Welcome to The Accelerated Investor Podcast with Josh Cantwell, if you love entrepreneurship and investing in real estate then you are in the right place. Josh is the CEO of Freeland Ventures Real Estate Private Equity and has personally invested in well over 500 properties all across the country. He’s also made hundreds of private lender loans and owns over 1,000 units of apartments. Josh is an expert at raising private money for deals and he prides himself on never having had a boss in his entire adult life. Josh and his team also mentor investors and entrepreneurs from all over the world. He doesn’t dream about doing deals, he actually does them and so do his listeners and students. Now sit back, listen, learn, and accelerate your business, your life, and your investing with The Accelerated Investor Podcast.
So, hey, welcome back to Accelerated Investor, I am all alone today, solo cast time. I’m so excited to be with you. Thank you so much for joining me. Our ratings and reviews and views and listens to all of our podcasts has been growing substantially over the last couple of months. I don’t know if it’s COVID, people staying home. I don’t know if it’s the fact that you love the content. The new introduction, whatever it is, I just want to say thanks. Our video streams, watches and listens are up over 50 percent in the last 60 days. And I want to thank you for sharing this on social media today.
I’m going to jump into one of our case studies. I don’t talk enough about all the deals we’ve done. We’ve done over a thousand deals, wholesale, rehab, rental. We own over 2700 units of apartments. I have amazing guests on, but I probably talk about my own deals enough and I should be sharing those much more often with you could hear a little bit more. So this is a case study. We’re going to call this the Buhrer Avenue case that you can actually look this deal up on the Internet if you want. The address is one eight three five Buhrer Avenue in Cleveland, Ohio. This is part of the Tremont neighborhood, theTremont kind of subdivision, part of Cleveland, if you will. Tremont is an amazing part of Cleveland. It’s one of the the hottest areas of Cleveland. It’s got restaurants and bars. I used to personally live down here when a lot of the area was re gentrifying. You know, back in the day, you were to buy properties down here for 30 grand, 50 grand, a hundred grand. Now they’re building houses that are selling for eight hundred thousand dollars, a million dollars. Mike Clevenger from the Cleveland Indians who just got traded to the San Diego Padres lives down there. There’s many athletes that live down there. There’s amazing bars and restaurants down there. And so what happened was with Buhrer Avenue, we had a student, a local student and a borrower come to us.
And say, hey, Josh, I’ve I’ve got this property under contract. It’s a duplex. I’m going to renovate it and I’m going to rent it out. So I need acquisition funding. So we funded him through a private lender loan. A hundred percent of his purchase and rehab and the total loan amount that we gave him was about eighty three thousand dollars. Well the guy bought it. And he started the renovation. Everything was going pretty smooth. And all of a sudden he stopped asking for rehab draws. He stopped asking for reimbursements for the construction. And we’re thinking, OK, what’s going on? Why is this guy starting to slow down? He was on track. He was doing a good job. He was going to buy the property and then he was going to refinance it and put long term debt on it, keep it as a duplex, keep it with lots of equity in it, and ultimately cash flow the property around. Or we made a loan on this thing for eighty five thousand dollars. The property appraised. After a period value appraised at over two hundred grand. So he would have that one hundred and twenty thousand dollars of equity. Hundred twenty thousand dollars of profit. If he sells it, OK.
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OK. So come to find out. We actually were buying another property, which I’ll do another case down a property on Rowley Avenue one nine two four Rowley Avenue. You can look that up on the Internet. It’s one of my deals. And that’s also in the Cleveland Tremont area one nine two four rally. We actually were at the property doing a site inspection. We stopped there for like ten minutes and we’re like, hey, let’s go. Walk down the street. Two blocks over is this property on Bura Avenue. So we walk down the street, we’re walking down the street. And my rehab project manager, Tim Roth, is like, hey, Josh, that’s the property right there. I’m like, oh, wow. That’s a nice big duplex up and down. It’s painted all white big driveway, two car garage. Let’s go see what’s going on. So. We walked to the property. Everything’s locked up and of course, the neighbors. Right.
We love neighbors. We love when we’re buying a commercial apartment building. We love to talk to the tenants because the tenants know everything about the property or buying a single family home. You’ve got to talk to the neighbors. The neighbors seem to know everything. So we walk up. It’s this cool, cute little Ukrainian couple I used to date of Ukrainian girl back in the day. She was crazy, but I did. So I walked up, started talking, and I could tell by their accent, they’re Ukrainian. And I said, hey, what’s. You know, we’re the bank, which we were. What’s going on with the property next door? And they said, hey, you know, the guy really hasn’t been around very much. You know, I haven’t really seen the guy for about 60 days. We’re not really sure. I said, well, has anybody been coming and going so well? Yeah, about 30 to 60 days ago, there was one guy that was kind of living upstairs, but we haven’t seen him for a long time. I said, well, you know, is anybody coming around taking care of the house? Said, no, not really. You know, actually, they said we cut the grass. So they’ve cut the grass last time. OK. OK. Well, obviously, the guy’s not around.
