First investment property! Took action!!

First investment property! Took action!!

Ponchatoula, LA · Member since 2016 · 35 posts · 39 votes

Hello BP!!! 

Well after many, many months of reading and educating myself from the wealth of knowledge here my wife and I have purchased our first investment property! 

Ruby Door Properties, a brief history: I like many others on here began when I discovered BP and was impressed by the amount of education I could get at zero cost to me and was blown away by the generosity of others helping in the success of others. I began educating myself and listened to every podcast a few times and finally got the courage to presnt my findings and plan to my wife. We like many others were very risk averse and lived to the fullest of our means just staying afloat and never having lots of extra money. Once I explained everything to her she understood the black and white numbers REI works on. We're both involved in business for our jobs and have had a small business of our own for a number of years, so we understand the numbers fully.

Next up we partnered with a friend who is an agent and also an investor. He showed us his proprties and drove us through the neighborhood he invest in and explained why he invest there. We looked for several months at properties but didnt find any that fit our criteria. We were driving for dollars one sunday and came across another property we thought would work, contacted my buddy on Monday and the property has already been locked up by another investor. Bummed we went to his office to scour the MLS as he had another agent in his office that had a property listed that was dropping bi-weekly. So we ran some numbers and came up with an offer number that we thought the property might realistically sell for put in an offer well below that price to gauge the sellers desperation.

Ruby Door Properties Name: My wife's favorite color is red, upon a quick search online Red Door Properties was in use already. We were in the car talking real estate returning home from a family trip and Ruby by The Kaiser Chiefs(yeah we love alt/indie music) was on the radio and my wife told me the story of her Aunt Ruby, a Hollywood type who was always glamorous in all things and also sold real estate for a living. So we instantly thought we'd call the business Ruby Door Properties and yes all of our doors will be painted Ruby Red! 

The Property: 1968 pier and beam house, 1344 sq ft. Agent had it listed as a 3/1. Listed in May at 42.9 dropping the price bi-weekly until we saw it at 29.9, we put in an offer of 10k and a few days later the seller came back at 19K. We put in another offer at 17K and it was accepted! We were stoked!

 When we viewed the property we discovered an unfinished masterbath(this could be the reason for listing as 3/1) and knew this would be a huge value add. The master bedroom, master bath and laundry room were part of an addition to the original house. One of the original bedrooms off the living room was opened up and made into a formal dining. We closed up this formal dining room and now we have a 4/2!  

So now you're thinking, what kind of house can you get for 17k, really?? So here she is sitting on her 150 X 50 lot. These befores are pretty rough but saw through all the clutter and could see the potential. First off the floorplan was awesome, split floor plan with a true master suite, vaulted ceiling in the living/kitchen/dining area which was all open like modern homes. Comes complete with an abandoned car in the front yard! 

Laundry

Master Bedroom(after cleaning out tons of clothes/furniture/etc measures 19.5 X 13!! plus the walkin closet

Unfinished Masterbath including brand new tub/shower combo! 

And the sweat equity begins!! 

Filled a 20 yard dumpster in 3 days!

Buh-bye old nasty kitchen!

Framing up Bedroom 4 

Scope of work:

Needs to be leveled and have a beam replaced between the kitchen and hall bath.

Needs a new roof(and resheath the original side of the house, 2/3 of house)

Full electrical update

Full plumbing update

Add central HVAC(was window units only before)

Full kitchen replacement including appliances

Sheetrock 3/4 of house due to damage 

Full paint interior and exterior

Replace most windows

We're giving ourselves 6 months to complete this project. I have a friend who is a GC so he will be helping me out with the things that require a liscenced contractor. 

Our plan to put in tons of sweat equity and try to come in at 50K including acquisition price. This should rent to 850/900 a month and monthly bills will be around 475 a month, cashflowing 375/425 a month. We are using the BRRRR strategy and will get this rented and after seasoning it will pull our cash out and repeat. Our plan is to get 10 properties online in 10 years and then begin to pay them off the next 10 years so in roughly 20-22 years when we retire we should have 9-10K a month flowing in from our properties. We plan to self manage these units to maximize cashflow.

