All Forum Posts by: Andrew Kougl

@Dung Nguyen

I don't think it's necessarily a bad deal, not sure what market or appreciation potential is, but I think most investors here are put off by the fact you have to renovate the property AND are paying above asking. That's not normal, but since it's a traditionally financed loan, what was the bank appraiser's ARV after repairs?

Have you talked to property managers in the area who can confirm the $1200 rent list price in our current climate? I, like you am buying right now and the calendar is against us for sure, I'm assuming it'll be tough to fill vacancies until April. With long term tenants who'll definitely leave with rent increases, you'll want to raise those rents when the tenant pool is better so it'll be a weird 5 months or so. Also legally the increases you are suggesting will be difficult if there is a lease in place or the tenants want to stay as you have to raise it fairly and in increments.

Finally I'd say that when calculating reserves, I use 5% vacancy, 15% repairs/Capex combined, and 10% PM. I know you mentioned self managing but you always want those reserves in there to make it easier to scale and hand that work off.

I think this property could look good in 5 years when rents are realized and even raised but initially you will be losing money the first 12-18 months while it stabilizes.

Good luck!

@Bobac Razavi

You're hoping an investor comes in with 55k for $2400 in Cash Flow or a 4% CoC? Would you do that?

An 8 unit only making $500 in cash flow is super low. There isn't enough of the pie to split it 3 ways.

When the next storm comes through and causes damage are you going to put in 20% of the repairs?

Seems like you should wholesale this to an investor looking for the 1% rule.

Andrew

@Jake Arnold

You've really got a TON going for you and sounds like you can stack together multiple strategies which will ultimately really accelerate your growth.

1) You are willing to move

2) You are willing to rehab yourself

3) You are willing to house hack with roommates

4) You live in/near markets that cash flow

You are perfectly setup for owner occupied house hacks of multifamily properties with a possibility to transition to BRRRR or live in flips once you have enough capital.

I firmly believe it's important to play to your strengths and what your market(s) allow. Using the above strategies, you should be looking to purchase a property every 1 to 1.5 years. I know a HELOC was mentioned or taking from retirement accounts but I wouldn't because a HELOC requires equity (i.e. larger down payment) and/or appreciation and it sounds like you won't have much of either to maximize growth and your cash on cash return in your cash flow market. And you're way too young to forgo interest investment compounding so I'd keep contributing enough to retirement accounts to get the match and let it ride. Always good to invest in multiple economic sectors.

As long as you are buying duplexes and larger, you won't have issues with vacancy and you'll be able to pay the mortgages. You will have to watch out for your 10 mortgage limit however so either find a portfolio lender or 1031 exchange into something better.

Keep going for as long as you can. This strategy typically only works for young singles and once you get married and have kids the "move every other year thing" isn't feasible. You've got 5 to 7 years of working super hard and growing your portfolio like crazy before you'll need to switch strategies. Best of luck.

@Amelia McGee

I think focusing on the ARV makes it seem as though you plan to refinance or sell it once you fix it up. But from your post it sounds as this is a buy and hold rental. I'd be focused on cash flow, COC return and cap rate vs ARV. I think you need a couple estimates from GC's who are available to do the work and then back out your formulas from there.

@Tim Morris

Yes, have in Frankfort actually and am in escrow for one in Lexington. It is certainly harder to find things that make sense though.

@Jordan Becker

I was in the same position as you, looking to expand into new markets and Davenport showed promise. I haven't been able to find anything yet but did set up a "team"and am happy to share contacts.

@William Herzberg

Welcome, lots of good info and people on this site can help point you in the right direction. What are your specific goals and why would you like to invest in Lexington particularly?

@Michael Plaks

Thank you!

Hoping someone out there has done this. My insurance agent shared with me that if my personal insurance policy is used as a loan for a business expense, the interest on the loan is tax deductible.

In my case I want to use my loan to fund a down payment on a property which is being purchased under my LLC. Will I need to write a promissory note where my LLC agrees to payment terms with my personal WL policy with a 5% interest payback? Is there anything more to it? I just want to make sure that my business income, cash flow from the property, is okay to pay back this cost as I know you aren't supposed to use business income to pay personal expenses.

@Michael Thrower

Welcome to BP!

The only "mistakes" you can make cost you dollars, not time, and even sometimes those dollars aren't really wasted, all part of becoming the investor you want to be. Honestly making connections, answering the questions about what your goals are, describing your thoughts on real estate, etc. are all super valuable.

I think I can speak for many on here that we've all had the same conversation MANY times with potential agents, contractors, lenders, other investors, etc and have LOVED every minute of it. In my opinion the best thing this site and community offer is a group of like minded individuals who all are crazy real estate. Jump right in, those books are all fantastic as I've read them all and best of luck in your journey.