New Investor to BP - Introduction and First Deal

[Dave Younts]

Hi everyone.  I returned to Charlotte in 2014 following five years of service as a Captain in the Army.  Having grown up in Charlotte, I am very familiar with the city and all of the different areas.  I was blessed with the opportunity to pursue a career as an investment professional with an investment firm in South Park.  At the same time, I began an MBA from Duke University that required me to attend classes on weekends (tough when you have a 2 year old and 4 month old)!  My goal is to use as much of my W2 income to invest in building and growing a real estate business that thrives.  I never do things half way... so I have set the lofty goal of building a $100M+ portfolio.  However, as a Soldier, I took great pride not in individual accomplishment, but in sharing accomplishments with others.  For that reason, I've decided that I would like to partner with one or more other investors of like-mind but unique skillsets.

My first deal:

- My wife and I moved to Charlotte knowing that we wanted to live near uptown. We found a neighborhood that is in the early stages of redevelopment and home prices are still affordable, yet I could still walk to a Panthers game or the Music Factory. We closed on an incredible house that was completely flipped in 2010 using a VA loan (0% down with no PMI) for $103/ft2 and lived in it for two years before deciding to move a little further out of town so that the kids would have a yard and some room to play. During those two years, I was very active in working with the city and private investors to improve the area. We received $75,000 in grant commitments from the city and are in the process of winning a Smart Neighborhood grant that would make the neighborhood the model within the city for smart technology such as LiFi. All four homes that were boarded up and falling apart when I moved in were either rehabbed or torn down. Crime rates have plummeted and a developer recently began building new homes and listing them for $212/ft2, more than twice what I paid per foot. Since August 2016, we've been renting the home for $2340/month (our mortgage+tax+insurance is $2022/month). I realize that this isn't great considering that I have maintenance costs, etc, but rent is appreciating rapidly in the neighborhood and I expect to raise it to $2450-2500 by next year and $2600-2700 the year after.

Our new home:

- We had access to a HELOC at Prime (3.5% at the time) and bought a home in the Gilead Ridge neighborhood in Huntersville. We picked the house with the ugliest paint job, oldest appliances, awful countertops, and fixtures. Initially I ran the numbers on the home intending to live in it for a year or two and move out. We painted the entire interior of the home a cool grey that any renter would like and remodeled the kitchen ourselves by painting the cabinets, adding new hardware, and having granite installed (total cost of kitchen was about $10,000). We got ridiculously lucky when I found out that the home had been advertised as 200 ft2 less than it really was, so they sold us a home thinking it was 2400 ft2 when it was really 2600! Instant $20,000 profit margin! Long story short, we fell in love with the neighborhood and now we've decided to keep it as our primary residence for at least 5-10 years. I just refinanced the home with a conventional 30 year mortgage at 4.365% at $290,000 (we paid $252,000) and got 80% of the cash back out of it = $232,000 - closing costs. Paid back the HELOC and now have about $300,000 available to pursue some deals!

What do you guys think?  Basically I invested $0 in the first home and $0 of my own money in the second one too.  I ran NPV based on conservative estimates and assumed I liquidate each house after 15 years of ownership.  Home 1: +$65,767 NPV.  Home 2: +$64,882 NPV.

[Rory Cummins]

@Dave Younts Yes, I've been lucky enough to have come across a couple properties like that where they had miscalculated the sq footage... always a great realization! I'd be glad to help you out on finding your next great deal. I work with several investors here in Charlotte, know many wholesalers and also invest myself so I'm very acquainted w/ running the numbers to screen properties. Will send you a PM if you have any interest in catching up. 4plexs here in Charlotte are a great find. Guessing you've been looking in most of the historic districts? There are some tucked away in other neighborhoods as well, just wish Charlotte had built and developed more of them over the years as they have in other cities. Duplex's very easy to find but the 4 unit properties go quick. Are you searching in your Huntersville area as well?