All Forum Posts by: Derek Wheeler

Hey guys! I have been interested in out of state investing recently and settled on the Columbia, MO market. I was hoping to connect with anyone that is currently investing in that market. Thanks!

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Juan congratulations on digging yourself out of the bad debt and fixing your credit score! Thats going to be really helpful getting approved for a loan if you decide to go that route for your first rental.

I spent about 2 years reading/listening to podcasts before I got my first deal. I eventually found a great deal on the MLS and asked a family member if they wanted to partner up on it. Since I found the deal and negotiated the price, they helped with the capital for the purchase price and rehab. I ended up making about 35k on it and used that to buy 2 rentals! I believe its all about momentum, it will always be scary getting your first deal but once you get the first one out of the way, you learn so much from the process and become even more motivated to keep moving.

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@Dave Skow I wasn't even thinking about the loan side of it! Yes I was planning on getting a conventional loan 25% down. Thanks for your help!

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Quote from @Karissa Sampson:

One risk would be that if you rent it out as separate units and the city finds out, they could shut you down. No reason for the city to find out really unless your tenant or a neighbor gets pissed off and reports it, but its a risk you run. If they allow you to go through the permitting process and renovate it to code, it will probably be more costly to do so if this is an up/down duplex with the downstairs being a basement vs a side-by-side.

Also, consider utilities. If its an illegal duplex, more than likely the utilities are all shared and you will need to pay them as the landlord and incorporate that cost into your rent. You'll also have to figure out how to deal with tenants who abuse utilities (leave water running, crank the AC/heat, etc.) because the cost will be yours to pay.

Check your city and county zoning for the property. If the zoning allows for multifamily, then even if the property is still technically a single-family, then there is the opportunity for you to go through the correct channels to legally turn it into a duplex. If that's the case, you'll need to decide whether to approach the city right away and see if they will work with the arrangement you already have or if they will force you to tear the drywall and everything out so they can inspect from the beginning ($costly$)

If its zone single-family only in an entire neighborhood of single family, then the city zoned it that way for a reason and will be unlikely to approve a spot zoning change for your property. If there are multifamily/mixed use zones nearby, you will have a better chance of getting a rezoning application approved.

Are you planning to live there? If so, can you make the other half of the duplex a legal ADU to rent while you occupy the property? (although commonly you will not legally be able to rent both units, main and ADU, both out once you leave the property)

Do your numbers still work if you can only rent it out as a single family? What kind of individual or family would want to rent it out as-is?

During your due diligence period, you can bring this up as part of your inspection objection and ask for seller concessions/lower price etc. because its not a legal duplex. However, if the market is hot enough, it might not matter that its illegal (doesnt matter to people in my area, they'll cough up the money)

Or you could say, screw it all, and just rent it out as if its a duplex.

This was super helpful insight! This is an up/down duplex and after speaking with the city it would cost about as much as the purchase price to get it legally converted to be a duplex. This property is in a different city from me so I would not be occupying it and the numbers do not work as a single family rental so I think the best plan is to pass on this one it seems like too much risk for too little reward. I cant thank you enough for your help!

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Hello!

I am currently under control on a duplex in Arizona and I came across information that I am concerned about. The property was originally a single family home converted to be a duplex and was never permitted to be so. I was curious what are the possible risks I may run into once I close on this deal?

Thanks in advance!

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Hello!

Thanks in advance!

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Welcome to Arizona Caleb, I am also interested in the Kingman market! A couple months ago I flipped a mobile home out in Kingman and it seems like there is a lot more opportunity to keep doing that from my experience. I would love to connect more with you and see how I can add more value!

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@Dmitriy Fomichenko Thank you!

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Investment Info:

Mobile home fix & flip investment.

Purchase price: $21,000
Cash invested: $44,000
Sale price: $116,100

This is my first flip finally have it under contract for $116,100!! At the beginning of the project, I had projected the ARV to be around 80K - 90K but the huge increase in home prices this year has helped me get an extra 20k in equity. This has been a huge learning experience for me but I am proud of the results.

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

At first, I bought the property to turn into a rental but I also ran the numbers as a flip and turns out I would make a nice profit on it. I am glad I ended up flipping instead because I am interested in moving the capital into multifamily.

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

I found this deal on the MLS listed at $28,000 and I had the listing agent represent me as well as the seller. This helped me negotiate the price down to $21,000 when originally the seller didn't want to go below $27,000. It wasn't a huge difference but it helped me with my negotiation skills.

How did you finance this deal?

I financed the deal all cash with a partner.

Lessons learned? Challenges?

A huge lesson I learned was to delegate the tasks that were taking up too much of your time to focus on the more important tasks.

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@Account Closed Thats what drew me to these manufactured homes! The price range in this area is 20k-40k for fixer uppers and I am able to take my time working on the property without sitting on a mortgage payment! I am hoping this will be a good way to build more capital to start investing in multifamily!

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All Forum Posts by: Derek Wheeler

Derek Wheeler has started 5 posts and replied 13 times.

Post: Out of state Investing - Columbia MO

Post: Whats the story of your first deal?

Post: SFH converted to a duplex advice

Post: SFH converted to a duplex advice

Post: SFH converted to a duplex advice

Post: What are the risks??

Post: Kingman AZ Questions???

Post: My first flip under contract!

Post: My first flip under contract!

Post: My first Real Estate deal (Fix & Flip)