All Forum Posts by: Bryan Germann

Thanks for the quick reply.  I'll definitely check with the city on the items you mentioned and report back.

Some additional questions I have after reading your response and thinking about this a bit.

1.  I own the home and the lot but do have a 15 year conventional mortgage on the property.  Can I split the lot if I have a lien on it like that?  

2. I have not had the home/lot appriased yet my value is based on cold offers I have received from other investors and comps with much smaller lots.  Should I have it appraised before or after splitting the lot?

3. Would it be better to try and put a business plan together and pitch to private investors or a bank?  What is the best place to secure financing for a multi-build project like this?

4.  Is there a straightforward way for me to do the numbers on each scenario and weigh which method will yeild the most?  I am leaning towards develop and sell all or some of the properties so I can do some more deals however I do like the income with the nest egg idea too.

Thanks for your help.

Hello,

I have a property in SC that I bought and lived in several years ago, it was a B neighborhood close to a flourishing downtown area and has a very large lot. The house that is on it is a 3/2 and netting a CAP of 7.4% which I am pretty happy with but its also set to one side of the lot leaving about .68 acre of untouched land. When I bought the property for $115k back in 2014 I knew the neighborhood would change over time and lord has it. 2 houses around me were torn down and new builds on the same sqft and style have been built at the tune $290k each, recently sold so the data is solid. This has caused my home value to more than double in less than 5 years and I have actually gotten offers but I know why. The extra lot space that I have sits on a abandoned rail corridor that is in the process of being converted to a bike/walking trail and connected to a network of almost 40 miles of trails which is bringing people to the city from all over. I know this is why developers are buying up houses in this neighborhood and putting up brand new ones.

Ok so onto my question, should I section the lot and build some units on it  and if so what kind make the most sense here?  OR should I build 2 more single family homes and cash out on all 3?  Like I said I have about .68 acre to work with and the lot is zoned RM-1 (in my local municipality this is multifamily).  The strategy I had for this property was always a buy and hold so I am thinking of building either a couple of town homes , a multifamily structure or 2 single family homes on the to be developed trail (with that being a selling point) but eventually cashing out of the entire property going forward.  I see a path here to turn my $115k investment which is now worth about $225k to turn into much more.  

I have never done anything like this so I need a little bit of advice here to make sure I get going on the right track and possibly find a partner to do the development with here on BP.  So discussion started, any advice?

I see this as my ticket to getting some real cash to start a legitimate real estate business going forward with capital to rent to own and flips.  I dont know if I am being overly optimistic here so I need a dose of reality.

@Candace Ellison Thanks for your feedback, never really called it house hacking but I suppose that is what it is. I am well beyond 20% LTV on the original purchase price and the ARV/appreciated value since purchase is above that. I maybe should look into getting an appraisal on both properties to know just how much I could leverage them if needed. Do you or anyone else recommend a maximum LTV that I should not exceed if borrowing against the equity on my properties?

I have always had the plan of building equity for the purpose of building wealth.  My primary strategy is to pay off as many houses as I can, so that I could cash out of any of them at some point to start a business or buy a vacation home or other investments as I see fit.  The cash flow is secondary to wealth building to me as I see it today but I am open to other more effective strategies that could increase my overall hard assett ownership as quickly as possible.  My risk tolerance is moderate...I mean I personally have around $350k in real estate debt with only 2 of the 3 producing income... but I would really like to avoid becoming over leveraged and really want to keep my monthly expenditures for financing as low as possible.

@Eli Sunderland I am over in longfellow and work just over the river in the university area.  I am always down to meet up and chat over some coffee. Tried to PM you, dont know if it went through.

@Eli Sunderland Thanks, I wouldn't say I am on the track yet.  I have been buying property, working on it while living in it and renting it out rather than selling it.  Hardly a formal business strategy but that is why I am here to hear the advice that others are willing to share and to formalize my strategy moving forward.  I am getting to point where managing my own rentals is a job and I can see the future that this will get difficult as I add more.  I am trying to make the decision to do 1 of 3 things.

1. Unload what I have and put the money I come out with into formalizing my business and move into multifamily units that are managed.

