All Forum Posts by: Carl Hebert

Hi @Kellianne Fedio I agree with @Adam Bartomeo, I would also suggest you walk through some of the new construction before buying, when I went to buy last fall the majority of the new construction on the market was poorly done. 
Ended up with an older duplex that was in great shape and built very well. 

Hey @Dave Perlman, I bought a duplex last September in Cape Coral Florida for the same reason. Love it. Rented out one side and we live for less then renting in the other while building equity at the same time. 
You also have the option, depending we’re it is, to rent it out when you are not there. 
My wife and I truly do enjoy it and do not miss the Maine winters at all. 
Carl

Investment Info:

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

Purchase price: $172,000
Cash invested: $20,000

4 unit 3 - 1brs 1 bath and a 2br 1 bath 2 car garage.

Once finished house hacking the first unit we moved into another and stayed there till 2019. Rented the 1st fl out for $1100

Started staying in Florida in the winter and at a camp in Maine in the summer.
Moved out of unit and did an inexpensive refresh and rented it out for $825

Currently collect $3300 a month

Current apprasial is $206k

This building was bought as an investment property, unlike the first which was for family.

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

We were searching for a place to call our own (move from sharing with in-laws) and expand our portfolio. This is located in a great neighborhood and knew we could get top rents for the units. We liked having a garage to put the car in while we were overseas.

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

Our agent brought this to our attention when it was at $185k and we negotiated a deal after the apprasial and inspections came in for $172k.

How did you finance this deal?

20% down. Through a mortgage broker. Standard 30 year mortgage 4%

How did you add value to the deal?

Cleaned up property, refreshed lots of items from deferred maintence. Remodeled 2br unit and rented out at top of market.
Lived in building from 2015-2019, living free is nice!
Able to use the garage for the business.

What was the outcome?

Nice clean building with great tenants, garage for business use and solid income generator.
Currently collection $705, $670, $1100 and $825 a month in rent. $3300 total.

Lessons learned? Challenges?

House hacking is a pain in the ***. Seemed like everything took longer,controlling dust was tough and sometimes we would leave a project partially done to come back and scratch head to figure out what we were up to lol!

Also during the process of closing we found a section of the deed giving the tenant on the first floor the right to stay in the unit forever at a fixed rent! Had to have that removed before the bank would close. Fun stuff.

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

Debbie Bodwell at RMS was great.

Great question! I forgot to cover that in the post.

We technically lived there for 3 years while we were living in Beijing, China. We had no house other than this building, so it became our home in the United States whenever we returned. All our taxes, bank info etc was at this address. We basically took over one of the bedrooms in the unit for us :)

Carl 

Thanks Chris, was the first one and learned a lot from doing it. Still learning lol.

@Justin Paradis I would not lump all of Maine into one market, each market here has its own quirks and price points. Be sure to use current rents for the market not what the listing has for rents. Tenants know when they have good rent and most realize rents will go up with a new owner.

Some markets it is hard to find a multi family that does not fit the 1% rule, Lewiston/Auburn is one, Rumford/Mexico is another and Augusta area is also good for finding deals that hit the 1% rule. While others it would be surprising to find one at all that could meet that rule. Portland area for example can be hard to find a good deal on the market.

I do what @David Marshall does before I buy a property, put all the info into a spreadsheet and go over the details. You will find that sometimes a property is hitting a 3% but the repairs needed is going to eat up a lot of cash. When you are done figuring out all the numbers is your Cash on Cash worth it? Is the building going to appreciate over time and from the repairs/upgrades you do? Etc, etc. 

The 1% rule is just a quick guide to help you filter out the truly bad deals on the market. 

I agree with @Cody DeLong with finding off market properties to get better deals. 

Carl

@Jaysen Medhurst correct, I will go in and amend the post. 

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

Purchase price: $111,000
Cash invested: $95,000

3 unit all 2brs 1 baths.

Completly remodeled and renovated. Everything inside is new in two of the units. New electrical, new plumbing, windows, doors, floors, ceilings, kitchens, baths, etc. Basically built new apartments in an old frame. Open concept when done.

