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case study on 6104 Walnut Hills Small Group Investment / Syndication

A case study on 6104 Walnut Hills Small Group Investment / Syndication

This was a small group investment also known as a syndication that I completed in 2004/2005.   It was a duplex needed major repairs so I put together a small group to participate with me in the completion of the purchase, rehab and ultimate selling of the property.   Despite several surprises we ultimately sold the property and made a tidy profit for both the money investors and for myself.   

Please see the attached PDF’s the first of which was my prospectus to the Investors some of whom are members in the REICA group and I hope they felt good about the returns they received ((at least I think that they did))   Maybe one of them will come out and testify about this investment opportunity for the good of the group.   (You know who you are!))  

The final outcome came to a 46% return on investment for the money investors and a pretty good return for me as well!   Check out my budget and how the money was spent to see some of the details of what it should look like when you get started in one of these rehab/syndication deals.

To summarize this one I bought it for 33K and got my money partners to put up 40K and went to the bank and got another 40K to rehab it and we sold it for 140K.   We had some budget overruns (small ones) and almost got sued over it ((that’s another story)), but it turned out great for everyone involved! 

This was the last of my small group investments / syndications!   Now I will only do bigger syndications for bigger properties but it was a great stepping stone in my learning and growth as an investor.   If you want to know why I am against small group investments please send me a private email or post it to the REICA group and I will respond to you.  

I hope that this inspires some of you to go out and begin to put together small groups to help you further your investment goals.

 

Post your questions to the REICA board and I will answer some of them if any or send me a private email at Ron@theseaygroup.com.

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case study on 4800 Spring Meadow Cove, Austin TX 78744

A case study on 4800 Spring Meadow Cove, Austin TX 78744

                        The Spring Meadow Cove property was purchased on April 22, 2003 from HUD for $54,603.   The property was built in 1984.   The house was a 3 bedroom, 2 bathroom, 2 living areas, a dining area, and a 2 car garage.   The house was immediately rehabbed and listed for sale at $115,000.   It was sold for sale for $116,000.   The repairs were complete by Remar Ministries.   It required approximately $7,500 in repairs.   The list of repairs included:  

  Drywall repair, Paint entire interior of house, Carpet, Rebuilding the kitchen countertops, rebuilding the master bathroom tub surround, new window screens, new ceiling fans, new garage door, new door knobs, and new rain gutters.

 The repairs took approximately 2.5 weeks to complete.   The tax appraisal on the home before the repairs was approximately $94,748.   The after repair value per the appraisal dated April 19, 2003 was $113,000.   The initial loan to value, based upon the appraisal value, was 56% (65K/113K).   Below is a financial break down of the transaction.   There were $2,612 in closing costs associated with the purchase of this property.   Also there were holding costs of $975 per month for 5 months.   The  house was purchased using a “hard money” loan.   The interest rate was 18% the total amount borrowed was $65,000

 

.The Maximum purchase price was determined by using the formula previously outlined   The contingency factor should be added to the profit for this transaction because it is for emergencies or unforeseen repairs.  

                                   

            $Maximum Retail Value $                     $115,000

            (subtract the following) 

                       

            – Purchase Costs                      -$1,000

            – Rehab Costs                          -$7,500

            – Holding Costs                        -$5,000

            – Sales Costs                            -$6,500

            – Contingency Factor                -$5,000

            – Profit                                     -$35,000

            $Maximum Purchase Price   =  $55,000

 

 

If the house was going to be held as a rental then it would need to be refinanced.   If an 80% loan to value loan was used after closing costs and escrows TSG would have received a check for approximately $20,000 after paying off the hard money loan and closing costs.   This property would probably be held for 5 – 7 years and then sold.   If the market appreciates 3% – 5% per year (very reasonable appreciation rates) then this property will be worth between 132,000 to 144,000.

 

If this house were put on the Fast Sell Strategy track instead of the Rehab Strategy track it could have been sold to a rehab investor for $5,000 to $10,000 and the rehab investor would have used a similar formula to determine their profit potential.

 

Pictures before repairs:

 

            

 

          

 

          

 

          

 

          

 

          

 

          

 Pictures after the repairs

 

          

 

          

 We sold the house for 115K to an owner occupant with a 1st and a 2nd to us for 20K.   They ended up losing the house in foreclosure on the 1st and my 20K second was wiped out!   ((That SUCKS)).   We made good profit and learned a good lesson about taking a 2nd behind an institutional 1st.   Don't do it unless the profit that you get from the payoff of the 1st is good and you dont care about the 2nd.   We could have reinstated the 1st but after they were 3k behind then it was not worth our while any longer so we just passed on it and moved on to bigger and better deals.

This was the only deal (1st and last deal) that I ever used hard money on and it was a learning experience as well.   There was a tremendous lesson on who hard money really works in doing the transaction!    For those interested please send me an email and I will lay it out for you.

As an aside the agent who I had worked with to buy the house ended up buying the house from the bank and went out and did the same type of transaction as I did!  Funny how we even recycle houses in Austin!

Post your questions to the REICA board and I will answer some of them if any or send me a private email at Ron@theseaygroup.com.

9903 Hansford Dr, Austin TX – SOLD

9903 Hansford Dr, Austin TX

 

          

 

          

 

          

 

          

 

          

 

          

 

          

 

          

 

          

 

          

  $135,000

More pirctures of before the property was repaired are below

This property is a rental and the current rent is $1059 which is probably low by about 150 per month.

The pictures before the property was repaired

Pictures before repairs:

 

       

 

       

 

       

 

       

 

       

 

Pictures of the old roof before it was replace in 2006

After the hail storm that destroyed the outside

Mobile Home Investing

Over 100% Yield On My First Mobile Home Deal

I have been reading everything posted on this site for several months. Last month my wife became upset because I was not doing anything with all the information that I was getting off the site. She said she wanted to have another child! I said not until we do our first deal. So she went out in her zeal and tried to find us a deal. We almost bought a mail store, but I figured that we wouldn't have time for our real estate business. Continue reading Mobile Home Investing