All Forum Posts by: Boone Tyson

@Joe Splitrock I take responsibility for not explaining the nature of our business more fully and asking better questions. Was it the wrong policy? Absolutely. Should my insurance agent have been more aware? I think that’s a no brainer. A rental policy on a flip house because it was easier to underwrite? No doubt it was wrong.

That being said, it’s still my fault and I value the education it provided.

I know much more about insurance for sure.

But the greatest thing of all cake while I was driving around mulling over what to do and this question came to mind.

“Can I flip 2 in the time it will take to finish this one?”

The answer was an absolute yes. So that’s when we elected to sell because we knew it would be a long project to break even at best and our crews would be tied up rather than somewhere making us money.

We have picked up 1 great deal since then and have our guys working on a 2nd that is looking like our best flip yet. And we have a 3rd under contract that should close in a week or so. The profit from those, if things go even halfway correct, will triple the loss and way more hopefully.

@Jay Hinrichs - It'll absolutely work out. My degree cost a lot more than that and I imagine I'll use this experience way more than a degree long-term!

@Ruth Geller, @Kyle J., @Jay Hinrichs - I thought early on the coverage was sufficient and I felt we had disclosed it was a flip rather than rental, but I don't think we had made it clear enough so the policy was more of a landlord policy that one with a vacancy clause.

We are in the process of litigation though because right after purchase, our county went into a covid related total lockdown (Hidalgo County Texas). All the county announcements and even those from the governor were sent to our agent. Between our lockdown which prevented our "nonessential" contractors from working, and the moratoriums in place which kept most tenants in their residences, I think we have a good case.

It was actually set to close prior to the fire by about 3 weeks but 2 days before closing, the city stripped our certificate of occupancy because there had been an enclosed addition in 1997 that wasn't permitted. They flagged us when we ordered a roll-off dumpster and so it couldn't be sold.

Got the enclosure permitted and we were ready to close when it caught on fire ahaha! Nightmare scenario!

@Marlen Weber yes thank you. Our hope is that we would learn and many others would as well. It was a surreal experience that could’ve been much worse. Luckily it didn’t sink the ship and we can simply keep moving forward

@Rachel Underwood my pleasure! We learned a lot more from this deal than if it would’ve simply sold at retail. Life goes on

@Ruth Geller because of the vacancy. Our insurance agent directed us to a bad policy for a flip, but it’s my fault for not asking the right questions. It happened to be on the queue around the same time we had a hurricane locally so I think that played a role in the decision. There were a lot of denied claims locally.

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Mcallen.

Purchase price: $165,000

Found this off market while lead generating for seller listings. Waited about 2 months and offered 24k below listed price and paid all closing costs. Was able to partner with my brother and we got an owner occupant conventional loan so he could do a short-term house hack and then keep it rocking as a rental. Currently fully occupied.

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

The numbers looked fantastic and it is a nice single story brick unit with very little deferred maintenance.

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

I cold called an expired SFH listing and it ended being a fourplex owner who still wanted to sell. We waited about 2 months and made an offer. He took it

How did you finance this deal?

Conventional 25% down

How did you add value to the deal?

Nothing yet.

What was the outcome?

Great rental

Lessons learned? Challenges?

Learned the value of daily prospecting. You never know what you will come across if you are regularly making calls and lead generating.

Investment Info:

Single-family residence fix & flip investment in Mcallen.

Purchase price: $80,000
Cash invested: $40,000
Sale price: $104,000

Had it under contract to sale at 165K and it caught on fire on the day of closing! The money was en route to our account, we had already signed and had to stop the recording and the wire so that we didn't burn someone else's house down. After that, insurance wouldn't pay and we decided to lick our wounds and move on instead of trying to break even on it

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

Was a great flip. We were scheduled to clear about 35K and instead lost about 20K.

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

Wholesaler - paid what they wanted

How did you finance this deal?

LOC

How did you add value to the deal?

complete remodel and permitted extra living square footage.

What was the outcome?

Lost 20K

Lessons learned? Challenges?

Sometimes its better to take a loss and move on rather than letting ego make your decisions.
Get clear on what insurance is needed.
Know who you're in business with.

@Soumya Brijesh ended up being about 40k

@Zeriet Woldeab vacancy is all over the place. I am an agent and investor with 10 doors. We price competitively and try to maintain a condition people want to be in. We haven’t had any major vacancy issues, but I have seen some mismanaged or poorly advertised rentals that sit on the market for a long time.

My recommended zip codes actually make a large rectangle.

78504, 78501, 78541, and 78539.

I like to stay east of Shary road, west of 281, south of Monte Cristo road, and north of business 83.

Can’t go wrong there