Long time listener - first time caller! Fort Wayne, IN

[Steve Franks]

Hi Bigger Pockets! I'm an avid lurker and newbie to posting - but I figured it's time to tell my story so that I can network, learn from others, and be open to any feedback/constructive criticism. Here goes...

After reading books, listening to podcasts, and reading so many blog posts for over a year - in August 2016, we bought our first investment property - a mirror image duplex in Fort Wayne, IN (where we live). The seller no longer lived in the state and there was a crap-ton of differed maintenance. Rents were extremely low. After purchasing the home, we increased rents a little - but still below what the market rate was. Side A's lease was due to end in June 2017 at a rate of $645. Side B was on a month-to-month at $500. We didn't touch Side A, but increased Side B - offered them a 6, 12, or month to month lease at higher terms, and they selected 6 months at $575. In March 2017 when that 6 month was up, we also offered 6, 12, or month to month also at higher terms - and they selected 6 months at $693.50. This rate was still well below comp's in the area. 

In June 2017, Side A moved out and we started renovations. New flooring throughout (carpet in the bathroom and kitchen, I mean really? is that still a thing???), installed ceiling fans, painted everywhere, new furnace and AC, updated electrical, new counter tops in bathrooms and kitchen, painted cabinets, new appliances, raised the height of the banister on the second floor, and a ton of small other details (door knobs, hinges, windows, etc.). At the end of the renovation, we were about $10k in. This resulted in an increase of rent to $1,095. 

Side B's lease is set to expire in October and we are trying to determine next steps - increase rent again or not renew so that we can do renovations and get that side up to $1,095 as well. Prior to our increase in rent, Side B had not received an increase in 16 years!

In July 2017, we purchased 2 single family homes and also did renovations - flooring, paint, hardware, new appliances, exterior work, windows, etc. We just completed them and have 1 rented already - and the other one I'm still screening residents. Thanks to Bigger Pockets, I have set my screening criteria rather high and have an email that goes out to all those who are interested. It allows them to self-screen (credit report, evictions, and other criteria that we use). 

Funny story - during renovations at one of the homes, I used my handyman for some deck repair work (not the general contractor, but my handyman I use for minor work). Well, I had to fire him last week. He used the bathroom in the home - only we removed the toilet the previous week. He literally pooped in a bag over the toilet flange - only thing is - there was some residual splattering which he left for me to clean up. The GC noticed this, called me, and I went over to the home and asked him to send me any invoices for work done - and that I would no longer be using his services.

A few lessons I learned the hard way - don't do three renovations at the same time when starting out! I was a little too eager and spread myself too thing which resulted in long days. I enjoyed it though - having never swung a hammer before to doing a lot of the work myself - I'm proud at what I accomplished. This also means that my homes will now turn over at approximately the same time and need to prepare for that next year if all residents leave at the same time.

The owner of the duplex next to mine wants to sell his portfolio - 2 duplexes and a single family. I would love to add these to our portfolio - but purchasing 3 homes (total of 5 doors) at the same time seems a little daunting and scary to me. I'd love any advice from fellow investors! Working through financing options is challenging, as so many private money/hard money lenders have a minimum loan amount and these are below that. If we do conventional financing, we are already tapped out at our Debt to Income ratio. Again I would love to hear anyone's success stories if you've been in a similar situation.

That's my story so far! Thanks for reading and for any positive/constructive criticism that would assist me. If there are any questions, please let me know.