All Forum Posts by: Alex Zyskowski

I bought 2 properties this year, a new "fixer upper" primary residence that I found on the MLS that we'll eventually BRRRR (while converting our former primary condo in Chicago into a cash-flowing rental and doing a cash-out refinance taking out $130k with still lots of equity left).

The second is a commercial property consisting of a retail space, a few Self Storage units, and an 1acre of vacant land that we will be expanding the storage business on. This was a FSBO property that had been on the market for a while and have been vacant for about a decade. I partnered with some friends (putting in 25% of the money but owning 40% of deal due to me finding, negotiating, and managing the entire business) to pay cash for the property with enough left to make repairs/improvements and down payment for expansion of back lot into RV/Boat Storage.

@Drew Sygit haha yea I’m definitely on the move, but have a long way to go and figured it be great to find some people who have already walked the path!

@Jonathan Klemm Chicago was home for 12yrs and will always love it, but Detroit has definitely made a comeback making it a much easier transition!

If anything changes in your schedule and you’d like to join let me know!

Hi BP Family! 

I'm wondering if there are any experienced investors that are interesting in setting up a virtual Mastermind group!?

I was assigned a group when first joining BP but the members bailed before we could get started and they never reassigned a new group despite multiple attempts at reaching out, so now I'm looking to start my own.

A little about myself. Recently relocated from Chicago to the Detroit, MI area, I have 2 long-term rentals in Chicago, 1 STR in northern MI, just went through a modified BRRR (bought a new primary, did major reno, and will move out and convert to rental soon but no refinance right now due to rates), and most recently purchased my first commercial property (small non-operating storage facility and retail storefront) that I'm developing and turning around.

I'm hoping to connect with others who are at or beyond where I am on my journey, as I'm really looking to bounce ideas of each other and learn some of the things you may have done to scale and get to the next level. I'm very creative and resourceful with lots of drive, so am hoping to find others to bounce ideas off of and hold each other accountable to help each other grow!

Message me or comment if interested!!

Hello BP family!

After lots of searching and many offers, I am finally under contract on my first complete gut rehab!

My first investment property (a small 1bed/1bath condo) needed the bathroom gutted and kitchen updates, but this one is a whole other animal and am looking to the experienced rehabbers for any advice, checklists, and general suggestions to help ensure my first large project is a success!

About the property:

3 bed, 2bath, 1700sq ft single family Tudor Style home w/ attached 2car garage on 1.5 acres with 150ft of lake front on a small no-wake lake

It has been gutted to the studs with electrical and plumbing rough-ins approved by the county, new windows, and new roof (2yrs)

Purchase price: $90k (cash)

Estimated rehab: $135k (will be walking through with contractors in a few days to get multiple bids)

ARV: $260-275k

Depending on the actual total investment and ARV, we plan to either flip it or BRRRR as a short-term rental (with small estate wedding venue potential)

If a flip, I would like to see $40k+ but I am ok with this not being a home run being my first one, mostly want to learn and not loose my behind!

I would love to hear from the experienced BP community any must-do’s, must-not’s, what to watch out for, contractor questions, checklists or any other insights you have for a first time rehabber!

Thanks in advance for all the wisdom!

@Amber Hooks sure thing shoot me a message!

Hi Sean,

While limited in the number of properties, I have had great success with this strategy. My wife and I bought our 2nd "Investment Property" on a "Second/Vacation Home" mortgage. Our first investment was a condo in the same city we own our primary residence so we had to get an investment mortgage and put 25% down. But the vacation home was out of state so we bought this as a "2nd home" giving us a better interest rate and allowed less down (we still went with 20% to avoid PMI).

We have done very well with Short Term rentals via Airbnb & VRBO however it is definitely due to the property. It is a large cabin with acreage, private beach, located on two lakes in northern Michigan so it has a lot of desirable attributes that allow for it to rent at the rates and frequency in which it does.

It is also A LOT more work than my long-term rental, as I self-manage both and with Short-term rentals (especially popular ones) there is a lot of communication with possible guests, managing check-in/check-out dates, finding/hiring a cleaning and maintenance crew (especially difficult in a rural area), Social Media account (check us out on FB and Insta @twolakeslodgemi) and so on. That said, I would imagine some of these things would be easier (like finding help) or not required (like social media) if you're in a city or more popular destination.

