Hi everyone. I returned to Charlotte in 2014 following five years of service as a Captain in the Army. Having grown up in Charlotte, I am very familiar with the city and all of the different areas. I was blessed with the opportunity to pursue a career as an investment professional with an investment firm in South Park. At the same time, I began an MBA from Duke University that required me to attend classes on weekends (tough when you have a 2 year old and 4 month old)! My goal is to use as much of my W2 income to invest in building and growing a real estate business that thrives. I never do things half way... so I have set the lofty goal of building a $100M+ portfolio. However, as a Soldier, I took great pride not in individual accomplishment, but in sharing accomplishments with others. For that reason, I've decided that I would like to partner with one or more other investors of like-mind but unique skillsets.
My first deal:
- My wife and I moved to Charlotte knowing that we wanted to live near uptown. We found a neighborhood that is in the early stages of redevelopment and home prices are still affordable, yet I could still walk to a Panthers game or the Music Factory. We closed on an incredible house that was completely flipped in 2010 using a VA loan (0% down with no PMI) for $103/ft2 and lived in it for two years before deciding to move a little further out of town so that the kids would have a yard and some room to play. During those two years, I was very active in working with the city and private investors to improve the area. We received $75,000 in grant commitments from the city and are in the process of winning a Smart Neighborhood grant that would make the neighborhood the model within the city for smart technology such as LiFi. All four homes that were boarded up and falling apart when I moved in were either rehabbed or torn down. Crime rates have plummeted and a developer recently began building new homes and listing them for $212/ft2, more than twice what I paid per foot. Since August 2016, we've been renting the home for $2340/month (our mortgage+tax+insurance is $2022/month). I realize that this isn't great considering that I have maintenance costs, etc, but rent is appreciating rapidly in the neighborhood and I expect to raise it to $2450-2500 by next year and $2600-2700 the year after.
Our new home:
- We had access to a HELOC at Prime (3.5% at the time) and bought a home in the Gilead Ridge neighborhood in Huntersville. We picked the house with the ugliest paint job, oldest appliances, awful countertops, and fixtures. Initially I ran the numbers on the home intending to live in it for a year or two and move out. We painted the entire interior of the home a cool grey that any renter would like and remodeled the kitchen ourselves by painting the cabinets, adding new hardware, and having granite installed (total cost of kitchen was about $10,000). We got ridiculously lucky when I found out that the home had been advertised as 200 ft2 less than it really was, so they sold us a home thinking it was 2400 ft2 when it was really 2600! Instant $20,000 profit margin! Long story short, we fell in love with the neighborhood and now we've decided to keep it as our primary residence for at least 5-10 years. I just refinanced the home with a conventional 30 year mortgage at 4.365% at $290,000 (we paid $252,000) and got 80% of the cash back out of it = $232,000 - closing costs. Paid back the HELOC and now have about $300,000 available to pursue some deals!
What do you guys think? Basically I invested $0 in the first home and $0 of my own money in the second one too. I ran NPV based on conservative estimates and assumed I liquidate each house after 15 years of ownership. Home 1: +$65,767 NPV. Home 2: +$64,882 NPV.
