All Forum Posts by: Dane Kania

Hello,

I have been building a relationship with my neighboring duplex owner. I bought my duplex last year as a house hack and am looking to acquire a new investment soon. It was brought to my attention that she may want to part ways with her duplex for own personal reasons. She is willing to do a seller finance on the property and is open to ideas. Obviously, both parties need to win in this situation. My duplex was bought about a year ago and only needed a few grand in repairs. Hers on the other hand needs a bit more attention.  I have never done a seller finance deal and am looking on input of how to structure it. What are some best practices you all have experienced when negotiating these terms? 

A few details:

-Both her and I's duplex are identical. 

-Mine yields $2500 a month in rental income. 

-Her mortgage is $1,000 a month

-I bought mine for $325,000. (Mostly renovated) Hers would probably cost around $15,000- $20,000 to get it up to par with mine. 

-I am a realtor and bought mine FHA 3.5% down (used 3% commission into down payment)

Any ideas or strategies are highly appreciated!

Investment Info:

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

Purchase price: $328,000
Cash invested: $11,480

2 bed 1 bath side by side duplex. Both have large private patio. One unit also has large fenced in backyard. One unit is rented for $1,250 and the other will rent for $1,300 once I move out) Will cash flow around $150 once I move out.

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

I wanted in to multi-family investing. At the time of the deal I still held my former W-2 paying job while just getting my real estate license. I figured it would be a perfect time to utilize a traditional loan while my income, credit, and debts were in line. I knew once I left my job it would take me at least 2 solid years of being a realtor to get a loan. So I took action. I found the deal on the MLS, represented myself as the buyer with my new license and successfully closed the deal.

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

I am a local real estate agent and used a hotsheet for multi-family searches. I represented myself as the buyer using all commission towards the down payment.

How did you finance this deal?

FHA 3.5% down

How did you add value to the deal?

Covering most of down payment with agent commission. Also, we are doing minor cosmetic upgrades to our side of the duplex (paint, new carpet in bedrooms, light fixtures) to keep up with higher market rents.

What was the outcome?

Live for less and cash flow once moved out.

Lessons learned? Challenges?

Finding the right tenants makes managing much easier. It was a good first approach on getting into investing. Next unit will most likely be bought through a wholesaler to make the deal strengthen.

Thanks for all your help. Yes, I should of been a little more descriptive in the rents. It's an up and coming area in the valley and rents are increasing. I could most definitely rent each unit for $1100, if not $1200. One side will be completely remodeled before closing. They are working on it now. New carpet, new countertops, brand new bathroom, fresh paint. etc. The roof was done a few years ago. new water heater in remodeled unit. Water heater a few years old on older unit.

Let's say I get the short end of $1100. That's $2200. Mortgage to be $2050, leaving me $150 per month. I will be managing the property. If I can get $2400, that would leave me $350. Per my lender, my PMI would fall off around 20% equity and drop around $220 putting more cash in my pocket.

From a lifestyle standpoint I would live less then I'm paying now for 8 months to a year. And, after renting both units, the mortgage and expenses would be covered with  some cushion on top.

Hello,

Here is my situation. I just  became a real estate agent a few months ago. I also work a W-2 job that allows for a loan program. I will be leaving this job soon to focus on my realtor business. I've been holding onto my W-2 income simply for the allowance of getting a home loan and realize once I convert full time 1099 my chances of getting the loan decrease significantly. I want to take advantage of my financial history and climbing credit while I have it.

I have been aggressively searching for my first multi-family unit property and live in the Salt Lake City, Utah market. Being fairly new to

the real estate world and am trying to leverage my license on this first deal by using my commission for the down payment. I've wrote offer after offer and have been beat out by stronger offers. Most mutli-family units are under contract within a day or two here in this market, at either asking or over asking.

The good news, I finally won. I was able to lock down a duplex over the weekend. It's a 2 bed/ 1 bath side by side legal duplex. One unit is fully gutted and is under a full remodel while the other has a month to month lease that has been in place for 5 years at very low rent. We are wanting to house hack this first property by living in one side and renting out the other for 1 year per FHA owner occupancy rules. Then, move out and do it again.

The contract breakdown:

Sales Price $325,000

Duplex: 2 units (2 bed/1 bath) one side completely remodeled.

-Fenced in yard per unit, roof 5 years old, new water heaters within a few years

FHA 3.5% down (3% of that coming from sales commission)

Rents: Local rents vary from $900-$1200

Mortgage: $2050

I understand this deal will not produce that much cash flow in the short run (Once I convert more equity in the unit I can drop PMI to increase cash flow) Remember, this is my fist deal with little to no money in which doesn't produce a strong cash flow standpoint. What do you guys think about all this? Do you feel like it's a good first opportunity? Or is it to risky because it doesn't produce that much cash flow? I know there are other options like hard money and BRRRR. I want to use those next. I am just trying to take advantage from a first time homebuyer and house hacking.

@Amy Kendall thank you for the insight! That's one thing I'm struggling with. I feel like I can excell my realtor business if I was full time. However, bills don't care about giving you time to build that business. Hence, keeping my W-2 job for a bit. It's super exciting finally leaping into the all things real estate! And agree with you on the potential it has for ones family! I see your a Utah local? Maybe coffee sometime. I would love to hear your strategies!