So we get on the phone, we call the borrower and we say, hey, look what what’s going on with the property. So, hey, man, I had to move to Toledo. I had to move to Toledo, which is about two and a half hours away. Something came up with my family. I had to move. I can’t really do finish this deal off. So we’re like, OK, that sucks. But this is one of the reasons why you when you lend you land at 65 to 70 percent of the after repair value. That’s why when you borrow, you borrow at 65 to 70 percent of the after repaired value. So we made this loan for eighty five thousand, which was the purchase and rehab. We quickly realized, holy cow, this is an amazing deal. We should just buy this. And we should get a new private lender loan on it so we could finish off the rehab and we should simply do the deal.
So that’s exactly what we did. We ended up getting a quitclaim deed from the borrower over to us. I got a new private lender to give us a new loan for one hundred and thirty thousand dollars. We didn’t need a hundred and thirty thousand, but I had a private investor, a friend of mine who’s been lending to us forever. He had a hundred and thirty thousand in his self directedIRA between him and his wife. And I wanted to use as much of their capital as possible, get their capital in play so that they could earn interest. And I’d just give us a little bit of extra buffer. So here’s what we did. We took the property back in a deed in lieu, basically back to our lending company, Freeland Lending. We then purchased the property in our company Freeland Properties, bought it from free land lending and the new purchase for free land properties cleared out the old loan. So it paid off the old loan of eighty five thousand. We put a new loan on it for 130. We took the eighty five thousand, we said, look, the guy’s done a good job. We could if we wanted to simply clean the property up for about five grand and we could rent it out. But again, this is treatment and we could get seven hundred dollars a month in rent per unit. Or if we clean it up and do a really nice job, we could probably get twelve hundred dollars a month per unit.
So instead of fourteen hundred dollars a month in gross rent, we could get twenty four hundred dollars a month in gross rent. Extra thousand dollars a month. An extra twelve thousand dollars a year. If we put some improvements into it. So I’m like OK. Let’s do it. So purchase prices. Eighty five. We scheduled thirty thousand dollars in improvements. And out of that thirty thousand dollars, roughly seven thousand dollars was all new HPC system. We decided to get rid of the old, the old, the old boilers. That was two old boilers. Get rid of those. Get rid of the radiator heat and put in an all new HBC stats in. Which means that to put an all new duct work that was about seven thousand dollars, we decided to paint the entire in the exterior. That was five thousand dollars to do all the interior labor, which was cleaning. Painting. Cleaning up the kitchens. Putting a new tile in the bathrooms. We put in new flooring, new Elvie flooring, all those kind of soft new blinds, new switch covers, you know, taking care of the paint, cleaning the property out. It was all all the stuff that we had to do to the property. And that added up to about thirty thousand dollars.
We ended up spending was actually twenty one thousand eight hundred and seventy dollars for labor and about seventy two hundred dollars for material. And all told, we end up putting twenty nine thousand one hundred dollars into the property. Now we’re not going to touch the property for, you know, ten, ten years. It’s gotten all almost VSC systems, new flooring, new kitchens, new bathrooms. It’s got, you know, all new paint on the exterior. We cleaned up the driveway. We cleaned up and painted the garage. And the little Ukrainian neighbors love it. It’s awesome.
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And so now we’re all into it for the eighty five thousand other purchase, plus thirty thousand in rehab. So we’re all into it for 115. We’ve got an extra fifteen thousand dollars because remember we borrowed 130 from our private lender, paid our private lender 10 percent fixed return on their money. And the plan is for us to refinance into long term debt, 30 year and long term rental loan. Once the property is totally occupied, OK, we’ve got somebody moving into the first floor. We just finished the rehab like two weeks ago. Got somebody moving in the first floor and the upstairs is still for rent. Once it’s all rented out, we’ll be basically cash flowing, will be cash flowing. Pretty ridiculous on this thing. OK, because once we put a new loan on it, four hundred and thirty thousand, let’s say at five percent interest on a 30 year am, our principal and interest in taxes and insurance is only going to be about nine hundred dollars a month. Even if you add utilities and maintenance for the property, that’s maybe another two dollars a month. We’ll be paying about eleven hundred dollars a month in expenses and we’ll be collecting twenty four hundred dollars a month in rent.
