New Member in Stafford, VA

[Eddy Dumire]

I've been lurking for a while, reading blog posts, scanning the forums, and I've made it to podcast 88.  I figured it's time to introduce myself and start leveraging the forums to both help myself and others a little more rather than just feeding off the questions others have asked.  I'm a web applications programmer by trade and invest in real estate as a way to transition to a less stressful life.  My short term goal is to be making about $80k/year in passive income within 3 years.

My wife and I are buy and hold investors and currently own two properties in Stafford/Fredericksburg VA. My first was a SFD that I bought on homesearch.com. The house was a 3 level brick front with 4 beds and 3.5 baths. The property had lots of deferred maintenance. Our purchase price (including buyers premium) was 234k. The ARV at the time was estimated at $280,000. We put about 28k in repair costs and another 5k in holding costs. Yes, I overpaid for this one. Mortgage and HOA fees cost about $1200/month and we have a 3 year lease in place for $1900/month. I pretty much violate every rule there is from the 2% rule to the 50/50 rule to the 70% rule on this one.

I found labor for the first rehab on craigslist and this was a classic example of trying so hard to get the lowest cost labor that I spent twice as much money in the long run.  That story could fill an entire blog post so if I work my way into blogging I'll have some material to start with.

Our second purchase was also on homesearch.com and was for an occupied 3 level townhouse in Fredericksburg, VA. I assumed additional risk in my calculations based on the fact I would have to remove the prior owner. I purchased this for 134k with an estimated ARV of $200k. We were very lucky that it only needed about $15k in rehab and holding costs. We also paid $1800 for a cash for keys agreement. We don't currently have a mortgage on this one but I'm trying to get a HELOC to pull equity back out for down payments on more properties. If it weren't for the HELOC taking so long, I probably would have bought my 3rd property a couple weeks ago. This one has been rented on a 2 year lease for $1500/month. I used smartmove to help with the tenant screening on this one and it saved me from renting to a guy with 5 evictions.  This one almost met the 70% rule but not the 2% rule.  The 50/50 rule isn't really valid since we didn't finance, but we wouldn't make it if we had.

I really don't think that these rules are valid in my market.  I know that means I should probably invest elsewhere, but I'm just not comfortable with that.  I do a good bit of the rehab work myself and we manage the properties ourselves also.

I'm currently reviewing financial options for more acquisitions and also keeping my eye out for opportunities in the Stafford/Fredericksburg area.