I do not trust a lot of these vacation rental property managers (like evolve) as my experience as an owner and a guest (rented a property on VRBO that did use them) was they take a high % and don't really do as much as I found I could do on my own. Now once i have 5-10 that may be another story.

I am in the process of trying to find and recreate the success I am having at my current rental, but this will be different as I am not longer able to use the "second home" advantages I did the first time around.

Overall, this is a great strategy if you own your first home and are looking to invest in real estate while also being able to enjoy it yourself. I am not familiar with the rule requiring a min # of days spent at the property, but if it is something that other people want to rent, you will have no problem spending time there yourself!!

I'm happy to chat more if you'd like, but hopefully this is a good starting point!

Alex

@Nathan Duane Herline oh and to confirm it is duplex currently set up as 2 bed and 1 bath with walk out basement each. My plan is to add a bedroom and bath in the basement to make both units 3bed/2bath.

So I’m not sure if I should be looking at what current 2bed/1bath houses sold for and double/75% their value to account for this being a duplex. Should I look at 4bed 2bath homes and assume the value is less than these since it is a duplex and not single family. Do I use 3bed 2bath as a middle ground, etc?

For rents, as you mention there are lots of mobiles in the area that are cheap. I also notice several sr living/handicap apartments in the area (between Cadillac, kalkaska and TC) that seem to have room that are very low rents (like $500-$600) but then I see 1 bed 1 bath apartments in TC for $1200 so hard to understand distance from TC how the rents decrease

@Nathan Duane Herline thanks for your feedback and insights!

1) I will adjust the vacancy, I agree should plan in at least 1 month.

2) I meant SE of TC, so Kingsley, Fife Lake, Kalkaska are the closest towns. None of them seem to have a ton of rentals or homes for sales and certainly no duplex’s to compete to. BP insights only seem to be useful for larger markets and not great with these smaller rural markets

3) not sure what OMP is but i was planning on Cash and then refinancing after it’s renovated.

4) I'm definitely trying to be conservative with my rents and ARV values, but I also don't want to be so conservative that no numbers or deals work out. I'm pretty confident that it would be worth $200k plus but am talking to an agent that can hopefully give me a ball bark but an appraiser is a good idea.

Hello! I am evaluating a Duplex in a semi-rural area in northern Michigan (about 30mins SW of Traverse City). I am struggling to find comps for both the purchase price, potential ARV, and potential rents to determine if this is a good deal or not

The Property:

Duplex built in 2006 on ~1acre with 2Bed 1Bath and semi-finished walk-out basement each. Potential to add a bed and bathroom in basement to make 3bed/2bath.

Asking $159,900, seller has come down to $142,500 + closing costs of about $2500 for a total purchase price of $145k.

I am told one unit is in good shape, needs nothing and is currently rented for $600/month. The other unit needs complete renovation. I have not seen the property in person and available photos are only of the unit that needs to be renovated.

Utilities are separated by unit.

The Numbers:

List Price - $159,900

Seller counter - $145k (including closing)

Taxes - $1,286 (2018) - estimating will be $2000 after purchase

Renovations - Seller estimated $15-$18k for the 1 unit and nothing for the other. I estimated $50k for both units, if only one needed could probably get away with $20-$25k

Rents - current unit = $600/month. Estimated $700/month for 2bed 1bath and $800-$900/month for newly renovated 3bed/2bath. TOTAL = $1500-$1600/month. Struggling to find good comps in the zip code and as I start to move out they get higher as they get closer to Traverse City. 

ARV = ?? struggling to find this. Could be anywhere from $200-$250k which is obviously a huge variance. What tips and tricks do you use to find this when there a are very few comps and even fewer duplex's? (most homes in area are single family, many manufactured or mobile type homes). This number is a make or break on the brrRr part as I could either get all my cash back out on the refinance or end up with $25k+ left into it.

Because there are so many variables, I am trying to be conservative yet realistic. I used 5% for vacancy, CapEx, etc.(no management fee as it will be self managed) and 2% for future assumptions (6% for sale costs)

Based on the numbers below, what do you all think?! Do you prefer lower cash flow but high or infinite Cash-on-Cash? Are you OK with more cash invested but higher cash flow? 

I appreciate all of your insights and help on my first potential multi-family purchase!