All Forum Posts by: Andrew Morales

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Midvale.

Purchase price: $692,000
Cash invested: $7,700

After months of searching, backing out of a bad deal, and several lost bids, we finally found and bought a legal multi-family that meets nearly all of our search criteria. We financed the DP with a HELOC at 3.0% and the remainder with a conventional loan at 3.5%. Come springtime, we'll convert the property from a triplex with a DCR of 1.46 to a quad with a DCR of 1.83. Meanwhile, the appraisal came back at 700k giving us instant equity!

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

It was fully leased up at the time of our offer.

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

Zillow. Our offer contained a condition that we would increase our offer by 5k above their next best offer up to a certain amount.

How did you finance this deal?

HELOC for the DP and Conventional for the rest.

How did you add value to the deal?

Still too early but we plan to convert lawn to gravel that can be used for parking, adding a BBQ area, and setting up fiberoptic internet. Each should reduce costs on the property and add value for our tenants.

What was the outcome?

Ten days after the deal close, we've made back all of our cash investment.

Lessons learned? Challenges?

Finding the right property at the right price. We were making offers 30k over asking price but were consistently being outbid. The difference with this property is that we had our bid in within a couple hours that it hit the market largely because we knew exactly what we were looking for and what numbers would meet our criteria.

Hi Ron, I got some details wrong and tried to edit the above but couldn't figure it out... so I created a new entry. We actually used conventional not FHA. We had some savings and we used interest free credit cards and finally a heloc to fund the renovations.

Look into Keybank for the heloc, they give you the option to switch your loan to a fixed rate.  They're also a portfolio lender, they take their time for mortgages so I wouldn't use them for your purchase only your refi. 

Investment Info:

Single-family residence fix & flip investment in Murray.

Purchase price: $225,000
Cash invested: $70,000
Sale price: $353,000

Reconfigured first floor, gutted basement, new HVAC, new plumbing, new electrical, new baths and new kitchen.

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

We were looking for a smaller project (turned out big!) that we could mostly do ourselves. The house was in our budget if we ended up living there for a long time (which we did). And the neighborhood was real nice, ours was probably the ugliest on the block.

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

Found via the MLS, we used some plumbing items and the appraisal to negotiate 10k off.

How did you finance this deal?

We used a conventional loan. The rehab was paid for using savings, interest free credit cards, and a heloc that we got after the first phase of remodels.

How did you add value to the deal?

We reconfigured the first floor (making the kitchen bigger), and gutted the basement (moved all the mechanical to a closet and got an extra room). It got all new electrical, plumbing, HVAC, and windows. We also redid the floors, new carpet in the basement, and redid both baths. Wired with fiberoptic internet and a few smart devises (garage door, sprinklers, thermostat) and of course new flooring, trim, and paint.

What was the outcome?

Listed for 360 and sold for 353, we got it under contract after 3 1/2 weeks.

Lessons learned? Challenges?

We found a belly in a 120 foot segment of the plumbing (60 feet fo the 120 from the house to the city). We were told we could fix with 7k, it cost us 12 (had to get a pump and new lining to the city)! We also overspent on the windows and the water heater (got a tankless). It took a lot longer to do than expected. This was school of hard knocks! But the education... I'd be able to do the same project in half the time and save 24%

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

Joel Carson of Utah Real Estate was excellent for the purchase and later with the sale. He's very quick!

A mortgage broker friend of mine who has been in the business for 20+ years said that the reaction for mortgages are reminiscent of 2008-9.  Seems to me that this loosened up a bit with the fed dropping rates but for how long?  I'm in SLC and so far I haven't seen a drop in housing prices, I'm anxious to see if that continues.  

A lot of good thoughts here.  It was easy to fill (we're probably still a bit below market rate even though we just raised rent 4%).  We did give them the option to cancel their contract with a full refund on their security deposit but they opted to keep it.  I'm positive they'd have no problem selling their contract or if they backed away we'd be able to fill it quickly as well.

One thing that you've all given me a lot to think about is that in reality they do seem like good tenants and have been very communicative without nagging.  This is a good sign from our perspective.  I like what @Mary Mitchell said that solid applicants are preferable to the "unknown better applicant".

That's helpful to think through, I am grateful that they're bringing this up now so we can be prepared.  It's also helpful to think through the eviction process although I hope it doesn't get to that point.

I totally agree about there being more to be a landlord!  I welcome everyone's thoughts. 

New tenants who have already made a deposit and signed a contract are now asking if we'll be flexible if they lose their jobs in this new COVID-19 environment.  My first thought is that they can sell their contract, but if they can't isn't it better to accept reduced rent by 100-300 than it is to put up with a vacancy?

The situation here is that we are in a SFH with a MIL. Mortgage is 1800/mos and MIL rent is 885/mos. We'd get by without the extra income, but we're trying to think through all our options.

I wouldn't brush it off so quickly, I know people participating who are actively organizing their neighbors, it would be wise to keep an eye on the attitudes in our respective areas and be prepared for what could be a challenge for ma's, pa's, and companies alike. 

Investment Info:

Single-family residence buy & hold investment in West Jordan.

Purchase price: $410,000
Cash invested: $82,000

We occupy the 3 bed, 3 baths upstairs while our tenants occupy the basement studio and pay 885/mos. We came from a live in flip and altogether with the benefit of the new income our portion of the mortgage and utilities is less than our flip while we lived there.

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

The comfort it would provide my family while reducing our housing expenses.

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

MLS, we used details like the busy street to lower the sale price 5k.

How did you finance this deal?

Conventional loan, proceeds from sale of flip were used for the downpayment.

How did you add value to the deal?

This was move in ready, we enclosed the back yard but other than that no work has been needed.

Lessons learned? Challenges?

I am most grateful that we sold the flip and got back our equity before the current economic environment. I don't know yet if the current situation will spin over to real estate, but we lucked out to realize our first investment.

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

Doug Winder was excellent and creative on helping us meet our move in deadlines and negotiating our reduced purchase price.

Investment Info:

Single-family residence fix & flip investment in Murray.

Purchase price: $225,000
Cash invested: $70,000
Sale price: $353,000

Reconfigured first floor, gutted basement, new HVAC, new plumbing, new electrical, new baths and new kitchen.

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

We weren't looking for a home run, or a big project. It seemed a project just the right size for our budget and our skills.

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

MLS, the appraisal and due diligence gave us a few negotiating points that allowed us to lower the price by 10k.

How did you finance this deal?

FHA

How did you add value to the deal?

beyond the significant changes on the interior, we replaced windows, redid the landscaping, and finished the floors. These were three of the biggest selling points during showings.

What was the outcome?

It took just over three weeks to get an offer.

Lessons learned? Challenges?

by far plumbing was our largest problem. There was 120 ft from the home to the city with a 60 foot belly. We had several back ups while we lived there that weren't solved until long we installed a pump. Never again will think that we can "get by" with the existing inadequate plumbing, I should have negotiated a lower purchase price and fixed that problem right away!

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

Joel Carson was great to work with both on the purchase and the sale.