All Forum Posts by: Dylan Paul

I'll share my opinion from the lens of someone who is leveraging their W-2 to throw everything, including the kitchen sink, at real estate. I was able to creatively 0% finance my education all the way through my Master's degree. I think the fact you could do something even better (0% financing loses to free all day, everyday) puts you in a competitive advantage. 

But the truth boils down to what your goals are and are you willing to sacrifice the time and effort it takes to complete your degree. If you have a passion and feel you can educate yourself for free, having a strong W-2 will have a wide range of financing options that you could pursue. BUT a degree is just a piece of paper that essentially lines up potential interviews. You still have to sharpen your skills and convince someone to give you a shot in order to actually earn a well paid position. I've networked with many full time investors and W-2's, both have pros and cons. You really need to soul search and decide what avenue is best for you and grind.

Dylan

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Dayton, Ohio.

Purchase price: $69,500
Cash invested: $17,375 (25% down, Conventional 30 yrs @ 4.625%) + $1200 in random odds and ends = $19,375


This is our first rental and is a duplex, 3 bed 1 bath a side. Purchased sight unseen!

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

Stable cash-flowing duplex located less than 10 minutes from Downtown where there are multiple big employers and a large Private University. It is the only Small-multi in a neighborhood of Single Family homes. Tenants have been in place since early 2017 and are related to each other.

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

Automatic email from our criteria set up through the MLS. It was in a neighborhood we had driven multiple times while driving for dollars. We ran the worst case numbers and decided to pursue the deal. We were aiming for positive cash flow of $125 a door with 12% COC after 10% property management, 15% CapEx/Repairs, and 8% Vacancy.

How did you finance this deal?

Conventional financing, 30 yrs @ 4.625% with 25% down.

How did you add value to the deal?

We negotiated repairs from the seller to cover most of the work required. Rents are currently 15-20% under market value due general deferred interior items including dated carpet, lower quality laminate flooring, and paint. The previous landlord did not implement any routine rent raise schedule.

What was the outcome?

90 days in we've been extremely happy. There have been minor issues and tenant training in regards to communicating via the property manager so all parties are involved (my personal number was given to both tenants by the selling agent and they tried multiple times to circumvent our management team by contacting me directly for leasing, repairs, etc).

Lessons learned? Challenges?

The biggest challenge is being patient to recoup the 25% down payment as we're ready for the next deal already :) We feel extremely fortunate to have a property manager on board that has been very approachable and receptive to our goals. 

What's next?
We plan to continue to save approx 40-50% of all W-2 earnings to purchase a house-hack duplex. 

@Josh Rowland seller financing is the "sweat equity" financing if you will. Basically you apply the "everything is negotiable" mentality and agree to have the seller act as the bank for you. But I'm sure everyone who has every executed this will probably agree it depends on your ability to build relationships. Read about it.

And I mail market currently with a combo of a couple of different letter prompts and post cards. If it's in your comfort zone it's a way to generate "leads" if you will but the catch is only you know about that particular property. I'm on my 4th month of it and I'm getting into houses that aren't on the MLS. I'm only marketing to about 300 identified properties in some local zips but I'd like to scale it soon.

@Nick Rutkowski bad business on their part all around and overall, pretty short sighted. Their track record will catch up and I'm sure they'll notice a trend of silence when they make future offers. Good luck in commercial ;)

@Marcus Auerbach I almost imagine Betty White showing up with a tray of warm chocolate chip cookies ha.

@Caleb Heimsoth the zip codes I'm specifically targeting that ruffled him the most retail in the range of 60-90k for SFR and most duplexes. Given the amount of out of state money snatching up a lot of MLS listings, you'll see some break the 100k threshold. Given the price range, you're right, not exactly what's rolling him out of bed every day. I recognized that and it's okay for that not to be motivational for him. No hard feelings and it was best to call a bad fit just that.

@Sean Tagge Sounds like quite the success. Do you contribute both the appreciation and increased rent to renovations you completed or is Memphis just that strong of a market to increase both in such a relatively short period of time?

@Josh Rowland under the assumption you have other reserves than the 30k, you could get creative and hustle some seller financing or make a move using a FHA loan (assuming you didn't FHA this duplex). Have you done any of your own marketing or are you relying on MLS/craigslist alone?