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All Forum Posts by: Chris Stephens

Chris Stephens has started 7 posts and replied 12 times.

Post: Seattle Houseboat Project

Chris StephensPosted
  • Investor
  • Seattle, WA
  • Posts 12
  • Votes 6

Investment Info:

Other fix & flip investment.

Purchase price: $380,000
Cash invested: $7,000

Ok... I bought this houseboat (cosmetic fixer) to enjoy as a weekend getaway and a weekday office. Over the past several months I've managed to replace the plumbing, water heater, interior and exterior paint, fixed a bunch of small items that added up to making this place look really cheap. I'm listing the property on Saturday, the 27th of May. Updates, and before and after pictures to come. I'm picking up a triplex, the deal is contingent on the sale of the houseboat.

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

I've always wanted a houseboat and chose this one to try it out. I loved fixing this place up and wanted to keep it, but it turns out that my wife gets horribly sea sick. The marina does not allow rentals.

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

I've kept my eye on the houseboat market for years. This houseboat had a huge front deck with a view of downtown Seattle, a loft, and a large bedroom with 3/4 bath. There was nothing like it at that price point. I met the agent and the owner and then introduced myself to the neighbors to get a sense for the vibe of the marina and learn any backstories on this home. The owner was motivated and the market was tanking. I offered her a choice of either 20k under asking, or to complete 15k in repairs

How did you finance this deal?

I paid cash.

How did you add value to the deal?

Cosmetic remodel!

What was the outcome?

Work is still in progress. I anticipate listing for 410-420k to cover my costs and walk away with some pocket change.

Lessons learned? Challenges?

1. Rent a houseboat with your spouse and test for sea sickness
2. Buying a houseboat when your passive income can absorb the monthly cost is fine. Otherwise, probably pass
3. Make sure to do the math on the true cost of ownership (Ex: Monthly Moorage, HELOC, payment for a portion of cash out refi)
4. This was my sanity project, and I loved every minute of it. I needed the peace and quiet and have no regrets.

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

Agent:
Susan Robinet
Broker | Houseboat Specialist, Coldwell

I forgot the Breaking Bad part. At purchase, the title company missed a tiny detail that we discovered during a cash out refinance two years later. The recent title report showed that the deed for the house was flagged as once being a meth house. After calling the department of health I learned that Title companies miss all kinds of details and that I should call them every time I make an offer on a house (he's on my Christmas card list). The good news is that the entire place was sanitized and tested after it was flagged but they never applied to have the flag released. Now the deed is clean. 

Post: 2020 The Year of my Crazy Luxury House Hack

Chris StephensPosted
  • Investor
  • Seattle, WA
  • Posts 12
  • Votes 6

Thanks Grant!

Hi Natalie, yes the DADU was already on the property. The spec level on the DADU is really incredible. It was designed and built by JAS (https://jasdesignbuild.com/). The main home is beautiful and we will be able to add a ton of value to the upstairs, which has a bad case of the 80s. 

Post: 2020 The Year of my Crazy Luxury House Hack

Chris StephensPosted
  • Investor
  • Seattle, WA
  • Posts 12
  • Votes 6

Thanks Grant!

Investment Info:

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

Purchase price: $330,000
Cash invested: $450,000

My first short sale was back in 2010. The home was poorly constructed and located in a C neighborhood. I really didn't like this house or the neighborhood. My agent and I ran the numbers and researched the neighborhood and he convinced me that we should buy this property. The first couple of years were awful. The tenants were deadbeats, the neighbors were mean, and I was going through a divorce.

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

I wanted to try buying an income property via short sale.

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

My agent and I searched for months, this was after the real estate crash and viewing short sale properties was a pretty traumatic experience. This was also the first time that an agent had found me a deal.

How did you finance this deal?

Conventional financing.

How did you add value to the deal?

Remodeled both units. New bathrooms, new appliances, paint, flooring, etc.

What was the outcome?

