All Forum Posts by: David McKee

Investment Info:

Single-family residence buy & hold investment in Altamonte Springs.

Purchase price: $257,000
Cash invested: $30,000

Contributors:
Russell Holmes

This is our start to investing! We're(Taylor and I) House Hacking our 4/2 in Altamonte Springs. We did a 'Modernizing" facelift in the first few months of ownership. Now we live for free!!
Big shout-out to Russell Holmes for helping us find the property, and working on both sides as the seller's and buyer's agent to make a win-win scenario for all parties involved! He most definitely went above and beyond and we will be working together for many years to come I'm sure!

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

Lots of podcasts, books, talking to others about the power of Househacking, and after saving up for down payment, building a credit score, we quickly found this diamond in the rough. It's still new at only 2 months, but the freedom in finances this allows us is really amazing, and we feel no negatives of having people in our home! Everyone gets along great!

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

After searching on Redfin for months for a 4/2, (I had my heart set on going bigger to begin with for rent stability, and long term, we can grow in to this house and not have to uproot)I'd always find something I didn't really like, from small lot, to HOA, Price, small SF, too nice, too far gone, there was always something to sacrifice. Russell had this property listed and it was a perfect fit! Even got a back porch which was bonus! We offered 13k under asking and they accepted in a day!

How did you finance this deal?

FAIRWINDS Credit Union, which my spouse works at gave us a great rate, and allowed 5% down on a 30 year. We also get 1% off that rate for as long as she's an employee :), saving us some money and making the househack cashflow. Next we're looking to re-appraise for $500 to knock that PMI off with all the sweat equity and market appreciation.

How did you add value to the deal?

Scraped popcorn ceilings, sprayed and painted the new knockdown texture, new electrical outlets everywhere, added Alumiconns to all electrical because of aluminum wiring, Found Offerup deals on fans/furniture, LED light fixtures everywhere, Patched drywall in every room in the house, sprayed new orange peel texture, painted every wall, new water valves in the house, new kitchen sink, new dishwasher, new real wood vanities in both baths, new granite countertops with new sinks and faucets, new ba

What was the outcome?

After unsuccessfully trying to find quality tenants for 2 months through FB Marketplace, Apartments.com(bought out cozy), roomies.com, I was told about Roomster.com and within a week we had all 3 rooms rented up! Now the mortgage, AND all of the utilities, water, trash, internet, power is covered. Our living expenses are only the food and gas we use.

Lessons learned? Challenges?

Dealing with finding tenants is harder than I thought. I really appreciate the work that Property Management firms do now.
I found out how much I really enjoy working on houses to force appreciation! This was also the first time buying a home, so now we're more comfortable in that space.

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

Absolutely, Russell Holmes went so far above and beyond what any normal Realtor would do for both us as the buyer's and for the Seller's. It truly worked out to be a win-win-win.

This is definitely an intriguing proposition. Generally Turo has been seen as a way to be able to rent high end luxury cars or try out a Tesla for a couple days before making the purchase. Now there is a market, similar to renting homes it seems with focusing on the economy cars. You've got to make sure your insurance is in place to keep you covered, especially with Turo not covering it personally anymore. But as Walter said, if done right, insurance could make your return on investment skyrocket. I'm digging in to this idea, and going to research the ins and outs.

While many are still working, I think the majority are still working, there are plenty of people who will have a very hard time during this crisis. Older relatives deaths may bring homes up for sale that family can't manage or just wants to be done with, those who eventually get foreclosed on, and the markets natural cycle of ups and downs. I'm fresh off Recession proof real estate investing audiobook and a lot of the signs of being in the peak stage are transpiring, not all, but there are indications. I believe in the cycles theory J Scott introduced and we've been in the same cycle for longer than usual, everyone has known for a while. I don't think there will be major KABOOM, I think it will take a year or 2 before we see a big shift because of the process it takes. There's plenty of people wanting to buy and many potential seller's are unsure of the situation so they aren't listing, so prices go higher, DOM goes down etc. I'm personally just settling in to buying my first home and rehabbing to prepare for a house hack, stash cash for the next year or two and be ready to strike for when real deals pop up. I'm a noob but that's my current thinking.

I haven't done it yet but have been thinking of college students for our house hack and so I joined the Facebook group for the local college's housing/subletting/rentals. It's been great to be able to see what others are asking monthly for a room(my competition), and target my demographic for free

What a bear of a rehab! You're learning a whole lot about the entire process with this first one and the next one you'll know what you're up against. Enjoy the bachelor party!

And keep us updated! 

What are the most common types of Commercial acquisitions? As far as office building, warehouse, land, etc?

Thanks for this thread, I knew 1031 was the way to go but I would have had questions just like @Steven Andrews. Thanks for chiming in guys.

This is a great topic, I'm invested in the replies. 

As many have said, come up with what you can live with first and shop for it. For me, in my market, Duplexes are hard to find in an area I would want to personally live in, and the prices on them are higher than I think they're worth. I'm looking more for the SFH with 3 bedrooms to rent. I'll use a 3% loan from the credit union, and have my rent paid for, and possibly slightly profit. My plan is a fair $500/room plus utilities. Cheapish in my area.

In the mean time think about the opportunity cost of them loans. Like someone else said, that money is gone after you spend it on loans. And you will need to pay them off, at least by paying the minimums. But looking long term here, if you pay minimums the first 3 years, you aren't doing any damage to your credit or your standing with those loans. AND you are able to put away money for investments. Within 3 years, if you stay on the course of actively pursuing FI, I know you can have atleast 1 property cashflowing, PLUS you're househack. So you're 3 years deep, you are now making more money than you did at this current date(9/25/2019), you've got supplemental cashflow coming in, your housing is paid for. If you want to knock the student loans down more aggressively, go for it. You've used the opportunity that is in frontof you by making that bad debt good debt. Using OPM gave you the chance to gain this education, make money, get your own properties and now that you're more set-up than many other college grads. It won't be nearly as hard to pay the loan down. And after you do, your financials are even easier in the future. Just my .02 cents.