All Forum Posts by: Desmond Fielding

@Sher J. A hard money loan was the original plan. I am connected with a local real estate investor who has >50 doors SFH, MFH, STR, and storage units. I help him with some of his properties and he was going to do a hard money loan for 70% of the purchase price. I made the all cash offer and submitted proof of funds being available, but I also am connected with a VP at a local bank and before I closed he approved the cash-out, so at closing the bank did the 70% on a 30yr note and I never took the hard money loan. It worked out well I was able to make an all cash offer to beat out the other offer, but ended up getting the cash-out done concurrently with closing so I only put 30% down and didn't need to come up with all the cash.

Investment Info:

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

Purchase price: $305,000
Cash invested: $90,000

My first multi-family property. I purchased with an all cash offer and then did a 70% LTV cash out refinance. My wife and I will be house hacking and living in one unit while we rent the other. Our plan is to remodel the side we're living in and add another room in the basement so it will be 4bd 2ba. Then we will move into the other side and do the same thing. Once we've remodeled both units we'll move out and get it fully rented.

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

I always wanted to do a multi-family house hack, but my first property was a SFH. I built up capital until this deal came up and the numbers made sense.

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

I found on Zillow then made an all cash offer.

How did you finance this deal?

All cash offer then 70% LTV cash out refinance

How did you add value to the deal?

I will be remodeling and rent proofing both units and adding an additional bedroom in the basement.

What was the outcome?

It's still in process I just closed on the property. I hope to have everything completed in 1-2 years.

Lessons learned? Challenges?

You have to be quit when you see the right property. In my area true duplexes hardly come up for sale. Most MFH are converted from SFH to MFH and the quality sometimes is not good. This property came up on Zillow and I walked through it the next day and made my offer during the walk through. Another offer came in the same day, but I made an all cash offer which helped me be more competitive.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $240,000
Cash invested: $30,000

My first investment property. I bought it 5% down with a traditional 30yr mortgage. I lived in it as a primary residence for 18 months while I remodeled and "rent proofed" the property. After the remodel was done I transferred ownership to my LLC and then moved out and got it rented. It's been a great experience so far and I look forward to adding more properties to my portfolio!

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

I had been researching real estate investing since I was in college and this made the most sense for my first investment right out of college. I was able to only pay 5% down and get better leverage by living in the home while I remodeled and built sweat equity. I would have preferred a duplex, but in 2021 with rates below 3% I had a hard time finding a duplex I could afford as there was a lot of competition.

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

I found it using a real estate agent.

How did you finance this deal?

5% down and 30yr mortgage from the bank.

How did you add value to the deal?

New exterior paint, minimal care landscaping, new flooring throughout, new trim/doors, new vanity/mirrors in bathrooms, updated appliances.

What was the outcome?

I put about $30k into the deal including my down payment. The property has appreciated about $40k and I now have my first tenants in the home.

Lessons learned? Challenges?

I think the biggest thing that helped me was building out my "system" for analyzing properties. I made an Excel sheet that I can quickly run numbers to determine if a deal makes sense. I also built out a pretty extensive system for managing properties so it will be easier to scale in the future. I'd also say its really important to do good tenant screening. I turned a lot of people away until I found the right tenants.

@Richard F. Yes, the whole point is to note anything “wrong” with the property upon move-in so you are not charged. I understand how the checklist works lol I made it myself… however these tenants filled it out and also asked that these small issues be addressed immediately.

Thank you everyone for the feedback! I typed up the post quickly on my way out of work yesterday, so I can give a little more background information now. I require tenants to do an inventory and condition checklist upon move-in and the only things they could find throughout the whole house was a single closet door missing the door stop, one window screen with a small hole, and the light inside the microwave is burnt out. 

I am all for providing a clean, safe, quality place to live and have no problem making these small fixes, but it seemed like they were being very nit picky because they didn't want to leave the condition form blank and say that everything was clean and in order. I didn't even notice these small things myself which is why they weren't addressed. I think I will take care of them, but I don't want to set the wrong precedence with the tenants and have it turn into a situation where they request me to fix every small little thing.  

Hello,

I just got a new tenant into a SF rental. They were great during the phone screening/showing and the background/credit check all came back good. However, now that they're in the home they keep pointing out the smallest details and requesting that they're fixed. For background information - I previously lived in the home while I remodeled it and moved out to rent it and start the process over with a new home, so house is fully renovated with almost every room being updated. The tenant has pointed out things like a window screen with a hole the size of a quarter and doors missing door stops...  am I really obligated to replace the window screen or add door stops to a few doors that are missing them? 

I want to provide and safe enjoyable place to live, but this seems like unnecessary fixes. It would be different if the roof leaked and the toilets didn't flush, but I don't think any of these small changes will improve living conditions. This is my first rental, so I'm not sure the best way to proceed. What would you do if you were in my position?

Thanks in advance!

Who is the loan through? If you have a Fannie Mae loan that was originated after 2016 your mortgage servicer cannot deny a transfer to an LLC assuming certain conditions are met. I just did this with a rental of my own.

Scott, I agree. Regardless of if rates are "high" or homes are "overvalued" they both ultimately lead back to the same point - the cost of owning a home has increased significantly. I think something will have to give eventually whether that's interest rates or home prices. However, I do agree with your point Chris. Time to adjust and learn how to make deals in this current environment. If something pencil's out at 7% then it'll be killing it if you can refinance to 3% down the road. If not, you're still making money at 7% so no harm done. 

@Sebastian Hernandez That is a good point. I still would plan on running a credit check and doing the typical tenant screening process and would have them sign a lease just like any other tenant. Thanks for the feedback!

@Joel Case that is a good way to look at it. I appreciate the perspective!