All Forum Posts by: Chris Koeppel

I think the loaded, cocked Sig semi auto I ran over three times while mowing the lawn and uncovered more each time I did it (it was just past my chain link fence and where I turned the mower around in same spot) was more exciting than taking down the huge mirror on living room wall and finding a 4'x6' opening into the garage (for heating and AC transfer I suspect) or that literally there were 21 2x4's completely missing in action on the whole back wall after trying to repair an interior wall crack that kept reappearing by a window sill.  The coolest thing was new unsealed mexican clay tile was laid on dining room floor with no expansion joint between walls; must be right before I bought it, and there was a water leak in kitchen wall adjacent to tiled room and the wood wall separating the two rooms swelled, and during the first few nights I kept hearing bangs like a .22 shell. Dog didn't sleep a wink, and neither did I. Third night, my dog refused to go outside the bedroom after a now-used-to cacophony of nightime bangs and booms.  Walking out with gun and flashlight I saw the complete tiled floor 3-D with most of the tiles between the walls popped off floor and "peaking" like dozens of pyramids about 12" off floor. Really dangerous and had to carry dog out and over them as they collapsed under weight and shattered like a dropped planter pot. Smart dog. After-the-fact I found most areas had little adhesive/mortar, and the living room had a mix of three different types of mortar. I was replacing anyway, so just had a change of timing. The best laugh was just the amount of mail that kept showing up with new approved/declined creditcard apps, loans, hospital bills (dozens of drug, maternity, and weapon related injuries), etc., all to new names I did not recognize over the next 12 months.  It is good to have a post office box if you do househacks like this.  I knew it was the right decision when three neighbors intercepted me on my daily morning walks with my retired police dog and thanked me for rescuing the house and helping the neighborhood.  Two more houses to go....    You CAN make a difference in your neighborhood! 

So yes, alot of surprises in some of these funky houses, and always seems to be one big undiscovered surprise in each house I get.  As the numbers were fabulous, I just put the helmet on, grabbed a hammer and started fixing. Least the surprise happened with me and not a tenant..

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $80,000
Cash invested: $13,300

Driving for Dollars found a Realtor-listed house. 900' sq. ft house will 11 people squatting in it and was an estate-managed rental. One of three houses next to each other that were worst in whole neighborhood. Likely minor grow house due to debris in adjacent lot. ran over a loaded gun while mowing yard. Huge amount of termite damage and shoddy workmanship. 2/1/2 rental on city water which was very unusual for area.

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

House in a gentrifying neighborhood, rent was significant (1.4%) and needed a place to live. Numbers made great sense, as FHA mortgage was $400/month and I could rent it at $1100/month. Even if no appreciation, the mortgage was good for me while living there, and to eventually rent out.

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

Although found this by driving for dollars, it was listed on MLS and was already under contract. Original contract fell through and it came back on market, and I put in asking price offer. $500 discount due to some errors in listing.

How did you finance this deal?

Online lender, FHA loan, 3.5% interest, 2.5% down payment. Borrowed personal money from a 457b work account (deferred compensation).

How did you add value to the deal?

Had to live in house for a year due to lending requirements. $400/month mortgage payment is CHEAP rent. Rehabbed house, repaired termite damage, new hvac, and ducts, toilet and shower, and appliances, granite, new windows, new flooring, wall replacements, all new switches and outlets, new screened florida room, and tiling on front and back porches. New landscaping, paint and refurbed yard shed. Basically down to studs rebuild, and in the whole back wall of house, even studs were replaced.

What was the outcome?

Has been rented for three years with a fourth year starting in a few days. House has double in value (bonus, as I did not expect appreciation with the house). A huge building boom all around it with $300k houses going in and this is now valued around $150k. Used a HELOC from this house to take back primary house that I was renting and sell that house for a profit as it was a liability and not performing at all well.

Lessons learned? Challenges?

Do not trust many home inspectors to tell you the whole truth on what is found as there are alliances with lenders, sellers, buyers etc. There was extensive termite and water damage that was covered up and while it would have probably stopped the lenders from financing the house, literally 25% of house was sawdust from old termite damage. True... no active termites, but the carnage was pretty widespread. The T word and the M word where never mentioned and it felt like a Harry Potter movie.