My hope is to post update on a weekly basis as we are working a night or two during the week and working 6-8 hours each Sat & Sun., GC will get his work done weekdays. I hope you will follow us along our journey and perhaps be inspired to take action and get your RE investment career going. All feedback and suggestions are welcome!! Thanks BP community!! 

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Real Estate Investor · Acton, CA · Member since 2014 · 109 posts · 73 votes
9y

@Derek Duplechin I just built a brand new house, in Los Angeles county, and I didn't run any phone lines at all. We have ATT for our internet and phone, but they ran a wireless phone system called U-verse. We plug our home phone line into the back of the wifi router. Anyway LA county didn't require us to put in phone lines, they approved our plans without any. 

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  • Investor · Germantown, WI · Member since 2012 · 206 posts · 364 votes
    10y

    Congratulations Derek! I love how ambitious you are taking on a huge project like that. It looks like you've got it all planned out and I can't wait to see the photos as the rehab progresses. 

  • Investor · Springfield , OH · Member since 2014 · 32 posts · 22 votes
    10y

    Good luck on your project. Looking forward to your progress reports.

  • IL · Member since 2016 · 17 posts · 5 votes
    10y

    @Derek Duplechin congratulations on starting your journey. Thanks for sharing and allowing us to follow along the way. Best of luck!

  • Austin, TX · Member since 2016 · 6 posts · 1 vote
    10y

    Congrats Derek!! Keep us updated!

  • Temecula, CA · Member since 2016 · 75 posts · 38 votes
    10y

    Get-r-done!

  • Flipper/Rehabber · Springfield, MO · Member since 2014 · 114 posts · 67 votes
    10y

    @Derek Duplechin Awesome!! Taking action is the hardest yet most crucial part of investing! Keep it up!

  • Ponchatoula, LA · Member since 2016 · 35 posts · 39 votes
    10y

    I took some time off of my W2 job and worked with my dad and got 5 new windows installed in the house. I still have a double window(72X70) in the living room and the kitchen window to change out. The kitchen window will get done after the house is leveled as the kitchen was where we have a major leveling issue and the living room window will get done after the roof gets changed because I found some water damage in that wall. My dad and I spent the majority of a day pulling these massive vines(some the size of a baseball bat at the base of the tree) down from the 60-80' pine trees behind the house, turns out they were poison ivy! So let's just say pine tree sap and poison ivy don't do nice things to your skin....Today my wife and I spent some time raking up what looks like many years of pine needles and leaves from around and under the house. I needed to get the underneath cleaned out so my leveling crew can work. This upcoming week I've got my GC's crew working on leveling the house and hopefully by the end of the week we can meet with my GC's roofing guy to get a roof bid and get on his calendar.  So things are still moving long at a decent pace for owning the place for only 23 days. 

    Replaced the 36X48 single pane with 36X36 double insulated windows

    Thankfully the side and rear windows were already 36X36 so they were a simple swap but we replaced all the trim work on these

  • Rental Property Investor · San Antonio, TX · Member since 2011 · 266 posts · 158 votes
    10y
    Derek Duplechin this is an incredible project to follow! So what's been some of your biggest lessons learned so far? Anything you would have done differently? I'm impressed with your progress. Keep going and I look forward to following along! -Andrew
  • Conshohocken, PA · Member since 2016 · 42 posts · 12 votes
    9y

    Awesome project! How much was the leveling?  Were there specifics to the property that drove up that quote, or kept it lower than other leveling jobs?  ie) Sq footage, the fact that its on piers, drainage, etc.

  • Real Estate Investor · Acton, CA · Member since 2014 · 109 posts · 73 votes
    9y

    Congrats @Derek Duplechin I just followed this post, can't wait to watch. Very inspiring!

  • Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    9y

    kick ***! keep it up !

  • Investor · Jericho, NY · Member since 2015 · 171 posts · 148 votes
    9y

    @Derek Duplechin Great! It pays to take action and just go out there and do it. Glad that its working out so far. Good luck with the rehab.