We’ll also have about fifteen thousand dollars in cash out refi proceeds because we’re all into it for 115. And we’ve got that fifteen thousand in our account when we refine it. That 15000 will become cash out. RE5 proceeds, which will be tax free and will have seventy thousand dollars of equity. We’ll have a loan for 130 and the property’s gonna be worth two hundred.
So here’s the lessons to be learned here. One, if you’re going to be a private lender, you’ve got a loan at 65 to 70 percent loan to value. If you’re a borrower, you’ve got to borrow at 65 to 70 percent loan to value. If you’re making loans, you’ve got to underwrite your deals really good so that if you have to take a deal back like we did here, you can take it back and you want to take it back. You want to take it back and actually buy it, renovate it and keep it. Or sell it, or you want to take it back and wholesale it. OK. You don’t want to make a loan and then be over leveraged. I’ve done those deals and that sucks. OK. So underwriting at the right the right numbers is important. Also buying in the right areas as important. This is an A class neighborhood with a class tenants, people that live and work downtown Cleveland. People that want to go to the bars. People between the ages of 22 and 40 years old that are living downtown that maybe don’t have kids and aren’t worried about schools that want to be close to downtown, the Indians, the art galleries, the Cavs, the Browns, the you know, the the bars, the restaurants, walkability, they have all that stuff you got to buy in the right areas. I’m personally not a huge fan of buying and C class and D class areas because I like owning assets that I can ultimately sell. And that’s really the last lesson here, is when you’re buying properties, are you buying for cash flow? And if you are buying for cash flow. OK. Are you still able to eventually sell the property to an owner occupant? OK.
The last thing is I want to plug our software a little bit. We’ll put this in the show notes. I was able to very quickly use Accelerated Investor Office, our software to review and analyze this deal. I was able to pull the rent comps. I was able to pull the for sale comps. I was able to pull the comps that are right in the area. I was able to put together a rehab budget. I was able to find other properties. I could have pulled cash buyers. I could have pulled private lenders all out of the software to do this deal. OK, if I needed all of that stuff, what I primarily needed was a rehab project manager, a rehab planner. What I’ve needed was comps, OK, for both for sale and for rent. OK. And I need someplace to store all of our documents, and so our software accelerated investor office allows us to do all of that within one software. So I don’t have to go a lot of places to get all this information. OK. We’ll make sure we put some notes in the show notes. And we’ll also make sure that you get a link if you want to go check out that software sometime in the future.
But guys, that’s one of our latest deals. One eight three five Buhrer Avenue going to make over thirteen hundred dollars a month in cash flow. We have over seventy thousand dollars in equity, plus fifteen thousand dollars in cash out reify proceeds.
So I hope you enjoyed the case study. Hope you learned a few things here from this. I’m going to be sharing more and more of our case studies with you as time goes by. Check those out. If you enjoyed the podcasts, leave us a rating. Leave us a review. Go to iTunes right now. Click the link in the show notes. Go ahead and leave us a five star rating. Leave us a five star review and we’ll send you a free T-shirt. Thanks so much for being here on Accelerated Investor. We’ll talk to you next time. Take care.
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I talk about a lot of other deals but I don’t talk enough about deals we’ve done. We’ve done over a thousand deals and this recent deal we’ve done got us earning a pretty penny. The property is located at 1835 Buhrer Avenue in Cleveland, Ohio and is part of the Tremont neighborhood which is one of the hottest areas in Cleveland.
As a private lender, we get to finance a lot of property purchases and rehabs. This particular deal had a student borrowing funding from us to purchase a duplex and rehab the property for renting once it’s done. We were in it for about $85,000 in total but the property is appraised to be worth over $200,000.
Things got our attention when the borrower stopped asking for reimbursements for repairs and during a visit to the property, we found out that the borrower could no longer hold up his end of the deal. Bummer but we realized how great of a deal this is for us.
We can easily make money by buying the property, getting a new private lender loan on it and simply doing the deal ourselves. We got the clean title from the borrower, got a new $130,000 private lender loan on it and made more improvements to the property.
The deal lands us at $1300 per month in cash flow, over $70,000 in equity and about $15,000 in cash out refinance proceeds.
Lessons learned out of this deal?
- Loan and borrow at 65-70% of the after-repair value
- Underwrite your deals really well
- Buy in the right area
- Buy for cash flow or at least be able to sell to an owner-occupant
This deal could have taken more time to review and analyze but through our Accelerated Investor Office software, I was able to review this deal, put together a rehab budget and pull comps much quicker.
- Why it’s important to loan or borrow at 65-70% of the after-repair value.
- Getting a new private lender loan to clean out the old loan.
- The reason why you need to buy for cash flow or at least be able to sell to an owner-occupant.
- How the Accelerated Investor Office software makes reviewing and analyzing deals easier.