All Forum Posts by: Brian McDonough

Hey Matais,

Thanks! We did NOT have any appraisal contingency and got the deal excepted, so if we hadn't appraised, we would have gone back and renegotiated. As for the rehab cost, yes, my wife and I both have a lot of experience at this point with rehabs and generally understanding a home and its systems. My construction background helps a lot. We feel very comfortable walking a home and doing our own inspections before submitting our initial offer. This house is on town sewer and water though, had it been on septic, we would have included a contingency for that. This house was kind of an open book, one floor, open in the attic above and open in the basement, so you could literally see everything, systems, framing, insulation, there weren't really nay surprises when we got into the rehab. 

Inters rate on the HELOC is 2.49% for the first year which runs through October 2022. Switches to prime after that first year. I can see how that rate being variable will light a fire under us for sure! We have been dumping everything extra we can get into paying it off, including the cash flow from this property as well as some of the cash flow from one of our other properties. It definitely feels like a race right now, but once that is paid off which we think we can get done by the end of 2023 at the latest, the property will feel very stable.

Do you buy mostly in California?

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $300,000
Cash invested: $100,000

Contributors:
Jessica Niles-McDonough

Downtown Freeport single family long term rental 2bd/1ba. Potentially short or mid term rental at some point. Lots of sweat equity added to this deal. It cash flows as a long term rental, has solid appreciation potential and will hopefully also serve as an opportunity to dip our toes into short-mid term rental when we are ready.

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

Solid potential for appreciation, multiple exit strategies, just the right amount of work needed to be done to where it scared off some competition I think, but still plenty of room for us to improve without having to do a full blown renovation.

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

On Market. My wife is our agent and did an amazing job locking up the property for us. She knew we needed to go 25K over, it was listed at $275k. No inspections. No appraisal contingency.

How did you finance this deal?

Heloc.

How did you add value to the deal?

Removed all the garbage, cleaned upon the yard, painted entire exterior, some new systems, plumbing, electrical, insulation. Light kitchen and bath remodel, paint, improved functionality. There is also an entire attached garage, which was partially converted to living space at some point, but was un-permitted. We plan to add a deck off the back side of the garage and turn that space into a master suite turning it into a 3bd/2ba.

What was the outcome?

Rented long term right now. As it sits, valued somewhere around 350-375k

Lessons learned? Challenges?

Heloc was a vital tool for us in this situation, but takes longer than we'd like to get paid off so we can redeploy the money. Wheels are turning on other options.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jessica Niles-McDonough at Locations Real Estate in Falmouth, ME.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $300,000
Cash invested: $100,000

Contributors:
Jessica Niles-McDonough

Downtown Freeport single family long term rental. Potentially short or mid term rental at some point. Lots of sweat equity added to this deal. So far this property has seemed easier and less daunting than our (wife and I) first deal which is encouraging. It is currently being rented out as a long term, furnished rental and could be switched to short term any time. Life circumstances caused us to push pause on the short term rental for now. It cash flows as a long term rental, and the potential for solid appreciation seems high given a long enough horizon. We hope to flip the switch when the timing is right and see if we can push up our cash flow using the short-mid term rental approach without creating too much of another job for ourselves. The house was completely over grown, needed exterior paint, lots of clean up, light kitchen remodel, light bathroom remodel, etc. mostly cosmetic work.

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

Solid potential for appreciation, multiple exit strategies, just the right amount of work needed to be done to where it scared off some competition I think, but still plenty of room for us to improve without having to do a full blown renovation.

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

On Market. My wife is our agent and did an amazing job locking up the property for us. She knew we needed to go 25K over, it was listed at $275k. No inspections. No appraisal contingency.

How did you finance this deal?

Heloc.

How did you add value to the deal?

Removed all the garbage, cleaned upon the yard, painted entire exterior, some new systems, plumbing, electrical, insulation. Light kitchen and bath remodel, paint, improved functionality. There is also an entire attached garage, which was partially converted to living space at some point, but was un-permitted. We plan to add a deck off the back side of the garage and turn that space into a master suite turning it into a 3bd/2ba.

What was the outcome?

Rented long term right now. As it sits, valued somewhere around 350-375k

Lessons learned? Challenges?

Heloc was a vital tool for us in this situation, but takes longer than we'd like to get paid off so we can redeploy the money. Wheels are turning on other options.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Jessica Niles-McDonough at Locations Real Estate in Falmouth, ME.

Investment Info:

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

Purchase price: $307,000
Cash invested: $15,000

This investment was a house hack. My wife and I bought it, lived in it, and fixed it up. It is a 1950's cape with a detached accessory dwelling beside it. The accessory used to be an old barn which someone in the 80's converted to a living space. It has been the perfect investment for us. We put in a lot of sweat equity and about $30,000 all together in upgrades since we bought it. But it just recently appraised in the mid $400,000 and continues to cash flow.

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

House hacking made perfect sense and really seems like the best possible way to get started in all of this. It gives you a little taste of all the different aspects of being a landlord and managing a property while usually not being unmanageable. That being said, there's still so much to learn and I'm stying hungry!

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

MLS. Paid asking price, but negotiated about $30,000 worth of upgrades into the deal. New septic, new roof on both buildings, etc. If I were to buy this again today, in this market, not only would the asking price much higher, but I don't think I would have a chance to negotiate all those repairs. Very happy I bought when I did!

How did you finance this deal?

FHA. 5% down. Refied a couple years later to conventional, got rid of PMI.

How did you add value to the deal?

Negotiating repairs and being willing to take on a fixer upper which would have scared many people off at first sight.

What was the outcome?

Still own it, plan to hold for a long time. Cash flows nicely, and if it continues to appreciate as it has, who knows where it'll be in another 10-20 years. Hoping to aggressively pay it off, and access home equity to buy more units.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Niles Shedlarski & co. best real estate brokers around. Hang their license at Better Homes and Gardens in Windham Maine.

Investment Info:

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

Purchase price: $307,000
Cash invested: $15,000

This investment was a house hack. My wife and I bought it, lived in it, and fixed it up. It is a 1950's cape with a detached accessory dwelling beside it. The accessory used to be an old barn which someone in the 80's converted to a living space. It has been the perfect investment for us. We put in a lot of sweat equity and about $30,000 all together in upgrades since we bought it. But it just recently appraised in the mid $400,000 and continues to cash flow. We moved out a couple years ago, and all together have not missed a single month of rent since buying the place. We are still pretty hands on in the management of the property which sometimes feels like the wrong move, but given our skill sets (me-contractor + wife-real estate broker), and the small size of our portfolio so far, it seems to make sense for now.

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

House hacking made perfect sense and really seems like the best possible way to get started in all of this. It gives you a little taste of all the different aspects of being a landlord and managing a property while usually not being unmanageable. That being said, there's still so much to learn and I'm stying hungry!

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

MLS. Paid asking price, but negotiated about $30,000 worth of upgrades into the deal. New septic, new roof on both buildings, etc. If I were to buy this again today, in this market, not only would the asking price much higher, but I don't think I would have a chance to negotiate all those repairs. Very happy I bought when I did!

How did you finance this deal?

FHA. 5% down. Refied a couple years later to conventional, got rid of PMI.

How did you add value to the deal?

Negotiating repairs and being willing to take on a fixer upper which would have scared many people off at first sight.

What was the outcome?

Still own it, plan to hold for a long time. Cash flows nicely, and if it continues to appreciate as it has, who knows where it'll be in another 10-20 years. Hoping to aggressively pay it off, and access home equity to buy more units.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Niles Shedlarski & co. best real estate brokers around. Hang their license at Better Homes and Gardens in Windham Maine.