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All Forum Posts by: Kristel Daugherty

Kristel Daugherty has started 19 posts and replied 120 times.

Post: Promising Partnership turned Profit sucker!

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $200,000
Cash invested: $70,000
Sale price: $425,000

First joint venture / partnership and basically a lesson-churning machine! The partner found the deal and funded the purchase. Our contribution was getting the work done and splitting the profit. Some of the lessons learned:

1 - Get it in writing. This saved us at the closing table when the partner tried to not pay us our profit portion. It was also helpful later in being able to show experience for funding later projects. This is now our standard, and also covers details for all kinds of circumstances (if a partner dies, needs to leave the project, etc).

2 - Know the terms. I made the mistake of assuming the partner structured the money deal and terms in a similar way to what we'd done and were familiar with. Instead there was equity pulled out up front (theoretically to fund the rehab, but those funds weren't shared) and an interest rate that was almost double what we'd paid previously. Compounded over the life of the project, these two factors made a huge impact on the amount of profit - the same profit we were splitting equally.

3 - Find an expense tracking method that works easily. I started off trying to scan every single receipt and save them with a naming convention for easier tracking. It was overwhelming. We now use a spreadsheet that does the heavy lifting and all the receipts go in a physical folder. It gets the job done, keeps the records updated easily, and hopefully we don't ever have to go back through those receipts - but we'll have them!

4 - Lathe and plaster is not something we want to tackle again. The walls were cracking and generally poorly maintained, and once the demo started it was so messy and so much hard work. Opening the walls always results in surprises - and we had our share! Not only that, but drywalling an entire house is really a massive task. Then add in the angled ceilings - I would not choose this project over again.

5 - Communication and trust. I started to get creditor calls from lenders for other projects our JV partner was involved with and it became clear there were liquidity issues on his side. On the job site, my partner and I were stressed and arguing constantly because the deal was going sour in so many unexpected ways. The profits we thought we'd have went from $100K each to ultimately about $30K each. Not enough for what was going to be a 6 month project (that we actually worked on site for ~9 months).

6 - Do quality work you can put your name behind. Through all of it, I knew I would be the listing agent and would need to disclose everything we knew. Reputation matters, and I'm ultimately proud of the transformation. We know the home is ready for another long life as a much safer, healthier home.

What was the outcome?

Purchase price: $205,000
Rehab costs: $70,000
Holding costs: $45,000

Sale price: $425,000
Commissions, Buyer's Closing Costs, our Closing Costs: $45,000

Profit to split: $60,000

Post: Washington state/Kitsap County landlord-tenant laws

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

Another great resource (that I use) is RHAWA. It's the Rental Housing Association of Washington and their landlord resources are worth the membership. Bonus is they advocate for landlords so our legislation doesn't gear entirely towards tenant-friendly laws. We need more landlords and investors voices heard!

Post: First Flip in Tacoma WA

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $195,000
Cash invested: $30,000
Sale price: $330,000

Tiny 546sf 2 bedroom / 1 bath home on .17 acre that needed cosmetic updates.

What made you interested in investing in this type of deal?

It was a small project that we felt would be a great way to gauge if we wanted to do this again or not! If it didn't work, then it was small enough to not be too burdensome. It felt very achievable compared to the idea of a first flip on a 2000+ sf home that would potentially be much more work, longer to complete, etc.

How did you find this deal and how did you negotiate it?

Local wholesaler list that was just overlooked. We double-checked the numbers and found more opportunity than was advertised.

How did you finance this deal?

Private money for the purchase and our own funds for the remodel.

Our initial budget was $27k and we only went slightly over at about $30k. Our initial timeline was too ambitious and doubled from 6 weeks to 3 months. That ended up benefitting us by allowing us to accept FHA and VA offers too.

How did you add value to the deal?

We gave the whole house a full refresh, including interior and exterior paint, flooring, updated kitchen and bath, and a new deck. The back and side yards were overgrown with blackberries - so those were cleared and new sod was laid over most of the backyard.

What was the outcome?

Overall a net profit of about $85k!

Lessons learned? Challenges?

Supply chain issues and delivery delays caused some of the problems. We learned a few good lessons about the order of operations (we put flooring in a bit too soon). Always get the crawlspace cleaned up and re-insulated (this cause the appraiser to call out additional items which delayed closing).

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Connect with folks at REAPS - this is where I got many of my connections to make this deal possible!

Post: 1st real estate deal advice. MT or WA Market

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

@Anna Martinson - congrats on making the decision to get out there and start investing!

I do a lot of business in Kitsap County, and Port Orchard is a very hot market. Getting a property may be more competitive than you'd expect. Not to dissuade you, but to give you the information that you need to make a decision. However, I do see a lot of house-hacking opportunities overlooked. I talk to a lot of folks looking for multi-family, and see a huge opportunity in buying a 4 or 5 bedroom house and renting by the room. With the Navy, shipyard, and commuters in the area - there's a lot of potential renters looking for a "deal" that would still provide you with ample profit margin.  The appreciation in the area is also huge (about 16% last year alone), and without massive building taking place I think we'll continue to see housing shortages drive appreciation in continuing years.

Post: Kitsap County, Washington

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

Hey Joel!

If you want to meet up with local wholesalers - come out to REAPS this week. First meeting is free, register at REAPSweb.com

I'm guest speaking this month about goal setting for 2022. You'll be able to network with most of the active wholesalers and investors in the local market. It's our best local REI meetup!

Post: Interested in Connecting with New Veteran Investors in Kitsap WA

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

Hi @Douglas Goodart!

That's a great idea and I think a lot of the active duty and veterans in Kitsap County would love the opportunity to be a part of that process.  Unfortunately, you're going to run into problems with Fair Housing Laws and protected classes in the way that you're presenting it. However, you may be able to setup grant programs and network with lenders like Lee Nguyen at Veteran's Lending Group to create focus groups. I'm not an expert at setting something like that up, but I'd love to get you connected to anyone in my network that might be of assistance to you. Let me know how I can help.

#ArmyStrong #Veteran

Post: Kitsap Investment Networking Group - Premier

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

@Adam K. - of course!

Post: Kitsap Investment Networking Group - Premier

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

Next one is August 3rd! Come on out!

Post: Kitsap Investment Networking Group - Premier

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

Opening in-person event to network, discuss investing goals, and talk about what this group can do to grow together.

Upcoming Topics Include

  • The Millionaire Real Estate Investor
  • Deal Analysis and strategies for multiple exit scenarios
  • Networking Spotlights (lenders, wholesalers, investors, 1031 exchangers, agents, etc)

Post: Rural Washington Market...Mult-family or Small Apartment

Kristel Daugherty
Posted
  • Realtor
  • Bremerton, WA
  • Posts 126
  • Votes 69

I'm local to the Port Orchard market - just listed a few duplexes this morning. Would be happy to chat with you about anything in this area!