So, I'm a new agent to the salt lake area. As we all know, being an agent can provide many advantages to building your investment portfolio. I'm currently working on my first live in flip and looking for strategic moves to fund my future deals now being on the front line.

My question for all you Realtors out there, what are some creative ways you've used your license to help fund deals? Example: used buyer commsion as part of down payment, negotiated commission out of sales price, tax benefits, etc.

On another note, I'm a NEW agent and still hold a W-2 job while I build my agent business. Should I get into a property while I still have verifiable income over the next few months? I'm open to all suggestions!

I am fairly new to real estate investing. I am currently working on my first investment property. However, as a lot of new investors I came in sort of blind. I am hoping to share my current situation with you and receive back some possible strategies to help make this first property work. The original plan was a "live in flip", with the goal of completing our project in 1 year. So here are the details:

The house:

4 bedroom 2 bath

2,400 sq/ft

Purchase Price: $281,000

Private money for down payment: 20% ($56,200)

Market trend: Average appreciation per year at 5%

Estimated full rehab: $30,000 (ballpark)

Completed rehab comps in area: Highest comparable was $360,000

Friend and I get private money from his parents for down payment. Both, very grateful for the opportunity considering they don't expect a return, but only their original investment back to help us get started. They also supply a line of credit for the rehab. Being new to investing our "house hunt" was sub par in terms of a good deal. We ended up purchasing the house at it's appraised value of $281,000 which was about $16,000 under asking price after negotiation. After, talking to a few contractors, we assumed a full rehab would run us around $30,000. We never assumed a big profit off this first project, but more so the experience doing a house flip while making something a few thousand each at the end. 

Now, we are currently working on the house and have only gotten through minimal repairs, such as paint, trim, new windows, some new plumbing etc. (we are working on the basement first as we live upstairs and are planning on switching once basement is complete).  We have a lot of work left to do. However, we are starting to think that this property could make us more money in the long run with a different strategy. I am currently reading Brandon Turners "How to Invest in Real Estate" and came across the BRRRR strategy. We are thinking we want to lighten up on our rehab cost and spruce the property up to get it to good rental standards for this area, while making some decent cash flow on top. Reasons being that, they we could avoid capital gains tax, allow the house to appreciate, and have cash flow coming in from being rented. The house itself was in really good condition despite its outdated features. 

This is where I am confused. How do we get his parents there original investment back? We feel that we have a good opportunity here and understand there are SO many strategies that can be taken. But, are unclear on which one would be the smartest to take. Is a BRRRR strategy possible here to get his money back if the deal wasn't bought at the right price? Or, is it possible for this property to make both, his parents as the private money lender and us the buy and hold investor a return? How could that be structured into a creative deal on both ends? With current financing in place there is opportunity to make a couple hundred each in cash flow per month. 

I'm hoping you all can shed some light on this situation. Please feel free to ask for more information if needed! I look forward to your responses! 

Dane Kania

Mortgage is roughly $1,450. Similar rents are around $2,000 in the area. So definitely some good cash flow opportunity. Average yearly appreciation is about 5%. So, maybe it would be smart to sit on it for a year and save the cash flow from rentals?

I'm sitting here pondering creative ideas to help fuel my early start in real estate investing. I'm curious about home equity. My father owns a home out-right valued around $200,000. It has recently came to my attention that he plans on willing the home 50-50 to my sister and I in the future. Is it possible for him to "gift" a portion of his equity on the home to help fuel an investment property for myself? He has no plans on selling his home and plans on living there the remainder of his life. Please shed some light on this situation. Any advice is well appreciated. Dane Kania

Hello everyone!

So, I am starting the journey of real estate and couldn't be more excited! I should have my license within a month or so. Also, I am currently attempting my first "live in" flip with a good buddy. As all of you already know, and from what I am learning, creative investing is the absolute best way to get started in this field. From that being said I wanted to get some feedback on my current flip to uncover some possible opportunities that I may have not thought of. So here are the details:

I haven't used any money of my own. The house was purchased with a private money lender's down payment of 20% (good buddies father) He also supplied the financing for the flip. It is my friend and I's responsibility to pay the mortgage monthly while we live in the property. Most of the work is being done by us besides plumbing and electric. We bought the home in February 2018 for $280,000 and plan on having it done by January or February 2019. 

We bought a house that wasn't in complete distress. Yes, the grandmother living in for the past 50 years had some unique taste; popcorn ceilings, orange carpet, duck wallpaper trim, etc. It was enough for a full remodel with great bones. We were able to get the seller down about $20,000 from original asking price. The highest remodeled comp in the area at the time of purchase was sold for about $80,000 more than ours. Our numbers are indicating we will spend about $30,000 to $40,000 on renovations. We didn't want to jump into something that we knew we were incapable  of completing ourselves. 

What are your suggestions on flipping it immediately versus renting it out for a year or two? I do feel we will be able to profit off an immediate sell, but will not be as much as we initially hoped for. What would be the difference in Capital gains tax? The goal of this property was to learn as much as possible on flipping, renovation, and selling under profitable circumstances. Any advice is well appreciated!

Dane Kania