d probably take it. She is willing to let me place tenants in it before we close, so that would work pretty well. It needs no work and can be online and making money for June.
I worked 12 hour days for 2 1/2 years getting this business to where it’s at now and I’m not willing to do that for the next 3 or 4 months to get that bigger project up and running.
there is a key lesson for folks to take away here.
its not only about finding a deal that works, but one that works for your circumstances, talents, experience, goals, etc. A great project for one person could be terrible for someone else. This sounds like a great project for an investor who is a GC and got guys on his payroll that are hungry for more work/$$$.