All Forum Posts by: Cody Kauzlarich

@Johnny Mack yes, we both work Friday, Saturday, Sunday night from 6:30 PM to 7 AM. It is rough on the social life, but we have a nice routine of breakfast Sunday mornings before church at 8. If we both work part time we can continue to cover our own expenses. I basically want to get to around 80-100k to properly execute BRRR strategy. The model SFR we look at can typically be completed all in around 75-85k with an ARV of 100-115k. So if we had 100k cash on hand or say our duplex paid off(to use a HELOC), we could purchase a property for 60k, rehab for 20k, have it appraised for 100k and then finance at 80% LTV recouping our initial 80k(theoretically). This would allow us to repeat until we had a portfolio to our satisfaction.

My wife won't let the truck go. It is our only real frill and we use it as we do all of our own work on our properties. She works weekend package because of me(which nets us an additional 50k/yr combined) and goes along with all of this stuff so its not worth it to me to take that from her to try and save 15k.

Basically, I'm asking if we should pay down our personal mortgage, rental property mortgage, truck, or just try and save cash.

I am going to be completely transparent with my wife's and I finances in hope to get some good suggestions of the direction to go to lead us to our goals. We currently owe approximately 140k on our personal residence valued at 180k, we owe 108k on a duplex that is currently rented and valued at 136k, we are in the process of a flip that should net us approximately 12k that should be finished by the end of the month, I have 12k in student loans, and we owe 38k on a truck. My wife and I both currently work every Friday, Saturday, and Sunday night-12 hour shifts(results in approximately 50k in incentive pay per year between both of us.) We make good money but have basically no flexibility with our full time jobs, but it does give as an excellent opportunity to work on our investments throughout the week and we cash flow approximately 5-6k a month not including our current rental income. We have limited savings since we recently purchased both of our investment properties but we have our personal emergency fund and rental property reserves in place. We contribute enough to our 401k's to get our top employer match. I would like to continue to grow our portfolio to a point where we can both go part time and off of weekend package, which would allow us to have an incredible amount of flexibility with our W-2 jobs while maintaining some great perks and benefits. Plus, we both like our jobs, just hate the current strict schedules. As we progress, I would like to employ the BRRR technique with our own private funds. I have basically been given two options to accomplish this, have however much money I need to buy and rehab a property in my checking account or use a HELOC and then refinance with a traditional mortgage to get my initial cash back out of it. My issue is that I'm far better at paying extra on loans than I am at just having money laying around. We currently have basically no equity in either of our properties, and I hate having a car payment. At the same time, we don't owe money on anything with more than 4.5% interest. Should we pay down our vehicle loan, our personal residence, duplex, keep money in traditional savings, or stuff as much as I can in something like a Vanguard total index fund.

I apologize for the lengthy post, but thank you each in advance for taking time to weigh in on this for me. We would like to terminate our weekend package contracts in the next 18 months so I just want to make sure we are on the path to leads to that goal. 

What benefit do you have to not using a realtor to buy? Whether you're an investor or not makes no difference unless you are trying to wholesale. Real Estate agents are free for the buyer, the seller pays all of the commissions. 

Tenants are responsible for all utilities, including water/sewage, lawn care, and snow removal. NOI after vacancy and maintenance $10,180 and Cap Rate is 9.4%.

@Devin Berrian I think they were in a bad position of needing to get the previous tenants out to get it sold, but also needed to get it fixed-rented to pay the mortgage so we just happened by at the right time. And I think that it had been such a hassle is what kept them from backing out. 

My wife and I closed on our first duplex today. I say finally because our offer was accepted about 6 weeks ago and closing ended up being pushed back an entire week due to an estate being dismantled and causing all three children of the original owner(who all live out of state) having to sign individually. But, it was worth the wait I do believe. 

Originally listed for 120k the listing agent was having difficulty getting into the south unit due to uncooperative tenants. Once access was gained the state of the unit was apparently less than acceptable. The tenants were evicted, the unit was cleared out and remodeling had begun. This was over a 4-5 month time period. When my wife and I looked at the property a majority of the remodeling had been completed in this unit and the current owners had agreed with the tenant in the north unit to also do new tile in his kitchen and bathroom, new counter tops, and a new deck on both units without increasing the list price. We negotiated a sale price 108k with all projects completed. The completed remodeling helped the appraisal came back at 136k.

We were able to do 80% LTV over 25 years at 4.75%. At closing today, our earnest funds($1000) and the seller tax proration($3039) covered everything for closing and we walked out with a check for $119. Both units are currently rented at $700/mo and we signed new 1 year leases today as well as collecting all of June's rent with our first mortgage payment of $608 due next month. The $700 deposits for each unit was also transferred to us today.

We will have property taxes of $3400 due in September but I am quite pleased with how this deal ended up working out. 

Just in case you need to one more vote, I'm in for removing all of the bushes. We removed the bushes in front of our own house, built a small wall with a flower bed behind it along our porch. Transformed the look of the house. I also love strict white houses with red shutters and door. Blue would look nice but isn't has period or as catching as the red. 

If there is room in the budget for a porch I think its an excellent idea but even a small, nice perched awning would add a really nice accent and make the front much more 3D(see attached image below)

@Watson Smith nailed it with the granite for sure. The other areas mentioned are within a standard deviation of what you should expect. I wouldn't not hire the guy over an extra 50 bucks to put in can lights or run a new water line. But I would not hire him for charging that much for what your granite supplier will do for free. The place I go through also does a free stainless steel sink and installation when you spend more than a $1000.

I suspect that you will pay more for granite, cabinets and back splash than you have estimated.  

Does his estimates for the header, paint, primer, and drywall include those materials or are those also supplied by you? Those things are inexpensive on their own but will add up quickly. 

If that's the case then your representatives should include an actual home inspector. Neither a property manager or a realtor is close to a replacement for competent home inspector. A home inspector should be able to check wiring, plumbing, foundation, roof, raydon, among numerous other things. A realtor and property manager will walk through and make sure the lights work and that the carpet isn't stained.

Most common options, assuming your offer was based on the contingency of the inspection and not (as stated above) as an as-is property where the inspection is for buyer's knowledge only, is:

1) Back out. If the inspection reveals something crazy and you don't want to deal with it, i.e. mold, asbestos, termites... you can say no thanks

2) Re-negotiate the offer. If your offer of 100k was accepted and you were assuming a rehab cost of 15k and the inspection reveals a 10k foundation issue you can then make a new offer but it will have to be accepted by the buyer and they have the same right as you to say no.

3) Probably the most common is that an isolated something is found, such as a plumbing leak, and then it is either agreed that seller will pay to have it fixed or seller and buyer will split the cost to have it fixed.

The deal is dead. I was just using this as a recent example of how it seems like properties are just on the brink of being a deal worth the risk, but not quite.