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

The full monty here; buyer and seller agents, two different home inspectors, pest&WBO inspectors, insurance reps, and a FHA online financing process that was arduous and lengthy at best. Not to mention the house was "accidentally' relisted during the buying process and it complicated my purchase of residence. Closed on literally the last day of the initial contract. Potential buyers were offering $10k more for house by time I closed.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $70,000
Cash invested: $12,000
Sale price: $130,000

Handshake deal. Initially going to be buy&hold, although a friend who was stopping by and watching the whole house renovation (and drinking all my wine) offered to buy it cash when done. Hard money loan with $5k of personal money, 15% interest only payments ($812.50/month), and I lived in it during whole process. Price of house increased $10,000 while renovating it, so basically lived for free. 3/2/2 with inground pool.

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

After moving out of my primary residence and renting the house, I was renting a room in a family members' house while driving for dollars. I mentioned to everyone what I was looking for (house hack and buy&hold) and cubicle neighbor had a family member pass recently and asked if I was interested in place if other family was not. This was a perfect opportunity to get hard money, needed my own place, and the numbers were just fantastic for any deal.

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

Day job coworker had a probate house and knew I was doing this sort of thing.

How did you finance this deal?

one-year, 6-month minimum payments, interest-only, balloon principal at end. 15% interest. 6-month renewal, with 2pts,$2000 fee. $5000 of personal money for skin in the game, and $11,780 in repairs and associated costs including holding costs as I lived on site during entire renovation.

How did you add value to the deal?

Renovated kitchen, relandscaped, new flooring, added garden on automatic watering timers as a selling requirement. New appliances, outlets, switches, and mitigated for lots of smoker damage

What was the outcome?

Had an option to pay off personal debt, and the proceeds would be able to do this. My primary goal was to be debt free in a year, and this was most important as previous debt interfered with many goals.

Lessons learned? Challenges?

Smoker houses have unique sets of issues like HVAC, ductwork, ozone equipment, cleaning requirements, and quality sealers and paints in significantly higher quantities than normal non-smoker rehab.

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

Just called a title company to work up the hud/paperwork, and to organize a mobile notary for both parties. When house sold it was a similar situation and buyer knew me. No realtors were dealt with. A very simple front and back end deal.

Thanks everybody for all your insights and advice.  Every rental agreement I get smarter and close up more holes. Currently using the BP Florida landlord forms that recently came out.  Haven't checked on forums how people like them for Florida. 

Brandon,

Your understanding is correct. The actual attack of their pitbull on another dog was as they were getting ready to come over and sign lease. They were late to lease signing. One of their coworkers notified me yesterday (about a week into the new lease) as they were aware of what had happened to me several weeks earlier where I shot one of two pitbulls in self-defense, that attacked me while walking nearby. So it looks like I need to sit down and at least have a heart-to-heart with the tenant that is full-time resident at rental as her husband is on the road for five more weeks. 

Ironically when this tenant initially prospectively viewed house it was day after my altercation and she was rather freaked out about her little therapy lapdog possibly being attacked in the future while walking or in my fenced rental.

There must have been over a dozen potential tenants that saw my requirement of no “dangerous breeds as list by insurance industry”, and asked anyway. 

Contemplating all future rentals will be no pets whatsoever. Any presence of one and its an eviction. Thanks for the feedback!

Hi all,

Had a recent pitbull attack on me when walking the neighborhood of a rental I was house-hacking to completion.  Now that I am renting the house and after doing a background check, eviction check, and a sitdown with potential renter (Smartmove); I hear from other sources that the day the renters moved in, they had a pitbull that attacked and killed another dog at the place they were moving out from, and both dogs were eventually euthanized. Insurance was paid out, victim was possibly paid monies from altercation.  Literally the hour before moving into my rental when contract was signed.  Bottom line is they withheld they had a pitbull, knowing I prohibited dangerous breeds in contract, and was also recently attacked. Evidently one of the renters had a pit in his semi and only visits every so often as he is a over-the-road trucker. First rent monies have not even cleared bank yet on annual lease.  This is all hearsay until I get a Animal Services report, as nothing was on the news like what happened to me. What's your thoughts?

Regards,

Chris Koeppel

Hi all,

Situation: Evaluating a contracted $70k (ARV $120k) 3/2/2 SFR for a Buy-an-Hold rental at 1100/month, and with hard money lending at 15% (6 month term). With this temporary funding it is going to be break-even or -$190/month (considering CAPEX, vacancy etc.) cashflow until a refinance at lower rate.

CAP rate is 11%, 1.47% (2% rule), $3k in repairs, using above numbers. Alternative exit strategies are flipping, and lease-to-own depending on refinancing outcome. In Florida.

Questions: How long do I have to season the deal to be able to get a traditional lending refinance?   Would any of you think it possible and advantageous to getting additional cash out at this initial refinance from a traditional funder for another REI downpayment or purchase?

Is the initial cost of using HM Lenders such as above deal typical or is this too financially risky for many of you?