It appears our offer for walnut was accepted.
$35,000 purchase price.
$35,000 purchase price.
Good to hear!
Topic: RentalStarter - A Midwest Real Estate Investment Company - page 25. (Read 120494 times)
Good to hear!
It appears our offer for walnut was accepted.
$35,000 purchase price.
$35,000 purchase price.
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Quick update/outlook on the company since we've wrapped up the last round of funding.
The 2nd HL round of funding has completed with a total of 23,100 shares sold @ .0075btc/ea or ~164.59btc in realized proceeds.
We are still negotiating on the property on Walnut street. It would be a good fit for our portfolio and generally quick rehab (Mostly limited to flooring & painting work). Total rehab + purchase would be under $41k with an expected ARV of $75k + $750/mo in income.
Financially we're in great shape with good BTC reserves, cash reserves and of course tons of equity in our properties since nothing is leveraged at this point.
Right now we have two major goals for the next 3 month period :
#1 - Flip a house
#2 - Get leveraged
The reason for this process is that by flipping just 1 house, we insure a fantastic balance sheet to show to the bank (And investors) which then will seal the deal on #2 coming to fruition. As stated, the purpose of subsequent funding rounds has been to get to the point we have enough cashflow to approach a lending partner to help us leverage. Our book value is around $475k which at 70% LTV would allow up to $336k worth of funding. Of course, funding this amount will severely eat into free monthly cashflow, but would allow us to buy a nearly identical portfolio of further investments. If this took place, we should expect roughly $10,000 of FREE net cashflow monthly from all properties (Including properties we will be buying with our current cash/btc reserves).
Obtaining leverage is crucial to rapidly growing the business, but not critical to our well being. We have ample cashflow and reserves to weather most storms that could become problems in the foreseeable future. Flipping or developing several properties a year would help boost up our bottom lines which the banks tend to look at. Just 4 flips per year would grow our balance sheet up to 300% of where it is expected to be at complete occupancy.
Our 6 month goal right now looks to be developing a few properties. By this I mean acquiring building lots, building a spec home or two then either flipping it or renting it out. I have had several valuable talks with developers and working on a pricing strategy that works for our business model. The reason that this could be advantageous over utilizing our current structure is that it accesses a workforce outside of our own and allows us to continue to work on our projects. By outsourcing we free up management & workloads by a great deal.
If you have any questions or comments please let me know.
The 2nd HL round of funding has completed with a total of 23,100 shares sold @ .0075btc/ea or ~164.59btc in realized proceeds.
We are still negotiating on the property on Walnut street. It would be a good fit for our portfolio and generally quick rehab (Mostly limited to flooring & painting work). Total rehab + purchase would be under $41k with an expected ARV of $75k + $750/mo in income.
Financially we're in great shape with good BTC reserves, cash reserves and of course tons of equity in our properties since nothing is leveraged at this point.
Right now we have two major goals for the next 3 month period :
#1 - Flip a house
#2 - Get leveraged
The reason for this process is that by flipping just 1 house, we insure a fantastic balance sheet to show to the bank (And investors) which then will seal the deal on #2 coming to fruition. As stated, the purpose of subsequent funding rounds has been to get to the point we have enough cashflow to approach a lending partner to help us leverage. Our book value is around $475k which at 70% LTV would allow up to $336k worth of funding. Of course, funding this amount will severely eat into free monthly cashflow, but would allow us to buy a nearly identical portfolio of further investments. If this took place, we should expect roughly $10,000 of FREE net cashflow monthly from all properties (Including properties we will be buying with our current cash/btc reserves).
Obtaining leverage is crucial to rapidly growing the business, but not critical to our well being. We have ample cashflow and reserves to weather most storms that could become problems in the foreseeable future. Flipping or developing several properties a year would help boost up our bottom lines which the banks tend to look at. Just 4 flips per year would grow our balance sheet up to 300% of where it is expected to be at complete occupancy.
Our 6 month goal right now looks to be developing a few properties. By this I mean acquiring building lots, building a spec home or two then either flipping it or renting it out. I have had several valuable talks with developers and working on a pricing strategy that works for our business model. The reason that this could be advantageous over utilizing our current structure is that it accesses a workforce outside of our own and allows us to continue to work on our projects. By outsourcing we free up management & workloads by a great deal.
If you have any questions or comments please let me know.
A few minutes left, buy while you can!
12:00 Noon EST
Could someone tell me the time zone for Rental Starter/Havelock. I'm trying to figure out when the IPO price will changes to Public and all it says on havelock is 2014-04-30 12:00:00. Not sure if this is AM/PM or when.
So the roughly $85k raised during this IPO will be used to acquire more property?
Correct.
So the roughly $85k raised during this IPO will be used to acquire more property?
Branny, would you mind elaborating on the failed acquisition of CREI? Given that the current round of funding was largely justified for this purpose, personally I was surprised and a bit confused by the update this morning. It was not entirely clear to me if you've decided to give up on the acquisition entirely or if it just hasn't happened yet. Could you clarify this? Thanks!
There was a deadline of funding of something like April the 15th to fund their first property. In order to fund it, Havelock & I wanted me to be able to meet with the CREI owner/manager personally by flying out to NC and inspecting his operation/properties/ect. I tried several times to get out there, and at no fault of CREI (Or myself for that matter) I couldn't make it out. Flights kept being delayed/pushed off and/or cancelled.
This isn't to say we can't or will not fund CREI properties in the future, however the first go-around has not come to fruition.
