All Forum Posts by: Brenainn Kilchoer

So my friend and I closed on a duplex with live-in basement for $265k. We're using an FHA loan (we were able to lock in 4.6% interest), so we technically have to move in within 60 days, and then we can move out in a year. We were able to find it because my friend is friends with the seller (#1), who was using it as a medium term rental mostly to travel nurses (the property is a block or a 5 minute walk from the hospital). She (previous owner) rents out the 2/1 side for $1500, 1/1 for $1300 and basement $1100. My friend and I will basically be house hacking for a year, then moving out and renting the whole thing (my friend has her own house in Casper which she'll be renting out while we live in the duplex). PITI is $1743 and we can fix it up to increase rents a little so that we can bank on $1500/month not counting capex, maintenance, utilities, 10% vacancy and 10% reserve.

Question: How do you suggest I calculate capex and maintenance? Furnace is 2 (3?) years old, roof is at half life. We think we might just be able to break even the first year before we get rid of PMI (btw, seller #1 is basically giving us all the furnishings, furniture and appliances too, which are all 5 years or younger).

Then my friend gets a phone call from a neighbor who is asking us to buy his property so that he can move to another house he prefers (forgot if it was a bigger house or closer to work). It's a 3/2 house and he was originally wanting $230k, however my friend asked if he could do $200k and offer seller (#2) financing. He said yes to both, but he could only finance $100k (he says at 5% but we can probalby sweet talk him into less) so we'll be raising $100k (I already got some friends and family supporting my half, and my friend has her own line of credit). From past experience, both my friend and seller #1 have less than 10% vacancy on their short/medium term rentals (because they're so close to the hopsital). Gross rents for bedrooms for 3 month leases is approximately $1100 per door so in this case $3300 before PITI, capex, maintenence, etc.

Just wanted to share, because I'm pretty happy with my initial foray into real estate investing. Any comments and suggestions for buy and hold welcome! I'm completely fumbling in the dark and not quite sure what I'm doing. I barely have any cash to my own name, so I always thought finding money was simply monumentally hard to find, followed by how to find motivated sellers outside the MLS. Turns out, if you network well and talk to people, you can find both even when working a full time job.

@Sheri Fluellen

Mostly because I have a friend who lives there who helped with the down payment. Also she's the one who found the duplex that her neighbor was selling as the owner. It was a matter of looking everywhere for a possible househack

@Jake Schleppenbach

I'm a PHX based FO and I'm at Skywest too! Crashing at a friend's condo between trips, back in Casper during longer breaks to satisfy owner occupancy ;)

@Jake Schleppenbach

Hey Jake welcome!

I've had the exact same problem, living and working in Phoenix. I even ended up moving to Wyoming last month just to house hack, and use some of the cashflow from that duplex to pay my half of the rent to have a crash pad in Phoenix (I'm a pilot so travel is literally my job).

Phoenix isn't the easiest place to find a multiplex but the good thing is that if you're willing to get a SFH you could still rent out other rooms via roomies.com which is how I got my current auxiliary living setup.

Good luck!

@Jeremy Nault Thanks for the tip! I just thought it was easier to set up a gross income metric to start with, since I have no idea what other considerations I'll have in terms of total taxes, management fees, etc. That being said I have a loftier goal of traveling on my own for long periods of time, and if I can set up a system in which I can manage my managers for a few hours a day, that woudl be great!

@Steven Wilson

Well obviously! I would like to build my own real estate system, a bit like what Trump did (on a much smaller scale) in which a company can run properly without it's owner.

So that's the goal, and to achieve that goal I need at the minimum a real estate agent, a bookkeeper, a CPA, an attorney, a property manager and either a handyman or contracted maintenance help. And that's per location right? So I need to rinse and repeat in every market I want to invest in.

Who else would I need?

@Mike Dymski

I only recently bought a duplex with a live-in basement, so it basically runs like a triplex at $1500 per unit running around $1200 NOI

Can the plan be passive if you're using the right property managers?

So my goal is to retire comfortably as soon as possible and fly airplanes for my own pleasure and not for anyone else.ter

Everyone says it's important to set goals, and publish them so that you're held accountable, or you're susceptible to meeting a cheshire cat who'll tell you it won't matter where you go if you don't know where you're going.

My partner and I want to make $1M in passive income per year, which is $83,333.33 per month. Let's round that up to $90k/mo to make it simple. We want to specialize in buy and hold medium term multi-family rental properties in various jurisdictions at $1500 gross rental income per unit, and we wish to acquire 8 units per year (2 quads, 4 duplexes, 8 SFR, etc). At $90k/mo, that's actually slightly exceeding our goal by $80k/year, and at that acquisition rate, we'd be done in 7.5 years, or 2030.

That's just gross income.

At this point, I need someone's help to tell me if these numbers are realistic, and how to refine this goal to define exactly how to set our selection criteria for our real estate so that we can focus on the numbers of the property and avoid falling in love with deals.

Thanks!

Quote from @Steven Foster Wilson:

Quote from @Brenainn Kilchoer:

Hello!

Newbie real estate investor with complicated history. Born in California, grew up in Switzerland, educated in Prescott, AZ, lived in Memphis, Dallas, Colorado Springs, Chicago, Phoenix and officially now in Casper, WY. I've been renting all my life, but I finally got a duplex under contract in Casper after a lot of failed search and start/abort projects in Phoenix.

I'm a part-time investor, because I love my full-time pilot job based in Phoenix. I have to officially live in Casper, WY because I got an FHA loan to pay for that duplex (which has a live-in basement that can be rented like a third unit). My airline didn't have a problem with it, it isn't unusual for pilots to live in different parts of the world and commute to work.

After a lot and lots of reading (and I've been reading blog posts on BP since 2014 without any action until last month!), I've finally decided that buy and hold small multi-family is the strategy that best fits my lifestyle for now.

Looking forward to connect, network and expand here!

Thanks all!

Brenainn (like "Brennan")

 That’s awesome! So glad that you worked hard to make your first buy happen.

Thanks! :)

Quote from @Bruce Lynn:

Refinance in a year.

That's the plan! Although are there any cases when you can do so in 6 months? Already planning on paying down loan as fast as possible to get rid of the PMI obviously but any tips on accelerating the process?