All Forum Posts by: Andrew D.

I started my investing career working full time after a layoff of most of 2010.  As a union construction worker I have for many years watched the ups and downs of my chosen career path.  One month you're working 60+ hour weeks next month you're laid off.  Decided in early 2011 to start working part time rehabbing and holding rental property.

It's been about 6 years now and I'm still working full time with about 20 SFHs.  My goal is to hold out about 4 more years till retiring from my W-2.  I am in a very good spot now however as far as cash flow is concerned.  If I end up with another long term layoff I don't plan on coming back.

@Al Williamson Thanks for the response I will look them up and get a hold of them on Monday.  I'm just in the beginning stages of this but would like to figure some type of grant or at least a group to rent to by the end of the winter.  The riches are in the niches!

In a recent deal in Cedar Rapids I acquired a large vacant lot along with the parcel the house sets on.  The lot has frontage and 2 separate streets and was able to confirm with the zoning department that I could split this into 2 separate lots and still be able to meet mandatory setbacks.  This was unplanned as it was an estate and I had no idea until several months after closing that I had also purchased the large adjoining lot.  This was a great bonus but now I am trying to figure out the most productive use of this lot.  

I have thought about just splitting the lot and trying to sell the lots off or possibly building spec homes to try and sell.  I'm somewhat against both of these ideas because its and established neighborhood of $115-$135k houses and I'm not sure I'd be able to make much of a profit on these.

My last idea would be to try and find some sort of grant to build long term housing to build 2 houses that meet the specific needs of either individuals with special needs or perhaps disabled or homeless vets?  I know that in the past I have seen grants available for low income housing but I'm not sure if there is anything available for what I am interested in doing?

Sewer lines can be inspected by camera.  Costs a couple hundred dollars.  I've had one house that had a crack that had tree roots in it but otherwise these cast pipes hold up well.  I've had more issues with houses built in the 60s and 70s having Orangeburg needing to be completely replaced at about $4500.  If the water is on to the property ie not foreclosure, you can easily determine water pressure.  If the water is not on there is some risk there.  If the supply from the shutoff at street is damaged or clogged your looking at about $1500.  You can have water pipes pressurized to check for leaks.  From my experience with foreclosures they don't get winterized until after the first winter of the house being abandoned.  This means the pipes have already frozen.  

When I have water turned on the these old 2 stories I have a process.  I make sure there is a good ball valve on the metered side then have the water department turn on water and close the valve.  Then I go in with a helper.  They stand in the kitchen while I crack the valve in the basement.  Then they look at kitchen sealing and watch for rain.  Usually the 2nd floor bath is above the kitchen and I have yet to find a foreclosure that doesn't have a burst pipe in the kitchen ceiling.  Now this is not an expensive fix once you've located it but there will be plaster that needs cut out and repaired.

The electrical could be an issue.  These houses most likely had the plumbing and electrical added after house was built.  Sometimes the knob and tube has been replaced and sometimes not.  I've only had a couple electrical issues and they've all been minor.  Overall I've had good luck with the older houses.

As for cash flow personally my best cash flow is from the older neighborhoods.  Wellington Heights and Mound View have the cheapest houses to buy but they have there stigmas.  You will have people that won't even look at them based on the location.  Mound View you can potentially rent to college students though.  I think the next step up would be around Daniels Park, near Penford and over by Harrison Elementary.  These houses aren't as dirt cheap but people aren't scared living there either.  Also easier to sell to first time home buyers.  What I like about these areas is they are in close proximity to large industrial plants with many good paying jobs.  Lots of their employees are looking for housing close to work and most of these people work a ton of overtime so they can usually afford the place.  I'm sure there are other areas of Cedar Rapids that cash flow well but these are where I've had the most luck.

