$200k in six months - long distance RE challenge

$200k in six months - long distance RE challenge

Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes

I day traded currency futures in a past life and always kept an online journal to keep me accountable, share what I was doing with the community and have a little bit of fun.  

Even 10+ years later, I enjoy reading back over it, reliving the sweaty palm wins, the heart sinking losses and more importantly, seeing the evolution of my mentality and how I dealt with the highs and lows of risk, wins and losses.

With that said, I've set a challenge for myself to make $200k in equity over a six month period, June-Dec 2018, investing in a market that I know well but am not physically located in.

Details are below - enjoy.


Goals


1) Buy (5) single family properties in 2018 and get them refinanced into long term mortgages

2) Purchase under market and achieve a minimum of $40k in equity per property after all repairs are completed

3) Cashflow $250-400/mo after expenses & debt service per property

Funding

1) A single line of credit established on an existing single family property

2) Private money from existing private money lenders that I've worked with over the years

3) New lines of credit that I'm currently in the process of setting up on existing properties - probably will not be established until late August

Background

I work in oil & gas and I’m currently on assignment in Mexico and will be here for another 10 months. The area I’m focused on is Southeast Texas, where I know the market, rents are strong and rising, housing supply is limited and there is major industrial capital expenditure committed to the area over the next 10 years.

I'm an experienced investor, having built my portfolio almost entirely while abroad and avoiding turnkey companies.  I focus on building quality teams, finding decent opportunities and most certainly over-communicating. 

The Team

1) Project coordinator – my boots on the ground. This is our first project together but we’ve built a relationship over the last few months and he’s an active investor in the area. 

2) Various contractors, some that I’ve worked with before, others only via reference. Despite not being in a HCOL, contractor prices tend to be higher in Southeast Texas due to labor demand in the area. A high school graduate that wants to work 60-70 hours a week can make $80k+ and those with further aspirations can make much more in supervision. So trying to find a decent contractor at a reasonable rate is difficult. Hurricane Harvey has further compounded this problem as rates have skyrocketed.

3)  Agent - young, hungry, willing to write a lot of offers.

Let's get started!

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Sean H.Pro Member
Flipper/Rehabber · Pittsburgh, PA · Member since 2010 · 224 posts · 75 votes
8y

Great job so far. It looks like you may have set your goal a little low if you have two deals and over 60% of the way to your goal and it's not even August!

How are you compensating your boots on the ground? 

See this reply in the discussion

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  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Update

    Property #1 Rented at $1800/mo

    Property #2 On the rental market for $1650/mo.

    Property #3 Drywall moving at warp speed, these guys are fast. Kitchen will be ordered this weekend, flooring should be delivered tomorrow or Friday. Added a few more light cans in the living room, minor scope growth there. Everything else is moving along.

    Loan documents submitted on Monday for the refi of this home. I submitted an updated personal financial statement but my banker called me back and said no need, they'll use my PFS from three months ago (although I told him I've taken on more debt) as well as my prior credit report. Painless and easy.

    Continuing to make offers every week on other properties but nothing has stuck yet. But when it rains, it pours, so I'll remain patient.

    Property #3 Progress Photos Below

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    Looking nice.  

    What cash flow are you looking for per property?

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    @Bruce C.  Thanks Bruce.  $250-$400/mo is my target. 

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    A summary update of this challenge thus far - I'll try and post this every couple weeks as additional properties get through the appraisal and rental process to provide a clean and quick update.

    Property #1  Equity Earned:  $83,000  Monthly Cashflow:  $250

    Property #2  Equity Earned:  $42,000  Monthly Cashflow:  $375

    Property #3  Equity Earned (forecast $30,000)  Monthly Cashflow (forecast $350)

    Property #4  Not under contract

    Property #5  Not under contract

    Equity Earned vs Goal (including forecast):  $155,000/$200,000

    Monthly Cashflow Earned vs Goal (including forecast):  $975/$1625

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    Wow, those are some nice numbers. What date did you set as your personal deadline?  If you meant 12 months from the start of this topic, you’re going to crush that at this rate.

  • Investor · Lumberton, TX · Member since 2017 · 146 posts · 93 votes
    7y
    Originally posted by @Sam B.:

    A summary update of this challenge thus far - I'll try and post this every couple weeks as additional properties get through the appraisal and rental process to provide a clean and quick update.

    Property #1  Equity Earned:  $83,000  Monthly Cashflow:  $250

    Property #2  Equity Earned:  $42,000  Monthly Cashflow:  $375

    Property #3  Equity Earned (forecast $30,000)  Monthly Cashflow (forecast $350)

    Property #4  Not under contract

    Property #5  Not under contract

    Equity Earned vs Goal (including forecast):  $155,000/$200,000

    Monthly Cashflow Earned vs Goal (including forecast):  $975/$1625

     Love this chart! Gives me comparables lol.

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Thanks @Bruce C.  - trying to complete the challenge by end of Dec for a span of six months (June 2018 to Dec 2018).  I still have a shot at it but I need to get two more deals real quick to achieve it.