I'll have to check the numbers, but the CREI purchase accounted for 1/3rd of this current round of IPO's funding, the rest was for additional properties. As it stands now I expect to be able to leverage our current properties which will do away with the need for additional funding rounds and help us to scale greatly.
Branny, would you mind elaborating on the failed acquisition of CREI? Given that the current round of funding was largely justified for this purpose, personally I was surprised and a bit confused by the update this morning. It was not entirely clear to me if you've decided to give up on the acquisition entirely or if it just hasn't happened yet. Could you clarify this? Thanks!
Branny, you are the king of informative updates. Please continue doing it. It's a breath of fresh air compared to other investments I'm in.
+1
Branny, you are the king of informative updates. Please continue doing it. It's a breath of fresh air compared to other investments I'm in.
Inspected the property next to me, it's actually in really good shape.
We are still negotiating on Walnut, I however have made an offer on this additional property (Ohio) for $35k. It needs a new roof and new bathroom flooring to be rentable. It could use a new roof, however at a minimum we'd need to install some new fascia. We're looking at $6k with a new roof and <$1k without a roof on repairs. Rent should be $700 or more for this property.
After pulling a significant number of comps I don't feel confident about flipping it, however as a rental it's absolutely perfect. The same comp report & research also has led me to believe that the Walnut property, if done right would be a much better flip. In both cases I'd like to try for a land contract on either property, or outright flip.
Between both properties we'd have a grand total of $82k into them, expected gross monthly rents of $17,400/yr or 21% simple interest. ARV on Ohio would be $65k, ARV on Walnut would be ~$75k.
We are still negotiating on Walnut, I however have made an offer on this additional property (Ohio) for $35k. It needs a new roof and new bathroom flooring to be rentable. It could use a new roof, however at a minimum we'd need to install some new fascia. We're looking at $6k with a new roof and <$1k without a roof on repairs. Rent should be $700 or more for this property.
After pulling a significant number of comps I don't feel confident about flipping it, however as a rental it's absolutely perfect. The same comp report & research also has led me to believe that the Walnut property, if done right would be a much better flip. In both cases I'd like to try for a land contract on either property, or outright flip.
Between both properties we'd have a grand total of $82k into them, expected gross monthly rents of $17,400/yr or 21% simple interest. ARV on Ohio would be $65k, ARV on Walnut would be ~$75k.
Got a counter back on the 4br 1ba house we're looking at. Pretty favorable overall, they came off asking a decent bit with similar terms as to what we offered. I responded with a slightly higher offer with more EMD trying to coax them into a lower price.
A semi-suitable house has been located for a flip.
Asking price - $45,000
Rent price as-is - $700-$750
3br , 1 ba
1050sf (Could be based on first floor only, will have to inspect personally).
Cost to rehab - ~$10,000 depending on what we want to do.
Expected resale value - $75,000
Profit expectation - $15,000 (Assuming $5k for closing costs which is pretty high overall).
Asking price - $45,000
Rent price as-is - $700-$750
3br , 1 ba
1050sf (Could be based on first floor only, will have to inspect personally).
Cost to rehab - ~$10,000 depending on what we want to do.
Expected resale value - $75,000
Profit expectation - $15,000 (Assuming $5k for closing costs which is pretty high overall).
What does semi-suitable mean?
Purchase is higher than I'd like due to the fact the seller partially rehabbed it rather than doing no rehab and selling it for less. Additionally the location isn't prime for my taste. It'd make a decent flip or a great rental.
A semi-suitable house has been located for a flip.
Asking price - $45,000
Rent price as-is - $700-$750
3br , 1 ba
1050sf (Could be based on first floor only, will have to inspect personally).
Cost to rehab - ~$10,000 depending on what we want to do.
Expected resale value - $75,000
Profit expectation - $15,000 (Assuming $5k for closing costs which is pretty high overall).
Asking price - $45,000
Rent price as-is - $700-$750
3br , 1 ba
1050sf (Could be based on first floor only, will have to inspect personally).
Cost to rehab - ~$10,000 depending on what we want to do.
Expected resale value - $75,000
Profit expectation - $15,000 (Assuming $5k for closing costs which is pretty high overall).
What does semi-suitable mean?
A semi-suitable house has been located for a flip.
Asking price - $45,000
Rent price as-is - $700-$750
3br , 1 ba
1050sf (Could be based on first floor only, will have to inspect personally).
Cost to rehab - ~$10,000 depending on what we want to do.
Expected resale value - $75,000
Profit expectation - $15,000 (Assuming $5k for closing costs which is pretty high overall).
Asking price - $45,000
Rent price as-is - $700-$750
3br , 1 ba
1050sf (Could be based on first floor only, will have to inspect personally).
Cost to rehab - ~$10,000 depending on what we want to do.
Expected resale value - $75,000
Profit expectation - $15,000 (Assuming $5k for closing costs which is pretty high overall).
I'm quite impessed that such high ROIs are possible in the US housing market. In most places of Europe you would be happy to get a clean 6-7%, and that's counting on the good faith of your tenants (laws tend to bend very much in their favour and evictions are complicated, slow and costly)
Some areas of the US are like that, however the area we are in has median rates of 10% , and that includes large, inefficient multi-family properties bought/sold for retail pricing.
I think it really just depends on how you optimize your land use and region, finding the most efficient return on equity requires thorough research and analysis of the area. The US housing market is a nice one to look at resource wealth going back a few pages and all the other factors that can make property values soar.
And thankfully we have that ability in Ohio. Relatively low regulations in terms of real estate and pricing (We do not have price controls, nor extreme building codes). In some places you are severely limited to profit potential due to legalities. In these area, flips make much more sense than rentals or development, which is the case here.
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