All Forum Posts by: Alex Kukich

@Pete Husband I like the idea here. If you have the cash. I would say you likely need to broaden your search and everyone keeps saying it for a reason, but add a unit or two or theee and really keep your nose to the ground!!!! Go conventional, find a small multi snd you may be able to have better luck getting to closing.

There is some good banter here about future value and appreciation and numbers down the road. There are two sides to every coin. I suggest you pick the one that works well for you. A bird in hand is worth two in the bush...

Good luck. Stay hungry!

I'd have to agree with Sam, house hacking is great, but also starting out with a rental that you'd live in is ideal. If something goes wrong you are at least comfortable with the asset you've tried to rent out. 

Lots to talk about here. I think we can agree on the cashflow portion. I disagree with the notion of no appreciation. There is still plenty of forced appreciation in the aforementioned neighborhoods and others as well. Are those deals easy to come by? Of course not, but you can easily find 6 figures of appreciation in Hamden where you can acquire properties for under $100K. BRRR deals in Edmondson village on the right block can work well too if you look hard enough. I think what I will say is that neighborhoods like Pigtown haven't had much luck on the appreciation side and a few other areas. We can all agree crime stinks, but enough with the doom and gloom! It's folks like us here that keep things moving in the right direction, don't forget that! Even with the rise of A class rentals all throughout the water front areas there are still plenty of SF and MF that are returning good cash flows and also appreciating if bought right.

Scott is in the lead as I type! Anyone but Dixon is a step in the right direction. 

@James Billings-Kang had to get a little assist, (read I paid late) for a roof that was about $20K, everything else was cash/credit card and of course lots of sweat equity.  Never missed a payment.  @Matt Schelberg it is for a completely different tenant, I've found a few sales folks who usually have a lot of samples need places to store them so it's been pretty consistent, also in this neighborhood lots of families rent and don't have garages so there have been plenty options.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $229,000
Cash invested: $79,000

Rent ready single family, just needed some paint and slight structural damage. Cash outlay was a little higher than I'd hoped but the ~$80K includes 25% down, closing costs, and construction/rehab costs.

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

It's 2 blocks away from where I live, and I know the market/neighborhood. It's a great street, good, wide property, and the long term resell value is high, plus it has the ability to cash flow very well for a long time.

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

Realtor brought it to me.

How did you finance this deal?

Conventional loan.

How did you add value to the deal?

There was some structural damage and termite damage that scared some people away. The termite damage caused the structural damage and with the house being 97% brick, I knew it wouldn't be much of an issue. So we ripped the rot out, redid the support corner we needed, and took off and replaced a deck. Otherwise it was patch and paint and a few new light fixtures. Had to get the cat pee smell out too :-)

What was the outcome?

It rents at $1900 a month, COVID-19 cost me $100 a month in rent as my timelines for renting got a little screwy with the market. Mortgage/taxes/insurance is $1300 a month, so cash flowing at $600 a month, or $7200 for the year, so it's close to a 10% Cash on Cash return which is a great number for me considering the proximity to my primary residence and the low maintenance rental that this building is and tenant is.

Lessons learned? Challenges?

I paid a little more for the rehab than I wanted to because I thought it would give me an extra month of rent. That didn't work out. I will err on the side of caution moving forward ensuring I keep the work cheaper instead of racing to MAYBE get a renter in when I'm ready versus the market being ready.

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

Bryan Schafer

Investment Info:

Single-family residence buy & hold investment in Baltimore.

Purchase price: $186,500
Cash invested: $95,000

Bought this at an all cash Auction from a bank. Didn't have any cash, but got the GC from our first investment to mock up that I had the funds. Won the auction. Freaked out. Called the title company and persuaded them to take the loan. They did, so after 5 months of title back and forth the deal finally closed and I used a personal FHA 3.5% down loan. I was dead broke. Thought about refing another property to get some cash, but instead just did all the work to flip the house myself and ran it on Credit Cards before doing a cash out refi. Details are below. This is my best investment to date.

Acquired $186,500
Down payment with closing $20,000
Rehab: $75,000
Initial mortgage ~$1700 a month

When we acquired the property it was split into two unites, the top unit was 2 beds and 1.5 baths with full kitchen and washer and dryer. We replaced the top floor full bath for $3,500 and got a renter in after 3 months of rehab to upstairs and substantial demolition to the down stairs unit (didn't want to subject a tenant to the noise and dust etc.). Got a renter in for $1,400 a month on a lease from December 2016 to April 2017. Then resigned a new tenant from April 2017 - March 2018 (better time to rent and increased to $1500).

Spent $70,000 replacing a full roof (took everything off and all new joists, plywood, membrane, etc), building out a one bedroom one bath apartment with a full kitchen. Finished remaining renovations and brought a new tenant in on May 1, 2018 paying $1500 a month.

Started renting garage for $150 a month later in 2018. Have never had a lapse in tenants, after we stabilized the property I did a cash out refi that worked as follows:

Total Cash into property $95,000 (rehab, down payment, closing, etc).
Total remaining loan amount when refinanced was $173,000.
Got an appraisal at $450,000 for the building, put a new mortgage on it for $300,000K and got $127,000 in cash on the refi. Paid off all debts, rolled the remaining into a multifamily building with partners.

Upstairs apartment listing: https://www.zillow.com/homedetails/1345-Hull-St-Baltimore-MD-21230/36542201_zpid/

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

I saw it as an outlier in the neighborhood. There was already one unit virtually ready for rent that would cover most of my total mortgage and the bottom (needed lots of work) was a blank canvas that I could bring a unique product into the market place if I did it right. It was off of MLS and I entered into the auction.

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

MLS from an agent friend who had sent me a series of prepared lists.

How did you finance this deal?

Initially a cash auction I won with a $2,000 deposit that I would lose if I couldn't come up with the money. Once I won the bid, I proceeded towards closing and after a few weeks of speaking with the title company I convinced them (with some help from mentors) to let me buy it with an FHA loan which I was pre-approved for at the time. Somehow it worked.

How did you add value to the deal?

In the upstairs apartment we did a new bathroom for $3,500 and then immediately rented the space for $1400 a month while we dumped $70,000 into the down stairs, including almost $20,000 on a completely new roof/joints/plywood decking/membrande/etc. When we acquired the building there were mushrooms and plants growing down from the ceiling that had roots planted on the roof. Fun times.

What was the outcome?

We still own this property today. Our mortgage is $2150 a month, gross rents are $1500 upstairs, $1550 downstairs, $150 for garage, all annual leases for a total of $3200.

After we completed renovations we did a cash out refinance where we got $127,000 in cash back, a new loan amount of $300K and appraisal of $450K on the finished product.

We will rent this for decades, and then at some point we will do a full gut renovation, turning it back into a true single family home.

Lessons learned? Challenges?

Work hard, make mistakes, learn, and then apply the same work ethic. Good deals find money, and good deals find persistent people. Pay for good mentors, they'll pay you back in droves. Higher someone to do tile work, it sucks if you suck at it and I suck at it.

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

I always recommend Bryan Schaffer from Cummings Realty here in Baltimore.