All Forum Posts by: Ben Kirchner

I'm not dead set on one option.  The beauty of real estate.  I'd prefer to learn a little more of the building process to help get a better idea on the numbers.

@Tim Garrett I haven't pulled the trigger on building out there.  I passed on the TinyHome proposal, as I didn't see it producing the return put out there.  One thought was to sell the lots, as my partner was in discussion from interested big builders. However, COVID19 has shut that down, for now at least.  I would still like to learn moreabout the process of hiring a builder, to better determine the cost of that, and learn the numbers on what I could rent/sell for out there.  Any information you have on this is appreciated. 

@Justin Tahilramani Thanks for the suggestion.  I'll look into Fayetteville.  Can you speak to some of the numbers you're experiencing with your rentals there, and any slight appreciation that these properties may be seeing?  

Well, I can certainly share my successes, as well as my current struggles.

How I achieved 1.25-1.35% rent price to purchase price was putting a lot of time to it.  It likely wasn't the most efficient system, but it was certainly worth it in the end.  I analyzed properties everyday, from there I would narrow down certain ones to tour,  after touring I would narrow down ones to make an offer on, I would make offers that were favorable to the return I was looking for, most offers would get rejected, but some ended up working out.I believe with the 1st property, timing was on my side.  I got in there right away and immediately made an offer.  It was December, so I didn't have a ton of competition.  The 2nd property was a bit ugly, but could look nice without a ton of money, and it was again, in December.  Not a lot of competition for both reasons.  I lucked out a bit in the sense that the 2nd property had a tax lien for over $100,000 for the entire rental portfolio.  Seller had a lot of properties that she never paid taxes on.  Therefore, the estate was inherited by the IRS, who was very motivated to sell it for whatever they could get, and couldn't be bothered to dig into how much rehab each house needed.  Therefore, I got the 2nd property for $30k less than listing price.  I asked to be the first to know about the next property to go on the market from this seller, and was.  I negotiated it very well, and got it at an amazing price.  I was lucky in the sense that I stumbled across this predicament, but I certainly would never have stumbled upon it if I wasn't touring a hundred other houses that felt like a waste of time once I walked in.
Definitely a work harder, not smarter approach, that worked out in the end.  I'd like to begin to reverse that a bit, developing a better pipeline of potential properties, with more efficient follow through.  

This leads me to this thread.  I'm looking for more NC properties that I can get 1%+ rent to purchase price for.  I would think that my best bet would be distressed or off market properties. I'm looking for an NC realtor that can improve my pipeline of potential deals significantly.  As I've gotten better in my investing journey, I've learned better how to streamline the process of analyzing to closing on a property, which is certainly a value to myself and my realtor.  The out of state rentals I own, I was able to close on, sight unseen.

@Andrea Weule - St. Louis has good and bad.  The cash flow is great.  The inventory of multifamily cash flowing properties is large. An example would be my 4-Plex that I bought for $120k, rehabbed for $20k, and rents for $2225/mo.  It's a cash cow.  The downside is the appreciation isn't there, and if sold, you would likely be selling to another investor, who needs to look out for their own return.  Where my properties in NC will appreciate $10-15k a year, the growth in St. Louis is much more gradual.  Also, some of these neighborhoods do not attract the best tenants, so you need to be more mindful when filling vacancies.

My NC properties - Less monthly cash flow, better appreciation, less hassle.  It's nice that it's within a 40 minute drive, but I rarely ever have to take a trip out there outside of filling a vacancy.

My St. Louis, MO properties - Great monthly cash flow, very little appreciation, more hassle.  I self manage out of state, but have a team of people as far as contractors, and handy man.  

I'm trying to invest more in NC, and am looking for ways to strengthen my pipeline of potential deals. I'm currently awaiting pulling the trigger on a refinance on my latest BRRRR deal, as I'm looking for the next investment to place the money toward.

I figure this can be a good post for those succeeding with rental property in NC to share their success and how they are achieving it.  Let's spark some new ideas within one another.

First, I'll share my rental portfolio:

- Got my 1st rental in 2017,off the MLS, in Garner, NC.$89,500 purchase, relatively turn key. Now rents for $1150/mo.

