All Forum Posts by: Peter Hanson

Used private money and bought 4 separate sfr homes in Tulsa off market. All 4 are already rented with below market rents. Avg rent is $800 per house. 1 of the houses has a barn that I’m going to convert into another unit.

Paid $210k current rents are $800 each, market rents are $950-1200 per unit, market value of the 4 homes is $400,000

My goal is to fix up and raise rents to market, then refi at 75% ltv for nice cash flow and a nice payday too

I love real estate

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

Cash flow and buying way below market value

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

Off market, local investor found the deal made a finders fee

How did you finance this deal?

Private money loan

How did you add value to the deal?

Fix up raise rents and refinance

What was the outcome?

Fix up raise rents and refinance

Lessons learned? Challenges?

Buy at 50-60% ltv and you’ll be fine and happy

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

0 Votes

Hello everybody,

I currently own 12 rentals out of state average purchase price is approximately 65,000 each average income is $950 a month per property

I also have four long-term rentals in California combined value of approximately 1.5 million with loans of approximately 580,000 average rents is approximately $1900 per house

My ultimate goal in. The next 10 years is the own 100 rentals And live off of the positive cash flow

My question is what is the best way to scale my portfolio reasonably over the next 10 years

For the past 10 years I have just been doing the BRRRR strategy, Would it make sense to just do this team strategy on a little larger scale?

For example what is it comfortable LTV to maintain over all of the properties and how much liquid cash should I have per property put away in case of vacancies repairs and unforeseen circumstances?

What are the most ideal lending relationships I need to create and can anybody point me in the direction of someone who has grown a similar portfolio in a similar timeframe?

The homes that I ike to buy right now gross 16 to 20% per month and net approximately 11%

I have always shied away from too much leverage because I was really hit hard in 2008 through 2010 and I still remember those dark days

Any advice or feedback would be greatly appreciated

Thanks

0 Votes

CA appraiser here. I can give you some direction. If you have a small rehab budget spend your money on paint, granite counters, improving curb appeal, kitchen upgrades, new vinyl or tile floors, and bathroom upgrades to get quick visual improvements. This will get you some minimal appreciation and make your units more attractive to tenants.

If you have a larger rehab budget, the total best bang for your buck is to add a 1/2 bath or a full bath and/or turn a 2 bedroom house into a 3 bedroom house. My favorite thing to do is to turn a 1 bed/1 bath into a 2/1 or 3/1 or turn a 2/1 into a 3/2. You see SIGNIFICANT increases in value when you do these things. Some can be done cheaply like sectioning off part of a large living room or family room and creating another bedroom. Do everything with permits! As long as the square footage of the home matches tax records and there are no "unpermitted" additions you should get value for all the bedrooms and bathrooms that are present in the home. If you can add a bathroom for $7,500 you might get $15,000-$50,000 in value appreciation in the better areas (example: take a house from a 2/1 to a 2/2 ) If you can frame and drywall a 3rd bedroom for $10,000 you might get $20,000-$60,000+ in value.

A few recent examples that I did. I purchased a 600 SF 1/1 for $129,000. I framed in the dining area and built a closet for $10,000 making it a 2/1. 6 months later I had it appraised for $190,000 and I get $150 more per month in rent due to the 2nd bedroom. I also purchased a 1400 SF 2/1 for $510,000 and spent $80,000 remodeling it and making it a 3/2. 5 months later after it was all rehabbed I sold it for $759,000. Making the house a 3/2 increased the value by almost $250,000 which is almost 50% of what I paid for the house.

2 Votes

@KJ L. VA, CALHAFA, USDA, SILENT SECOND MORTGAGES, last sale in Perris they got 3 LOANS but they never told me that. Somehow it still closed in 30 days! I only found out buyer got 3 loans by accident, escrow told me when they got approved. It was supposed to be 1 loan but escrow slipped up and said "yeah! buyer got approved for all three loans..."

I was like "......uh....what?" Buyers are totally tapped out. Rialto buyer had to borrow $800 from his cousin to buy a new water heater LOL. People are crazy.