    Hahaha, glad to help @Aaron Rowzee  Catch you next week when I'm back in town.

  • Real Estate Investor · Takoma Park, MD · Member since 2011 · 74 posts · 38 votes
    7y

    Keep going @Sam B. you are inspiring all of us!

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    @Marla B.  Thank you.

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Update

    Property #1 Rented at $1800/mo

    Property #2 On the rental market for $1650/mo, applications under review. Hope to have a deposit by next week.

    Property #3 Drywall texture on-going today, should be ready to start interior paint Monday. Floors arrived Tuesday, still working through kitchen layout and pricing but should be good to pull the trigger this weekend w/tentative kitchen install starting in 10-12 days. Exterior repairs completed, exterior paint to start next week, just waiting to get into town this Sunday to pick a few colors out for exterior trim.

    I was really close to getting #4 under contract this week but not quite there, only $2k away on price...on paper, it looked great but being that it was located on a less desirable street/corner of town (of the good part of town), close to several multi-family properties...couldn't justify it. The search continues.

    Property #3 Progress Photos Below

  • Member since 2018 · 1 post · 1 vote
    7y

    Hey Sam,

    This is a really interesting write up. I'm brand new to this and I'm only in the research phase so this post is incredibly insightful for me. Keep up the good work!

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Thanks @Brian Taylor I'm glad you're finding this experience helpful.

  • Wholesaler · San Jose, CA · Member since 2017 · 29 posts · 10 votes
    7y

    Hey Sam this is an amazing post. Keep up the hard work. Hopefully I can achieve something like this next year. Happy investing.

  • Owen DashnerPro Member
    Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
    7y

    Nice work on these.  It takes a lot of extra effort to document all of this and you have made it a fun and interesting read - great job.

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Thanks @Michael Arreola - are you going to be investing in the SJ area?

    Thanks @Owen Dashner - it's worth it, helps keep me more accountable.

  • Wholesaler · San Jose, CA · Member since 2017 · 29 posts · 10 votes
    7y

    I'd love to be able to invest in the San Jose area. Unfortunately I am priced out of this market so I am looking elsewhere to invest. Mainly out of state because the landlord/renter laws are more favorable else where. 

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Understood and agreed, best of luck.  Holler if you have any questions or wish to bounce some ideas off of me, I started my investing long distance (3000+ miles away/18hrs of flying & driving).

  • Baltimore , MD · Member since 2011 · 32 posts · 8 votes
    7y

    still love this thread.. keep up the hard work @Sam B.

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Thanks @Randy Coffren - just flew into town yesterday, more updates to come shortly, property #3 is really taking shape, plus a couple offers/counter-offers that look promising.

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Update


    Property #1 Rented at $1800/mo

    Property #2 Application & deposit received (rented at $1595, not $1650 as posted earlier - my mistake).

    Property #3 Interior paint completed, electrician coming back on Saturday to add a few more light cans, install plugs/switches/covers and relocate the oven hook-up (my fault, oops). Flooring will start Monday morning in the kitchen and the kitchen cabinet install should start Tuesday.

    The struggle continues with locking down property #4 &5...pretty close on (3) properties as of this morning, just have to see how they shake out. Really hoping to close on at least one before I leave Texas again in another 10 days.

    Property #3 Progress Photos Below

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Update


    Property #1 Rented at $1800/mo

    Property #2 Rented at $1595/mo

    Property #3 Main flooring is nearly complete, bathroom tile starts tomorrow. Kitchen starts Wednesday. New exterior doors are on-site. No other major scope growth. Neighbors have been coming up and greeting me over the last week, all very excited for what we're doing. Progress photos below.

    Property #4 Woooo! Finally got #4 under contract, trying like hell to close by the end of this week before I fly out. The contract is with the title office and they are expediting. If not this Friday, next week. It's already been demo'd and dried out, which is great - both my contractor and I are very happy not to have to deal with that process again like we did on property #3. Rough numbers and photos below:

    Purchase Price: $76k
    Estimated Rehab: $65k
    Estimated After Repair Value: $236k ($107 sq ft)
    Estimated Monthly Rent: $2000
    Source: MLS
    Funding: Purchasing cash via personal funds
    Schedule: 4 weeks (start date approx. 15-Nov)


    Property #3 Progress Photos Below

    Property #4 Below

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    Very nice!

    Where did you get that flooring and what is the name of the pattern?  I like it. 

  • Member since 2018 · 3 posts · 2 votes
    7y

    I have a property you may be interested in for number 5.  check your inbox.  it would match all of your criteria I believe. 

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Thanks @Brian Melancon

    Thanks @Bruce C. - sending you a PM now with the product source and contact.  I'm very happy with the product, contractor is happy (easy to install), lots of compliments from neighbors, etc.

  • Real Estate Investor · Takoma Park, MD · Member since 2011 · 74 posts · 38 votes
    7y

    @Sam B. property #3 is shaping up to be beautiful! Good work.

    Marla

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