1 unit was renovated but not completly updated.

Current cash flow is $2600 as of 6/1/2020, this fall when family moves out the rent in that unit will increase the cash flow to $3300-3400.

Current 2020 apprasial is $215k

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

Just sold our home in Connecticut and was getting ready to stay in China for 3 years. We actually had no debt at all. Everything was paid off. Student loans, mortgages, cars, and credit cards. Both our parents were living in apartments that were not good for them. We bought this with the intention of breaking even with the rent to cover expenses and giving them a place that was nicer and less expensive then their current apartments.

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

We first found this on the mls for $140k. It was owned by an older couple who had been living in it since the 50's. After the inspection we put in an offer that was refused, so we backed out and started looking at other places. The place needed lots of work.

They actually removed the listing from the mls and a few months later we got a call asking if we still wanted it. All the other places we had looked at did not fit our criteria. We put in a new offer that was accepted at $111k

How did you finance this deal?

FHA 3.5% down. Through a mortgage broker. 30 year fixed at 3.25%

How did you add value to the deal?

Complete remodel of entire building see above. We did the majority of the work ourselves with family and friends. Electric and plumbing were the only big items we could not do.

What was the outcome?

Beautiful building that both sets of parents loved.

The third unit was able to be rented out for full market value which at the time was $900.
The other two units we received $450 each.
Currently we receive $1200, $450 and $950 in rent, the $450 will be raised this fall/winter to at least $1200.

Lessons learned? Challenges?

Get quotes on items you can't do yourself. In hindsight we saw we paid too much for electric in one of the units. The plumber was great, did excellent work, but was real expensive.
We paid for most of the materials on credit cards (Home Depot, Lowes, Visas, Discover) and took a loan out on our Discover card to pay for everything else plus cash from jobs. Took three years to pay them all off, but we didn't pay any interest on any of it. Just a 3% fee on the Discover.
So much for no debt lol!

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

Debbie Bodwell at RMS was great.

Investment Info:

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

Purchase price: $111,000
Cash invested: $95,000

3 unit all 2brs. Completly remodeled and renovated. Everything inside is new in two of the units. New electrical, new plumbing, windows, doors, floors, ceilings, kitchens, baths, etc. Basically built new apartments in an old frame.

1 unit was renovated but not completly updated.

Current cash flow is $2600 as of 6/1/2020, this fall when family moves out the rent in that unit will increase the cash flow to $3300-3400 a month.

Current apprasial is $215k

First building bought and wasn't even sure would be buying more. Went above and beyond with some of the updates, our moms were going to be living in two of the units and we love our moms!

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

Just sold our home in Connecticut and was getting ready to stay in China for 3 years. We actually had no debt at all. Everything was paid off. Student loans, mortgages, cars, and credit cards. Both our parents were living in apartments that were not good for them. We bought this with the intention of breaking even with the rent to cover expenses and giving them a place that was nicer and less expensive then their current apartments.

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

We first found this on the mls for $140k. It was owned by an older couple who had been living in it since the 50's. After the inspection we put in an offer that was refused, so we backed out and started looking at other places. They actually removed the listing from the mls and a few months later we got a call asking if we still wanted it. All the other places we had looked at did not fit our criteria. We put in a new offer that was accepted at $111k

How did you finance this deal?

FHA 3.5% down. Through a mortgage broker. 30 year fixed at 3.25%

How did you add value to the deal?

Complete remodel of entire building see above. We did the majority of the work ourselves with family and friends. Electric and plumbing were the only big items we could not do.

What was the outcome?

Beautiful building that both parents loved. The third unit was able to be rented out for full market value which at the time was $900. The other two units we received $450 each.
Currently we receive $1200, $450 and $950 in rent, the $450 will be raised this fall/winter to at least $1200.

Lessons learned? Challenges?

Get quotes on items you can't do yourself. In hindsight we saw we paid too much for electric in one of the units. The plumber was great did excellent work, but was real expensive.

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

Debbie Bodwell at RMS was great.

@Evan F. I just rented out three garages and used a lease off of Rocket Lawyer. I also use them for my regular apartment leases.