All Forum Posts by: Ron Averill

That happens now and then in my area. The college kids think it's funny. I guess I do too, sometimes. 

Good for you for taking quick action. Now you know that you never know what you'll find on the other end of the line. Keep calling.

@Dawn Anastasi  That's a nice deal. Congratulations!

Just closed on a duplex, which is rental property acquisition number five for this year. One side is vacant and the other side is rented. One of our goals is to finish the rehab on the vacant side by end of the year and try to get it rented for the new year. 

But our main goal for the remainder of the year is to improve our accounting and marketing systems. This is not necessarily the fun stuff, but it is absolutely critical for any growing business to be successful. This is our first year in the REI business, and our acquisitions outgrew our support systems this year. No major issues so far, but we want to be ready to grow in 2015.

Thanks @Brie Schmidt. I am leaning toward this approach as well. 

@Brie Schmidt  I don't have any recommendations for the Chicago area, but I do have a question. Do you perform the snow removal for your smaller residential properties in addition to your commercial or larger residential properties?

In my area, the tenants in small residential properties are usually responsible for snow removal. I'm wondering about the pros/cons of this approach versus covering the cost ourselves.

Many universities have a "student ghetto" area that is next to the campus and usually near the bars. These areas can require some advanced management techniques and hardening of the properties. Those owners that do it well are very successful. It is important to know what you are getting into when you buy in these areas. 

We have some properties just outside the boundaries of a student ghetto. The rent is slightly lower than in the core of the ghetto, but the caliber of renter is better. For these properties in particular, we have found that students will take good care of a home if they feel that the landlord really cares about both the student and the property. Most students are really good tenants, and they are even better when the expectations are clear and the tenant-landlord relationship is built on mutual respect. 

Students are naturally naive and often lazy when it comes to taking care of a house, and even the best student tenants may not keep the place clean. But underneath the piles of dirty clothes and empty beer cans, we have not found much deliberate damage.

@Brian Reinhart I like the creative thinking, but I agree with @Dmitriy Fomichenko. 

Sometimes you can out-think yourself, and that may be happening here. Better to build some cash before moving forward. 

I tend to be much more careful with other people's money (OPM) than my own. Relationships are simply more important than money. 

Since you are new to flipping (except for your HGTV education), I would suggest starting small with a project that uses mostly your money and your landlord's money. Use the father's money very sparingly while you make all of your first-timer mistakes and build some experience and a process. 

This is not a slam dunk deal by an means, but there may be some ways to make it work, some of which have been suggested by Chris. 

If you had the cash to make the downpayment and you could definitely increase the rents to $825 or above, then the deal would be just ok based on your numbers.

My main concern is that you are seriously considering a borderline deal that will leave you cash-strapped and at great risk if anything goes wrong. I make this assumption since you are short on the downpayment. Without sufficient reserves, I would not be willing to take on this much additional risk, especially when OPM is involved.

You might consider other ways of financing the deal that would reduce the overall risk. For example, is the seller willing to do a land contract at terms that would make the deal less of a personal strain, at least for a few years? Are you willing to take on a partner (perhaps your father-in-law) and also share in the profits? 

In most markets, there are many more SFH's available than duplexes. Duplexes are often owned by buy-and-hold investors, which means they do not turn over as quickly as SFH's.

I think an owner-occupied duplex is a great way to begin as a real estate investor. So if it were me, I would be patient for a while longer. If this does not make your agent happy, then find a new one that is supportive of your goals.