All Forum Posts by: Adam Dinneny

This still on for tomorrow Dave?

@Zac Newell and @Kevin Zolea! Feels good to be out of my analysis paralysis phase.

@Tom Hamill I looked all over the place: Fox Park (where this is located); Soulard; Tower Grove; Shaw; Northampton; Southampton; Clifton Heights; Benton Park; etc.

@Alex Olson me too man. A lot of these duplexes seems to get converted to huge single families but I'll leave it as is. I'm always interested in KC (I'm from there and have friends doing investing there too).

@Vince Mayer - kind of a long story, Vince! But essentially the deal almost fell through multiple times - the final issue included an unfavorable FHA appraisal ($6K under my purchase price). I was locked in at my purchase price - no room for negotiating due to a special sales contract and escalation clause that kicked in. Seller didn't have to budge and my financing contingency was about to expire (meaning I'd have to come up with another 6K at the last minute to obtain financing). Due to a great relationship between my friend/agent and the seller's agent, and total transparency with the seller throughout the process, the seller said he'd revise the sales price to the FHA appraised price if I could find him a rare bottle of whiskey. No brainer... $300 bottle of whiskey to save 6K overall. Deal saved. Goal achieved.

@Nathan Dehn - Thank you sir. I'm already learning lessons on this one for sure. I inherited a section 8 tenant in the upstairs unit whose lease with the prior landlord expired on 5/31/2020. I closed on 6/9/2020. Thus, I believe she's technically month to month. There is some damage in the upstairs closet and a small roof leak that needs fixing. I'd like to give the tenant notice to move out in 45 days as I don't believe I'm obligated to continue on a month to month with her. This would allow me to rent out the bottom unit (which is rehabbed) and move into the section 8 unit and fix as I live in to be rent ready in 1 year. However, I'm having trouble figuring out if I have the right to give her a notice or if I'll run into trouble trying to remove her. The Housing Authority has been totally worthless so far. They just keep sending me a new contract for the tenant which would lock me in for another year with her at $700 a month which is at LEAST $150 under market rent.  
Sorry - that's long winded - but know anyone in STL that has experience with Section 8 tenants?

Investment Info:

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

Cash invested: $12,000

2 family purchased with an FHA (3.5% down) with an inherited Section 8 tenant. I will live in one unit (which has been recently renovated) and the tenant will occupy the 2nd floor. Detached 2 car garage, HVAC within 5 years, new sewer lateral, etc. It's had it's difficulties, from negotiation, riders, escalation clauses, low FHA appraisal, undiscovered damage post-purchase, and the search for a rare bottle of whiskey to save the deal. 1st one down and trying to enjoy it!

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

I've been reading about and renting real estate for multiple years and had enough. Moved back to the Midwest and I knew I wanted to house hack (or try to house hack) immediately. I couldn't get into real estate due to price point on the East Coast so I set a goal to move somewhere cheaper and close to family and get a house within 6 months. Didn't quite meet that but I hit my goal, my friends.

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

A neighbor I befriended was a realtor. We probably walked 20 properties and offered on 6 before I got this one accepted. The market is competitive here, even during COVID-19's early stages, due to low inventory. Finally, we offered on a Missouri special sales contract (meaning no negotiating power on offer price, no matter what the inspection said) with an escalator clause. I included an inspection rider to the contract that stated I could walk if the inspection sucked (it didn't) and... got accepted.

How did you finance this deal?

FHA with 3.5% down and 3.5% interest on a 30-year mortgage. Used my own cash to fund the purchase. I'll pay for updates to the downstairs unit (minor - paint, appliances upgrades) and updates to the upstairs (damage in closet - roof leak - I'm freaking out actually - ripping out carpet, kitchen) out of pocket? I'm not sure yet to be honest...

How did you add value to the deal?

Trying to figure that out! Will upgrade and repaint the first floor - but if the tenant wants to leave, I'll move into that unit and fix it up while renting the rehabbed 1st unit.

What was the outcome?

I closed on it and am working on the FHA piece - but will hopefully be able to rent it out for $4-500 more in gross rent per month or more within the year.

Lessons learned? Challenges?

So many - will come back to this.

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

Ben Kostichka (Schneider Real Estate in St. Louis); Delmar Mortgage - Greg Iverson and his team; Title Partners Agency, LLC in St. Louis.

@Domenick Booker-Pomata

Brother - I've been searching for my first BRRRR in St Louis for almost three months with no luck! What gives in STL? (I just relocated here in August so I chalk some of my issues to not fully understanding the neighborhoods/market... But I'm getting there. Would love to hear what others are doing too!

Hey Ronald - I've yet to purchase my first property (from KC but live in St Louis now) and I've been using the calculator a lot recently. I'm kind of messed up on the BRRRR calculation, specifically the refinance portion. But otherwise, I've run probably 50 properties through the calculators. Surprised no one responded to you! Let me know if you want to walk through it. Maybe I can be of assistance?

We meet again David! Only now it'll be in person! Looking forward to it everyone!

Yeah I'd love to hear more too! Such as neighborhood, issues you ran into, timeline, etc. I see a lot of potential conversion type multifamilies now that I'm actively looking to buy a property. Would love to connect in person, over this thread, or via PM! Congrats on the successful flip too!

@Michel Bron I read in another St. Louis forum post (I’ll try to find it) that people were having success with AirBNBs in downtown near the stadium and ballpark village. I just moved to downtown STL. Would be glad to take a look and grab pictures of properties if you need some boots on the ground!

@Frankie Woods Wait... isn’t Fox Park in 63118?? Maybe I’m wrong here...

@Max T. - Wow! Nicely done. I've been trying to figure out how to structure a deal with someone else's money and none of my own for a bit and this was helpful. Thanks!  And yeah, I'm sure there are plenty of posts on how to structure a deal using other people's money... but maybe I'm just terrible at searching the forums.

Question - who's on the mortgage? The LLC? Or the private lender? Did the bank care that it wasn't your money, if there's a mortgage on the property?

Thanks! Inspiring!