The neighborhood improved dramatically and I've completely updated both units. 2010 cashflow: $1650, 2022 cashflow: $4955, and the appraised value of the home is $1.1 million, up from $330k in 2010.

Lessons learned? Challenges?

Passive income does not mean that you hire your way out and walk away. You have to keep an eye on the people that you hire. Both the property management company and my landscapers were scamming me. The landscapers charged me for years without actually doing any work and the property management company was sourcing renters and then encouraging my renters to break their lease and buy a property through them (including financing). The turnover was incredible.

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

Yes, although my agent is not accepting new clients at this time.

Investment Info:

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

Purchase price: $182,000
Cash invested: $320,000

Triplex Rehab: All three units were completely disgusting after decades of drug-using tenants. I found a reputable property management firm, a real estate agent, and a decent contractor. The same day that I served eviction notices, Governor Inslee posted a moratorium and the tenants stopped paying rent. A six-month, 85k rehab went 14 months @138k. Due to supply chain issues, I sourced many of my own materials and personally drive them over to Spokane so that my contractor could stay focused.

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

I was getting back into RE investing and wanted to test out remotely owned rentals and the BRRR method. This was an opportunity to do both and also crack the 1% rule in a rapidly rising market.

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

I researched Spokane for months while searching for a good agent. This home was so ugly and abused that it scared off most investors (listed/pending/relisted cycle). After running the numbers I realized that even if the project ran over (which it did) that it would still pencil from a cash flow and appreciation perspective. The property was listed at ~220k after playing offer ping-pong, we closed at $182k, all cash, no contingencies.

How did you finance this deal?

Cash-out refi of another rental property (and my savings).

How did you add value to the deal?

Studs-out remodel. We opened up the floor plan, new bathrooms, new kitchens, all new appliances, the whole nine yards.

What was the outcome?

I made every mistake possible with this project but I stayed focused and didn't give up. In 2022 my property was appraised at $460k, generates $4400 in monthly cash flow and I pulled $250k out for my next project.

Lessons learned? Challenges?

Build a solid network. Don't be afraid to switch contractors. At one point I had to sit mine down and re-estimate the remaining work, reworked his project plan, and rewrote his bid so that we could get this back on track. Sometimes it helps to have the original contractor roll off before the finishing touches are complete and find someone else to dial down the job with fresh eyes. Also, get creative. I had some cabinet doors hand-made to finish my kitchens due to supply chain problems.

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

Yes. Homeland Property Management. These people are the real deal. Full-service property management. Their fee is slightly higher but you definitely get what you pay for. They helped me evict the original tenants and kept an eye on the property for 14 months during the rehab (with no rents coming in). They are super focused on the relationship and have earned my trust. http://homelandrents.com/

Investment Info:

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

Purchase price: $182,000
Cash invested: $320,000

Complete rehab of a triplex that was originally built in 1910. All three units were completely disgusting after decades of drug-using tenants. This was my first long-distance rental. I found a reputable property management firm, a real estate agent, and a decent contractor. The same day that I served eviction notices, Governer Inslee posted a moratorium for evictions and the tenants stopped paying rent. The rehab was originally estimated to last six months at 85k and turned into 14 months @ 138k. Due to supply chain issues, I had to source many of my own materials and personally ship them from wherever I could find them over to Spokane so that my contractor could stay focused on the rehab. My contractor wound up overwhelmed and demoralized. At one point I had to sit him down while I broke out the remaining work, reworked his project plan, and rewrote his bid so that we could get this back on the rails and completed. In 2022 my property was appraised at $460k, generates $4400 in monthly cash flow and I pulled $250k out for my next project. Tons of lessons learned with this property.

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

I was getting back into RE investing and wanted to test out remotely owned rentals and the BRRR method. This was an opportunity to do both and also crack the 1% rule in a rapidly rising market.