1 Vote

Los Angeles County, California

HI Garrett, I am coming out to Tulsa tuesday 3/26 to thursday 3/28, are you around? I'd like to connect and buy some houses. Please call me. I live in CA and have some money to invest in rentals

Pete

6267051092

0 Votes

@Kenneth Kussman The last few deals I've done the buyer all depends on the price point and location of the home.

$360,000 SFR in compton was a first time buyer, she was a teacher who wanted to be in that area. She did an FHA loan. Sold in 8 days full price

Silverlake $635,000 sales price was bought by a couple in their 30s with no kids. They got the 25% downpayment from the girl's parents, both people work in LA make probably $150,000 combined income. Sold in 14 days 96% of list price

Watts Duplex for $350,000 buyer was a nice family who owns a lawn care business, bought it with an FHA loan, sold in 7 days full price

Jefferson Park $759,000 sales price, it was bought by a nice lady in her 30s, she makes $15-20,000 per month as a financial adviser and put down 20% herself

Long Beach $500,000 sales price, bought by an investor in a 1031 exchange, he paid full price all cash and closed in 21 days. He sold a 10 unit in Inglewood and needed to buy $2,000,000 worth of property immediately , as the seller I had good luck and good timing. He converted the garage to an apartment and he gets $4,000/month rent on $500,000 invested

A friend flips in Highland Park and his buyers are all over the map. 20 something French girl who obviously has a rich family paid $880,000 cash for a house. Elderly couple paid 1.1M cash. Another buyer was a music producer, paid 1.2M cash. Another buyer owned 3 restaurants and put down 30% on $850,000. Another one was a husband and wife who are both engineers and make almost $360,000/yr they put down 20% on $869,000.

If you go into the inland empire the prices are lower and almost all of my flips are sold to buyers with 1% down, 3.5% down or 100% financing. I cant think of any sales i've done in the inland empire where the buyer put down more than a 5% downpayment

4 Votes

Los Angeles County, California

@Julian L those are great numbers, would you share what part of LA? zip codes? I'm actively looking to buy 2-3 flips under $500,000 each. If you're an agent I'd like to use you to buy the houses if you want.

My last deal was in zip 90018 on Ruthelen St, I paid $510K put in $85K and sold it for $760K in 17 hours and she closed in 21 days with 30% down payment

2 Votes

Los Angeles County, California

@Jacqueline

you might want to consider liquidating some or building homes on them, new homes are going for record numbers if the location is good. I just did an appraisal for 3 homes on 5 acres in the boulders, I appraised it for $750,000 and it sold all cash for $925,000! insane insane insane.

you should really try to sell now, now is the time

2 Votes

duplexes have not been $250,000 in Orange county since 2010...unless you have a time machine you need to rethink your strategy because prices wont be that low in many many many years, if ever again...

I just looked on the MLS, the cheapest duplex in Santa Ana is $550,000. $250,000 just isn't a realistic number, go East to the Riverside or San Bernardino counties if you only have $250,000 to work with

2 Votes

Orange County, California

david, Hi, I live in North OC by Anaheim. "I'm thinking foreclosures/REOs might be another option, but I don't know how many REOs pop up in South OC." your idea of foreclusures/reo might be misguided because reo's dont sell for much less than regular/standard sale homes. You might get a 5-10% discount on REO/foreclosures in OC if you are lucky but you might have to pay cash or use hard money to close quickly. Maybe look for a 4-5 Bedroom house near jobs or a university, the more bedrooms you have the more income you can create. i'd guest you can get $$600-$800 per bedroom if you are close to jobs or a college. You can house hack in OC it's just more expensive than other places. good luck! the cheapest 4 bedroom homes in those cities range from $670-$700,000 so do the math, at $800 per extra bedroom you bring in $2400 per month (not counting your bedroom). If you put down 20% ($140,000) you would have a mortgage of $560,000 or about $3800/month. So best case your monthly house expenses would be $1400 (but that's not counting any vacancy, maintenance, cap ex, etc)

you'd live in a $700,000 for $1400-$1600 per month and hopefully get some decent appreciation but that's not a guarantee.