All Forum Posts by: Andrew Cowles

I understand I'm late to this thread but I feel I can give some good insight. I actually just got back from deployment and happened to close on a flip about a week before leaving on deployment.

I did not have the systems in place to handle a project without being involved myself. It was not something that I had planned for as the deployment was a last minute tasking. This was not my first deal and I was able to get through it and still have a successful deal at the end of the day but I would not suggest purchasing before you leave especially as it sounds that you do not even have a deal lined up and have very limited experience. If this is the case, the odds of you even finding a good deal and closing before you leave are very slim.

You will have a whole lot of nothing to do outside of work. Take the time to invest in your self-education. Everything you would need to learn about real estate investing is free on the internet or through books. 

Also, you will be able to save quite a chunk of money being out there. Eliminate as many monthly expenses as possible before you leave. Put your belongings in a storage unit and get out of your lease to save your BAH. You should be able to save basically every penny you make out there and you will be ready to come back home and hit the ground running in real estate.

Closed on a self storage facility about 3 months ago. I've completed turnover with all the tenants so everyone is aware of the new owner and are making payments on our new website. I spent about 35k on renovations and the property looks brand new compared to when I purchased. There was a small exodus when I purchased and the occupancy is only at around 70% now and rents are at about 50-75% market rates depending on unit size. With that being said, even with such low rates and only 70% occupancy, the deal is still cash flowing a little bit so the value to be added is quite high. I should also mention this is not a long term play. I'd like to get all current rents raised to market and occupancy to 90% and have it operating at peak capacity to sell it in the next few years to 1031.

I have not raised any rents on inherited tenants but have raised street rates to market and have had no complaints on price from new customers. 

I'm trying to navigate raising rents on the inherited tenants to market. The current clientele at the facility are absolutely price based customers. And the rent raise required to get the rates to market will be significant. Best ways to go about this?

Should I rip the band aid off and raise all rents to market and deal with exodus that will follow and assume the increase in rent in the customers who stay will cover the decrease in rent from those who leave? Should I gradually raise rents and upset tenants from multiple rent raises? Should I only raise specific unit sizes at one time to see the reaction? Seems like there is no great way to go about this.

BP,

I just got my first property under contract today at 21 years old.

It’s a turnkey property (could use minor updates that can add some value) that was cheap in my market because it’s not in a great neighborhood but the neighborhood seems to be trending upward because of local renovation rebates. A lot of the homes in the neighborhood are being flipped.

I bought it with 0% down and the mortgage will still be very low. I have to owner occupy it for a year which is perfect because I will be getting out of the military then and moving to Florida to invest full time. It will become an out of state rental for me when I leave. 

Cash flow should be around $200-$300 dollars depending on what rents will be a year from now. I’m very excited to finally be an investor instead of just an aspiring investor.

The biggest thing is just taking small actions consistently. I didn’t think I would be buying a property this early in my life but I just took small action like finding an investor friendly agent and getting pre approved. Small steps like that get addicting and you just keep figuring out what your next move is. If you are new and aspiring to invest just take one small step forward and you will never look back. 

Thanks everybody for all you help!

Drew

@Dave Schmidt

Believe it or not Dave, the property is actually in Kent County, DE. 

I plan on doing the work that I can such as painting and landscaping and sub contracting everything else.

And my lender is aware that it is a fix and flip property. 

I'm analyzing a deal right now. It's an MLS property. 3 beds 1.5 baths 1281 sf and no garage but a car port with an asking price of 110k. It's a full rehab(new roof, new drive way, siding is good but a has a few cracks, needs drywall work in one of the rooms(hole in the wall and a crack in the ceiling), full interior needs updated, and some landscaping in the front and back yards. It has two living rooms and one of them can be converted into a laundry room and another bedroom. Right now the washer and dryer are in the kitchen. It's off of a main road as well. I'm going to offer 90k using a conventional loan 20% down and cover the rehab myself(estimated 40k).

My best comp is the house that sold 2 doors down that was just flipped this year that sold for 175k but was only 888 sf so sold for $197 per sf. If I go by price per sf that would put my house at 252k but just to be safe I'm estimating ARV at 200k and the numbers still work. Here are my numbers

ARV - 200k

Holding costs - $5400( $900 a month for 6 months)

Renovations - $40k

Purchase price - $90k

Closing costs on the purchase - $5k

Closing costs on the sale - $17k

I’m just looking for confirmation that I’m doing everything right and that this is a good deal. It’s my first deal so it’s pretty daunting so just looking for some advice. 

Thank you,

Drew

@Kevin Sobilo

So how do you determine if it’s worth going and bidding on the property? Do you just set a number in mind as your max bid and just hope that the upset price is lower? Or do you have a way of picking properties that you understand will most likely be within your budget? 

Thank you for the information.

Does anyone know how upset prices are actually set for sherif sales?

Most people say it is just what is left owed on the mortgage but I’m not entirely sure that’s the case. Some properties only have 15k left on the mortgage but are worth 200k and I can’t imagine the bank will allow that property to go for 15k. 

This makes planning for auctions extremely hard not knowing what the upset price is because I have no idea what actually looks like a good deal and I’m only 21 so I have a limited amount of capital and I don’t want to go in expecting to be able to bid on a property because there is only 50k owed on the mortgage when in reality the upset price is double that. 

Thanks for any help.

v/r

Drew

@Patrick Britton

So I understand self storage is a business rather than an investment. I wrote my entire business plan based around South Florida being an expanding real estate market with great population growth.

I like South Florida because it is growing in population meaning there are more entrants moving into the area who are going to need self storage. 

I like self storage and small multi family(2-4-plex). I’m a new investor and I have been studying and researching for a year but I feel the best way for me to actual acquire knowledge would be to get my first deal.

For financing I'm looking towards an SBA loan or perhaps a conventional loan(bringing in an investor to help with the down payment). VA loans don't work with CRE so I would only be able to use that for my first small multi family.

My long term vision is owning a CRE business that invests in Self-Storage and small multi-family.
   

I'm currently active duty military stationed in Delaware. I have 0 investment properties right now. I would like to invest in CRE(self-storage) but I do not want long term investments in Delaware as I do not want to be here long term. But I want to get into real estate now.

I want to be in South Florida long term and start my CRE business there. I'm pretty nervous for my first deal and it being out of state is even scarier.

I’m trying to figure out the best option for me. Whether I should just wait until I’m actually in South Florida to start investing or try to jump into it right now from out of state. I use google earth to find deals and have my retired parents, who live there, be my boots on the ground and actually go look at the properties for me. 

If anyone with any experience investing out of state has any advice I’d really appreciate it. 

@Chris Levarek 

Thank you for the advice. I would love to start my investment journey now as like you said I have a stable income right now that isn't going anywhere and I'm tired of waiting. But I'm not in the area that I want to invest in. 

My goal is SW Florida real estate but I'm stationed in Delaware and the only way out of Delaware is to get out of the military. I still research the market here every single day looking for potential deals but in all honesty I'm not finding what I'm looking for. 

I wish I could find deals here because in that case I would be able to focus more on learning and not on having to rely on these deals as my sole paycheck. But like I said I'm not finding what I'm looking for.