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

I researched Spokane for months while searching for a good agent. This home was so ugly and abused that it scared off most investors (listed/pending/relisted cycle). After running the numbers I realized that even if the project ran over (which it did) that it would still pencil from a cash flow and appreciation perspective. The property was listed at ~220k after playing offer ping-pong, we closed at $182k, all cash, no contingencies.

How did you finance this deal?

Cash-out refi of another rental property.

How did you add value to the deal?

Studs-out remodel. We opened up the floor plan, new bathrooms, new kitchens, all new appliances, the whole nine yards.

What was the outcome?

All three units are in exceptional shape and the property generates $4400 per month in income.

Lessons learned? Challenges?

Build a solid network. Keep an eye on your contractor. If they are punching above their weight, don't be afraid to switch contractors or sit them down and walk through the remainder of the project. For major rehabs, it actually helps to have the original contractor roll off before the finishing touches are complete and find someone else to dial down the job with fresh eyes.

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

Yes. Homeland Property Management. These people are the real deal. Full-service property management. Their fee is slightly higher but you definitely get what you pay for. They helped me evict the original tenants and kept an eye on the property for 14 months during the rehab (with no rents coming in). They are super focused on the relationship and have earned my trust. http://homelandrents.com/

Post: 2020 The Year of my Crazy Luxury House Hack

Chris StephensPosted
  • Investor
  • Seattle, WA
  • Posts 12
  • Votes 6

Investment Info:

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

Purchase price: $1,600,000
Cash invested: $550,000

My personal residence. I rent the basement and the DADU in the back for a combined cf of $3750, reducing my monthly costs (PITI + Utilities) from $5800 to $2100.

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

Increased standard of living, solid appreciation, and low monthly cost. I live on the top of Queen Anne in a wonderful home for less than the cost of an in-city studio apartment.

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

I rode my bicycle throughout Queen Anne looking for opportunities. This home was originally listed for 1.85 and I waited until they started to drop the price. Before accepting my offer of $1.6M, the listing agent wanted to walk through my home to ensure that it was desirable and ready to list. They gave me one week to list my home, 20 days to drop the financing contingency, and 45 days to close.

How did you finance this deal?

Conventional, using proceeds from the sale of my current home at the time.

How did you add value to the deal?

I am still adding value. Removed the colonial landscaping in favor of Pacific Northwest Native garden, converted the basement into a rental, and will remodel the top floor in a few years before either selling or renting the entire property as a triplex.

What was the outcome?

Due to covid restrictions, I moved my family to our family cabin in Leavenworth, WA to make it easier for agents to book viewings and comply with covid restrictions. I commuted from Seattle to Leavenworth and back several times per week for work (3 hours per day). I would up dropping all contingencies on the new home before actually securing financing and nearly lost my 30k deposit. I closed my current home and funded my future home within 48 hours of the closing deadline.

Lessons learned? Challenges?

Fight for what you want and be willing to do the mental calisthenics needed to keep a deal alive. I explored every possible option, and had to account for both COVID restrictions and the impact protests were having on the market. At one point, the selling agent relisted the property because she didn't believe that I could pull it off. We wound up going head to head with their agent and their managing broker to get them to honor the terms.

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

Yes. PM me if you are interested in contacts.

Post: BRRRR Method Financing Question

Chris StephensPosted
  • Investor
  • Seattle, WA
  • Posts 12
  • Votes 6

Thanks, Brandon, this makes a ton of sense. I was wondering if I could use my HELOC instead of hard money (where I'm essentially the hard money lender) to avoid the cost of a cash-out refi. I couldn't find any information on how the HELOC would play out with this type of scenario. I can't thank you enough for explaining this so clearly. Thank you for the offer to message you with questions, I will likely take you up on that once the dust settles on my current rehab project. Which, is one for the record books (the last drug house in a neighborhood that is trying to shake off a 30-year reputation).

Post: BRRRR Financing Question

Chris StephensPosted
  • Investor
  • Seattle, WA
  • Posts 12
  • Votes 6

Thanks for the feedback and the resource, I’ll check out the financing guide!