  • Ponchatoula, LA · Member since 2016 · 35 posts · 39 votes
    9y
    Thanks for all the positive comments, much appreciated. Unfortunately not a lot to report as of late as my GC is getting backed up with work as a result of the flood in Baton Rouge and since he's not making much on my project I'm getting bumped a little in line. They are supposed to begin leveling the property tomorrow and Saturday. Once that gets accomplished we'll order materials for the roof which my GC says the local Lowes is a couple weeks behind on deliveries because of the flood. So needless to say things are beginning to fall a little behind schedule. I'm not going to fret about it to much just yet. Lessons you ask? My dad and I learned a lesson at the end of my vacation week. We knew we needed to trim some vines that were growing in the massive 80' pine trees behind the house. Some of the vines were as large as baseball bats at the base and had to be chainsawed off. We couldn't really see the leaves on the vines because they didn't start until 30' up or so. Well when we started pulling them all down we realized they were poison ivy! I have since discovered that I am highly allergic to it, had to go to the doc and get a steroid shot as well as oral steroids.....it's been an adventure. So now I have this massive pile of poison ivy in the backyard to dispose of. I called my local Ag guy from LSU and he said burning once they are dry is an option but there is a no burn law in city limits. So I'm having to load all this into my trailer and haul it to the dump 30 minutes from the house which means I have to handle it all again. We'll wear protective gear this go round. I'm sure some of you may be curious as to the financing on this deal so I'll give you some insight. My dad gave me 33k out of an interest only HELOC he has on his house to get started. For the balance of funds I'm getting a little creative. I have a 401k loan right now that I will need to pay off before I can get another 401k loan to fund the balance of the rehab. To payoff my first 401k loan I'll do a HELOC on my primary home and payoff my 401k loan and turn around and get another 401k loan for enough to finish the rehab and pay off my HELOC. Following that? The benefit of the 401k loan is that I pay myself the interest instead of the bank on the HELOC. Then once I have the place rented and seasoned I'll go to a small local bank and do a cash out refi and pay both my 401k loan and my dad's cash in a lump sum. Hopefully the property will appraise for 80k and I can pull out 60k in cash from it. The beauty of the BRRR strategy:) It all sounds good and doable and I hope it all goes as planned. I'll post up some pix of the leveling work and any other progress as soon as it's available.
  • Ponchatoula, LA · Member since 2016 · 35 posts · 39 votes
    9y
    Ryan Dressel I'll let you know once it's complete, I'll try to pull some insight from the guys doing it and what all was involved. Just from me looking at it the "seals" which are the big 8"x12" beams the perimeter of the house sits on are in great shape. The other beams running from the center piers out to the perimeter seals are what's compromised, one has been sistered and is still failing. I think there was a water leak at the kitchen sink or the hall bath which backs up to the kitchen. In all it's a section of the house about 20' x 14' that's the trouble everything around that is decently level. I think the guys will use bottle jacks and add in some additional piers as well as replacing the compromised beams. Hope that helps with your questions. I'll let you know pricing as well when they are done.
  • Rental Property Investor · Oklahoma City, OK · Member since 2016 · 41 posts · 28 votes
    9y

    Way to dive in head first. I love your business name. Like you, I also thought of "Red Door" as part of business name and quickly found the same results. You have found some creativity in all aspects of your project. Great Job!

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    9y

    Be careful if you are reducing the size of any bedroom windows - building code in most areas will require that the bedroom windows meet egress requirements if they are re-sized.  Good luck!

  • Ponchatoula, LA · Member since 2016 · 35 posts · 39 votes
    9y

    @Steve Babiak wow, didn't think of that, will look into it. The bedrooms are 10X11 so not abnormally large or small. Thanks for the callout ! 

  • Ponchatoula, LA · Member since 2016 · 35 posts · 39 votes
    9y

    Couple pix of the leveling issue in the kitchen and the progress made over the weekend on it. The guys will come back out tomorrow to finish leveling the dining room, hall bath and back bedroom. The kitchen was off 3.5" at the exterior wall, insane. So far the guys replaced the 2X10 support beams that run from the house center piers to the exterior wall and put down one layer of 3/4 sheeting. Next up is doing the same leveling/beam replacement in the hall bath and reframing the 2X6 wall that seperates the kitchen and hall bath that houses plumbing vent piping. Some good news is the electrician came in today and began their work today. I used post it notes and stapled them to the studs where I wanted all the outlets and switches. I've got to get with him tomorrow morning to talk about running coax to the bedrooms and running one phone line in the kitchen. With some luck the plumber will be in next week and the roofer is supposed to be coming out to give a quote and material list late this week. @Ryan Dressel

    Anyone want to chime in on phone lines? Do I need them, i.e. required? If so how many? Was thinking about just one in the kitchen as most people who still use them have a cordless system. 