2.  Keep what I have now, formalize my business and grow on top of it by using the current equity I have to roll into a multifamily unit or possibly another single family (due to the pricing I can afford this more readily), move to having all my properties managed.

3.  Keep what I have now, formalize my business and try to locate private money to purchase  additional property, rehab and rent.  Move to having my properties managed by someone else.

At the end of the day I want to move away from what I have been doing which is put the money I have in the bank that is my personal income etc into buying more rental properties.  I have not seen the return that I would like out of that method and know its likely not the best path way or even a good one.

@Eli Sunderland I have definitely considered multifamily and have plans to move away from single family once I start buying property strictly to rent.  You see both of my current properties were ones that I lived in and just decided to keep.  I would love to purchase one of these properties but with my existing methods of locating financing and purchasing property it has not been possible for me yet.  I need to change my methods.  If I do buy another property it will likely be a multi-family, likely a 2-4 unit property like you mention.  I love the flexibility it gives with regards to vacancy and in SC, which is where my properties are, you can find good deals on units like this with very decent returns.  I wonder did you finance the purchase on your own via a bank loan or find alternative financing methods?  If its the latter, how did you go about finding it?

Thank you @John Woodrich  the comments.  It has always been a goal of mine to acquire property and build net worth through owning them while also building some passive monthly income, although I do not need this money to survive by any means.  You are very right about the expenses though, I am running into a situation today actually where a furnace just went out on one of my properties in SC and I am having to go several thousand out of pocket.  I planned for it and had a reserve just for repairs that will cover it and more.  I do wonder what Information I need to do the numbers on my properties and decide whether or not it makes sense to cut them loose or keep them long term like I desire to.  The equity I have in each house is only about 25% for the second property and 35% on the first, based on the price I paid for them not their current appraised value.  The reality is that I am building equity and putting money in the bank every month with both of these properties, also both have very low interest rate mortgages on them...so when I look at it that way I am building net worth and making money but that may be a bit of a rose colored glasses scenario.  Honestly I lack the experience to really know the difference but I have the desire to do this and have intentionally kept all of my properties as a method of boot strapping this business goal of mine.  I want to formalize it and grow my portfolio slowly as I age, with the intention of selling the properties at some later date when the market is up.

Hello All!

My name is Bryan and I am into rentals.  I would love any feedback on my current approach and some ideas on how I can step up my game without dramatically disrupting my current lifestyle.  

I am 30 and currently own 3 homes, the one I live in and 2 rentals which I also lived in.  My first rental was when I was in college and I rehabbed the entire property, I got it for a great price and a low mortgage payment.  So with the improvements I was making roughly $350/month on a 2br/1ba house.  Its also very close to a university and rents in hours...literally.  

My second home is about 1.5 hours away from the first and is also a smaller 3br/2ba house which I got for a steal of a deal, its in a "transitioning" neighborhood though which is close to a growing and gentrifying city center with close proximity to parks and a very large trail system.  I had high hopes for this property when I moved in 3.5 years ago but not a lot has happened other than the market being very high right now.  I got a new job and decided to keep it.  I am currenty renting this property for $1350 with only a $867 mortgage payment...thats a $483 profit monthly and the best part is the house was redone before I moved in so it needs basically nothing.  

My latest home is the most expensive I have bought at $265k but is also the largest home at 4br/2ba but its in Minneapolis, MN in a great neighborhood and its undervalued by about $25k according to my appraisal with no improvements.  My exit strategy for this one is a live in for 2-3 year and sell but to rehab it on my own while living there and hopefully make a bit of money on the exit.  Figure I need to live here for my job and I enjoy doing the work on the house so no harm done.

So that is my current status, its a bit hap hazard and just a more go with the flow of life mentality for obtaining and managing my properties but 3 at 30 is not bad in my opinion and most importantly I am making money.  I just buy a property I like and then rent it which may be a folly way to go but its what I have done so far.  I want to buy more property in my primary market of upstate SC, because I plan to return there in 3-4 years and I perfer the taxes/market there to the mid west. 

What are your thoughts on how I am going about this, is it a smart way to go?  Do you see any strategies I can add to this that would increase my # of rentals while I am remote in MN?  Is there anything I should stop doing or be worried about?