All Forum Posts by: Deborah McLeod

 The house happened to lend itself well to dividing it.  If you imagine a hallway down the middle of the first floor separates two beds and a bath from a kitchen/living room/and staircase to upstairs/two beds up and 1 bathroom up. So 1st unit would be front of the house plus the upstairs 2 bedrooms and bathroom.  2nd unit would be the hallway, 2 bedrooms and bathroom on the back of the house on the first floor.  Would have to create a door to close off the opening from the living room to hallway of course. Then 1 bedroom was converted to a kitchenette/living room, so basically a one king bedroom, bathroom and kitchenette/living room with a french door to a deck.  The basement had a side door to it that also went up two stairs to the front of the house. So installed door and closed off kitchen entrance so side door is forced to enter into the basement only. Basement is a studio with a fireplace (electric), a beautiful full kitchen with island with dishwasher, king bed area with walking closet (space stolen from the mechanical room), huge bathroom with custom tile and glass shower and heated floors in all 3 bathrooms in the house. 

Now the doors are not installed between the three spaces, the 2nd bedroom on the first floor has the kitchenette removed, still walks out to the deck through french doors, but it's a queen bedroom now, the huge 3 space parking lot and turn around in the backyard was already poured, so parking won't be a problem if a wedding party or something books the house. 

Of course, my concern is how to rent a 5 bedroom, 3 bathroom, finished basement house and not have parties tearing it up. YIKES.

 I am not. I have a home of my own out in the country in Bruce twp, Michigan.  I wish I had known about house hacking when I bought my first home!!

I actually have a home in the countryside about 1 hour north of Royal Oak in Romeo, so no, will not be a house hack. This is a picture of the new airbnb house before I started updating it. It has been a joy to design, despite all of the problems. It was built in 1940 and has a ton of original detail. The neighbors have been so great and patient through the mayhem of dumpsters and PODs storage units that were supposed to be there for a few weeks and instead have been there for 3 months! Here is the before picture of the front of the house.

Here is a peek at the backyard space. There will be four main areas including a hammock under a huge oak for reading, a firepit surrounded by Adirondack chairs, a patio sitting area with lights draping back and forth, and this little dining spot. 

Still a work in progress, but starting to feel like a sweet little cottage on the park. 

Well, a lesson learned. The city of Royal Oak approved me for rental permit that I applied for that said 3 units and cost $100 extra. I was told because my new house was not a multi-family (no separate meters, addresses, etc) that I need only state that its a single family home rental and they returned $100 of my application fee. I then submitted drawings to the City and of the house divided into 3 apartments. Each has its own kitchen, bathrooms, bedrooms, living rooms, etc. 3 car parking lot in the rear of the house. Got approval very quickly and jumped right into demo and rehab. After spending a fortune and having multiple inspections, I had the City tell me that I had a stop work order placed on my project because its not an area that is zoned multi-family. I made my arguments that I checked with the city before buying the home, got a rental license approved and drawings approved AND passed a series of inspections, but alas, I had to rip out the kitchen I put in on the 3rd unit on the back, unplumb the gas line and water lines and drain lines I just paid to have put in... well, you get the picture. I thought I did everything right. Lesson learned, except what would I do differently next time?... I guess specifically ask someone to show me the planning drawing and prove to me that I am buying and rehabing in a multi-family zoned neighborhood. It was a very costly mistake. I will create a very production whole house airbnb out of it. The city needs bigger units for weddings and funerals etc. So I know I will have reasonable demand for stays, but ouch. What an experience. Many recommended that I sue the City. I love Royal Oak, I want to do business there, I want to have a great relationship with the City. At the end of the day, Royal Oak has its plan and it has grown beautifully because of it. It is just one of those things that happens. I am moving on...rehab should be done in 3 weeks, get it on the market and start recovering my investment... I am excited about how it's turning out. I will post some pics when it's done. 

I am self-employed. I do not have 2 years of income history for either of my multi-family airbnbs. (only 6 months on one and none yet on the new one.) 

Is there any advantage to letting my one long term renter stay an extra two months to create a history of 12 months of renting to her? I was going to not renew her lease which ends in October so I could re-hab into airbnb suite. But is there an advantage to wait 2 more months and have a 12 month history of rent for the 3 unit house? The other two units have been airbnbing really well, but not enough history to do me any good.

How do I get out of a hard money loan as fast as possible when I can't do a conventional mortgage? Are there investors out there that are willing to loan for a 5% return over 30 years considering bonds are terrible right now?

I am in the process of separating the house into 3 units. My realtor found me a heck of a house for easy dividing up into 3 units. I will have 2 one-bedroom suites and 1 two-bedroom suite. All will have a kitchen. Hoping to continue my prior success by spending more to be only a few steps from main street. Here's hoping!

Thank you, Dmitriy.  Funny how the littlest bit of kudos or encouragement will shine a light on the whole day! Thanks for taking the time to reply!

Just completed 2 of 3 unit rehab in Royal Oak Michigan. Airbnb for Suite 1 and Suite 3. Suite 2 is currently long term renter until October. Then I will rehab Suite 2 also. Airbnb has been a game-changer for investment for me!  I have not had anyone not pay even during COVID. The two Airbnb are cash flowing very well. It has been good to have the long-term renter as a safety net also. Joining the Metro Detroit Airbnb Owner's Guild has been the smartest thing ever. Lots of experience and cautionary tales come from the monthly meetings!

Time to find another house to buy!

@Nate Marshall

Do you have to have the LLC in the state where you own the rentals? In the state where you live? Why do so many people use Wyoming?

Investment Info:

Single-family residence fix & flip investment in Ferndale.

Purchase price: $90,000
Cash invested: $68,000
Sale price: $230,000

Complete train wreck of a house, but beautiful bones, city of strong growth.
Loved working on this one!

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

The worse it is the more I like the challenge and the more room for ROI

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

Realtor brought it to me, knew I would love the house and make a good return.

How did you finance this deal?

Cash for house, cash for repairs.

How did you add value to the deal?

Updated by converting fourth bedroom to a dining room. Previously was only an eat in kitchen. The house was so big, it just made sense to make it livable for a family which to me means dining together in a nice space. Put a barn door on entrance to laundry room from kitchen. Improves the kitchen experience and who doesn't love a barn door?

What was the outcome?

Great ROI. Fun project. Trouble with contractor. Can't expect everything to go right!

Lessons learned? Challenges?

I would never hire a construction crew that is a "real" construction company for a project so big. He did a great job on the flip before it, but it was half the size. I think this project was beyond what they could manage.