  • Real Estate Investor · Acton, CA · Member since 2014 · 109 posts · 73 votes
    9y

    @Derek Duplechin I just built a brand new house, in Los Angeles county, and I didn't run any phone lines at all. We have ATT for our internet and phone, but they ran a wireless phone system called U-verse. We plug our home phone line into the back of the wifi router. Anyway LA county didn't require us to put in phone lines, they approved our plans without any. 

  • Conshohocken, PA · Member since 2016 · 42 posts · 12 votes
    9y

    thanks for the updates, keep em comin!

  • Ponchatoula, LA · Member since 2016 · 35 posts · 39 votes
    9y

    Long weekend of working on the property, I'm spent! Good news on the progress front, my GC's electrician continued on the house this week, got wiring run to most of the house replacing the outdated fire hazard stuff to all new, This coming week he will inspect the master/laundry/master bath wiring to see if its compliant and tie it in to the rest of the house. I met with the AC guys this week also and we went over placement of both inside and outside units as well as the living room soffit to house all the vent piping/electric/water lines. Going with a 3 ton(house is 1344 sq ft) Grand Air unit, it's made by Carrier. AC guys recommended putting in a "chase" in the living room soffit so it wont ever collapse or give us any trouble, thats why the bottom of it the soffit is open right now. Once they install the chase we can finish the soffit framing. With some luck the AC guys will be out next week to get working after the electrician runs the 10/2 lines for it. Still have some leveling to do in the hall bath area and a little in the master, that should also be getting done this coming week. So this weekend my dad and I got the living room soffit built, set up the decking in AC closet for the air handler, framed up the openings for the return airs, installed the master bedroom door, ripped out the old tub/shower in the hall bath and built a raised deck on the backside of the house for the AC unit(were in a flood zone so I didn't want to chance my compressor going under).... and finished ripping out the last room of old drywall. Damn I'm tired.....it's all worth it right. This is a beast of a project, I'm not regretting it but it does require a lot of attention(i.e. money) 

    Living Room Soffit, will house air duct chase, pex lines for water and electrical 

  • Investor · Greenville, SC · Member since 2011 · 22 posts · 5 votes
    9y

    You guys are AWESOME and quite an inspiration!!  I cannot believe that about the poison ivy.... I'm highly allergic as well and know first hand the reaction you had is absolutely no fun.  Sorry that happened.  I can only imagine how discouraging that was, but you are a beast and are powering on!  Great job!

  • Investor · Warner Robins, GA · Member since 2015 · 1k+ posts · 490 votes
    9y

    Great job!!!

  • Investor · Houston, TX · Member since 2016 · 22 posts · 5 votes
    9y

    I'm excited for you guys!

  • Ponchatoula, LA · Member since 2016 · 35 posts · 39 votes
    9y

    So sorry for the long delay in reporting in on my project! I've been busy with the W2 job and things have ebbed and flowed on the house progress. Since my last post some work has been accomplished. The inside AC unit was installed and all of the ductwork has been run. The rough in electrical is also now completed. My wife and I got the large 72X72 window installed in the living room and my dad and I installed the kitchen sink window and refinished the siding on the back of the house. Today the roof was put on, including redecking 2/3rd's of the roof which was part of the original house before the addition. One small section of leveling is left where the living room transitions into the master and that will hopefully be completed tomorrow. Next up will be repiping the entire house with pex lines, waiting on plumber for a bid. In the meantime I'll be installing insulation on all the exterior walls that don't require water lines. Once the plumber is done it'll be time to sheetrock and finally get into the cosmetic side of the project, definitely looking forward to that! 

    Hope you all have a relaxing Thanksgiving and get to spend time with your loved ones

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