In my experience its been difficult to find newer high cash flowing properties in our market.  The majority of my houses are 100 years old.  I buy them distressed and fix them up and rent them out.  After the rehabs I really haven't had many problems and they all cash flow very well.  With newer houses its hard to find properties under 100k that then rent for 1050 to 1200.  On the other hand my Wellington Heights houses rent for 900 to 1000 and I have significantly less money in them.  One has been rented ever since I bought it 4 years ago to the same people.  I've found that the 4 bedrooms don't cost that much more but the tenants tend to stay put longer.  Of course my advice to any starting landlord is to screen your tenants very well.  I know that it is unnerving having a rent ready house sit empty but but getting unqualified tenants in there will cause problems in the long run.  Best of luck.  Any other questions feel free to ask.  I know the Cedar Rapids market well.

@Melissa Mullane When I first began buying SFR I focused strictly on getting the most reasonably priced homes and they ended up being predominately Wellington Heights and Mound View. As I advanced in what I could afford I stopped buying in those neighborhoods but have not sold the 5 rentals I have in those neighborhoods.

The CoC on these houses are phenomenal and they cash flow ridiculously well. I have had good luck keeping them rented with quality tenants but you do have to take your time finding a qualified tenant so that might mean a month or 2 of vacancies between tenants. I also believe in diversifying my investment portfolio so it only makes sense to have houses in all different areas of Cedar Rapids.

One thing to note is that a good portion of that area is deemed a historic district.  That means that you cannot alter the exterior of the house ie install vinyl siding or vinyl windows.  Most exterior remodel work needs to be approved through the historic society so you have more hoops to jump through.  All in all I don't think its a bad area to start investing with limited borrowing ability but I wouldn't invest solely in that neighborhood.

@Tanya Smith I have houses in Cedar Rapids including Wellington Heights. The 4 houses I have in this quadrant require  little more work to get rented to good tenants but the cash flow is great! I have one on the 1600 block of 2nd Ave probably very near the one you've been looking at. I bought it in the low 40s put about 10k into it and it rents for $990 a month with me keeping half the 2 stall garage. It's possible to find great cash flow and it's not really horrible neighborhoods just the worst in our area. One thing you'll need to find out if it's in the historical district. If it is you'll have to deal with the historical society for any exterior renovations and cannot vinyl side or put vinyl windows on the house. It's kind of a pain.  

Welcome @Lynnette Wissink! I am a Cedar Rapids investor as well. I buy distressed sfh and rehab them for rental properties. I've got one closing today on the NW side. 

Appliance repair can really cut into a landlords cash flow.  In that case I would probably expect at least $150 for the repair unless its super easy.  I've heard good things about Lampe Appliance but have never used them personally.  Generally I've found that if you find one reputable company and continue to use them they'll be more prone to wave some of those show up fees.

As far as new appliances are concerned, I've been using Lowes.  Not sure what they charge to install a new dishwasher but they install Fridge and stove's for free.  There 4th of July and and Black Friday sales are the best most rock bottom prices I have seen in our market.  You can usually pick up a quality Whirlpool in white for $249 and stainless for $299.  Sign up for their pro card and get an additional discount.  It might be a good idea to pick up a few of these (depending on how many units you have) and keep them in stock and have yourself or  your handyman throw them in as needed.  That way your not just sinking a bunch of money into something that might be close to the end of its life span anyways.

@Dan Jones  I haven't done a lot of research on turnkey companies, but in my mind they sell you a rented property with property management in place.  That way if you are an out of state investor you can (supposedly) rest assured that you've got someone boots on ground where you've invested doing all the landlord/ property management duties while you collect a check.  Truly passive income.

If you are planning on investing in Cedar Rapids and investing here to couldn't you just buy a rehabbed rental property with tenants and then get one of the area property management companies to handle all the headaches?  It actually might save you some money as the turnkey companies are selling you a full package.

There are landlords such as myself that for some reason have decided to scale back or change directions in their investing and would be happy to sell a couple of properties with good tenants in place.  Networking with the local real estate groups and just talking to friends and coworkers about these things is a great idea too.  You never know who those people know.  Feel free to pm me if I can be any help!