PROPERTY ADDRESS: 97 Baynes St, Buffalo NY 14213
“No frills, but a solid, clean investment property in an up and coming area did the trick.”
How was the property acquired?
We found this property on the MLS via our auto-drip search and immediately made a “sight unseen” offer, all cash, full ask, 30 day close with a strict time window to accept the offer. These strong terms and decisive action were able to help avoid multiple offers and we felt confident in the building because we knew it was drastically underpriced by the realtor and would not last. We financed the purchase via private money lenders of $40,000 and $25,000 investments, using Josh’s payout formula.
What was the After Repair Value and Comps?
Baynes is what we would consider an up and coming revival area and so we knew the end user was going to be one of two owners –
(1) The conservative owner occupier looking for his/her first investment property where he can rent one unit and live free in the other to build equity or
(2) the buy/hold investors looking for turnkey rental grade properties within an appreciating part of town.
Having identified that, and realizing this neighborhood has another 3-5 years to go before it’s fully stabilized, decided to take the conservative approach and not over reach on our rehab… the focus was on basic cosmetics and functionality, and staying at or below $25,000. Because this is such a strong seller’s market, and given the especially hot market on the west side, we were confident a basic rehab would not turn off buyers, while attracting our target buyer.
What was the purchase price of the property?
How much did the property end up selling for?
How much was your profit on this deal?
$57,000 Gross before investors and closing costs, so figure slightly over $45,000 Net Profit
What was your rehab budget?
$25,000 – which meant we had to make strategic decisions to hold back on some of things on our wish list (exterior paint, new roof, new upper furnace)
How much did you end up spending on rehab?
Right on budget (under $1000 variance)
What work did you/your contractors do on the property?
The biggest expenses went into plumbing, flooring throughout, drywall/paint, completely gutted upper kitchen, 2 new bathrooms.
Was there anything particularly special or challenging about the property?
Negotiating with a current tenant to leave, unevenness in the floors, and deciding what aspects to focus on most that would attract investors.
…another unique aspect was salvaging a stained glass window in the hallway which was a nice touch to preserve.
12. What part of SREC’s training, do you feel, helped you with this deal?
This deal ended up being a self-funded rehab with the purchase price coming from 2 private lenders, but we almost used a Freeland loan. The funding process was a learning curve for us for several reasons. We do believe in the end, our strong terms and decisiveness won us this deal so I can’t say I regret our offer to pay cash, assume a tenant, and not have any access clauses into the contract. But this did have it’s drawbacks.
For one, our personal funds had to be used towards the labor portion of the costs to pay for our crew. This limited our resources and restricted us to only the cash we had either raised or invested personally into the deal, which squeezed our business and purchasing operation. Darren did a great job facilitating me through these obstacles and how to creatively navigate them as the project progressed to completion. Additionally, I know more now about Freeland’s process to be better prepared on structuring the financing on deals going forward, but also the importance of having several financing strategies so we can win more deals that are most profitable.
What do you feel helped you sell the property the most?
Choosing to invest in this location and having the knowledge to focus in this area was the key factor. It’s a hot area and inventory is scarce so that in itself sells. Also, we knew to buy it right, because we knew the end user would need an ARV under $150 to make it go in this neighborhood (revived or not!). Our choices on rehab were overall to make it neutral, consistent, clean and durable, keeping our end buyer top of mind. Lastly, we knew the aspect of having off street parking and a large back yard would also push it over the top. No frills, but a solid, clean investment property in an up and coming area did the trick.
What else would you like to say about the property or lessons that you learned from this property?
I would say that the lessons learned were:
(1) getting our funding in order ahead of time – our private money lender literally funded us within 2 days prior to closing… it could have been a cancelled contract and we would be $40,000 less rich!
(2) keeping on top of our contractors and working efficiently and systematically.
(3) continue to problem solve and find creative solutions
(4) never give up!
About Nick Corto
Nick Corto is a SREC Mastermind student, investing in Buffalo, New York.