Darlene Nunez joined CFRI one year ago in Oct 2016. She attends many classes and meetings. In December she set up a home equity line of credit (HELOC) at the suggestion of other CFRI Members so she would be ready to buy something quickly if it came along.
In March 2017 she went to a CFRI Focus group meeting where fellow CFRI Member Alexa Michna announced she had an off-market property for sale for $30K. It was in the price range Darlene was looking for so she “followed Alexa out to the parking lot” and asked her more about the townhome in Palm Bay, FL. It is a 2 bed 2.5 bath home built in 1981 with 1,100 square feet of living space located at 4014 Tree Ridge Lane NE.
The seller was being foreclosed on for past due homeowners association fees. After inspecting the property and using their skills learned in the CFRI Junkers to Jewels course, Darlene and her husband Jose felt comfortable estimating the repairs needed to get the property rented. They offered Alexa $25K instead of $30K and Alexa lowered her wholesale fee and worked to get a lower payoff on the past due HOA fees.
After Repair Value $ 65,000
Purchase Price $ 25,000
Repairs $ 9,000
In March 2017 Darlene paid $25K using her available HELOC to buy the property. She used Commonwealth Trust Services to take title in a land trust, closed with Equity Title , and acquired insurance through Florida Insurance Planners, all three of which are CFRI Business Members. Darlene said, “Doing this deal also showed me how wholesaling works. Now I know it is a great exit strategy in future deals I don’t want to own myself.”Darlene spent about $9,000 total to repair the townhome to make it rentable:
New kitchen cabinets and backsplash
Tile flooring to replace the old carpet
Reglazed tub and shower (completed by Darlene’s husband & CFRI Business Member Bathtub Re-glazing Pro)
New bathroom vanities
Replaced popcorn ceilings with knock down finishing
They thought it may take 30 days to renovate, but it stretched to three months since it was an hour from their home and they work full-time jobs and were doing some of the work themselves. Once the unit was almost done in June, Darlene posted it for rent on Craigslist and Facebook, and had 18 responses in 30 minutes. One rental applicant came to see the property and said she was eligible for the Section 8 program which would pay for the majority of
her rent. Darlene was apprehensive, but attended the Section 8 orientation and saw the demand for affordable housing.
Darlene checked the applicant’s landlord references and their comments about the renter were all positive. She felt comfortable after verifying her paperwork, and really liked the idea of helping someone who really appreciated he way her property looked.
Her tenant moved in July 1st and pays $9 per month as her portion of the $775 total rent. Section 8 pays the rest through direct deposit into Darlene’s account. Darlene is managing the property herself and has had no major issues since the renter moved in.
Rented July 1 for $ 775/mo$-275 HELOC pmt
$- 99/mo HOA fees
$-108/mo Taxes, Insurance & Reserves
=$ 293/month Cash Flow
Darlene is collecting cash flow after expenses of $293/month after putting in $5,000 of her own cash besides the equity line. That is a 70% return on her investment! She knows she can increase her cash flow by paying down her equity line within about two years if she wishes, but also has other exit strategies she has learned from other CFRI
Darlene said, “Being new, you don’t know where to start. But with CFRI, you have every tool you need to make the process smooth. If you have questions, you can ask them, and you have the whole team there and that works really, really good.”
Reprinted Courtesy of Central Florida Realty Investors. Visit www.CFRI.net From the November 2017 issue of the CFRI Newsletter
Back to The Metro Blog >