- Got my 2nd rental off the MLS in Garner, NC, $89,000 purchase, needed some work, but not a ton. Now rents for $1200/mo.

- Got my 3rd rental off the owner of my 2nd rental purchase, in Garner, NC, $70,000 purchase, rehabbed for $20k. Refinanced at $137k ARV. Now rents for $1250. *Perfect BRRRR!*

- I began renting my previous home in Durham, NC that I originally purchased for $140k, and rents for $1350.  Basically breaks even, while appreciation increases dramatically each year.

- I've purchased some multiple family properties in St. Louis, MO because the cash flow is great, and deals seem much more plentiful than here in North Carolina.  The appreciation and ease of management is not as good as NC, which leads me looking to invest closer to home.  

So I've had some success investing here in NC.  Living in Durham, investing in Garner (35-40min drive) has me renting for 1.25-1.35%, with very good appreciation.  How did I do it?  Analyzing houses daily, touring plenty, submitting plenty of offers, likely wearing my realtor's patience thin until finally finding the 1st deal.  The 2nd deal came a bit easier, and the 3rd deal came easier than that, as I simply explored what the seller of the previous house was also looking to unload in their rental portfolio.  I believe I got kind of lucky.  To be fair, as the old saying goes, "the harder I work, the luckier I get" as I was analyzing and touring A LOT of properties.

Now, I'm looking to invest more "close to my back yard" but am struggling to find good deals. Looking out for the best funnel for deals that could get me that 1% + rent to purchase price, while not wasting my realtor's time is what I'm seeking to sharpen up on. I'm curious to what others in the area are doing to find good deals in NC, where these deals and located, and what kind of returns they are seeing. Ideally, I'm able to find more BRRRR deals, or fix and flips.

Thanks for any sharing and insight.

@Gennaro Coscia

How many lots?  

I own 2 myself, and 2 with a partner.  

Are they in an existing sub-division(with approved builders)?  

Existing sub division.  Not sure about approved builders
Do they have utilities on-site? Yes 

Are the lots cleared?   No

Do they have river views/desirable area? 
What were the price points for the lots? 

The best one is right across the street from the water, where sailing is very popular.  Across the street you have houses that can back their boat right onto the water.  My lot being across the street doesn't have quite that luxury, but nearby houses are selling for $350-500k.  The other ltos aren't in a great of a prime spot, but another one is right by the golf course, while the other two are in neighborhoods with surrounding houses selling for $150-250k.

Can the market handle the type of house you're looking to build? Will it sell/rent? I would aim to build a house similar to the surrounding houses.  Depending on the value I would get from hiring a builder would determine how well I could do from renting/selling it in that market.

I have some vacant lots in New Bern, North Carolina.  My original thought was to purchase the lots for cheap, and later flip the lots themselves in time.  I've been told from my partner that builders were looking at buying a load of lots before COVID-19, but it's put a halt on it.  I'm thinking of other options now.  Potentially hiring a builder myself to build a house on the lot to later rent or sell.

Questions:

Has anyone done this in any area in NC?  How much are you typically paying for a lot, the house, and what is your overall timeline and profit?

How much of a value am I looking at hiring a builder myself?  Is there a general cost per square foot?  

Does anyone here have any experience with the New Bern market? I'm in Durham, and do not know the market out that way. I'm trying to get a better idea of what I could rent or sell a SFH for there.

I would be looking to get in touch with some builders to further discuss this.

Thank you

Thanks @Natalie Kolodij.  This sale was done in 2020, so it will be on next year's tax return.  However, I want to prepare for it.  I'm still unsure of that percentage of the reported income from this will be taxed?  

Also, while this is not a 1031 exchange, I've heard that it may be possible to roll the profit into paying down another existing mortgage to prevent it from being taxed?  This information was unsure of by the person mentioning it.  

And as far as a future 1031 exchange - If my intention was to to roll these funds into another flip, and roll those funds into another one, my understanding is I would need to have the NEXT property to flip already claimed to do a 1031 exchange?  The issue with this would be I would need to sell the existing property in order to purchase the next one.  Is there another way around this?  

Also - so if $50,000 is what is being taxed, and what is the percent that is being taxed?  The same percent of my income tax bracket, or otherwise?

Yes, I meant $100 purchase price + rehab, and $150 sales price.