All Forum Posts by: Emily Beatty

Thanks for your replies everyone. I think I'd be more willing to throw the PM a bone if this was the first issue we'd had as of late. But it's kind of been one thing after another for the past 3 months and seems like they are having general "Growing pains" and a lack of communication amongst themselves with several new employees. I will certainly be having a conversation with the owner of the company about expectations and whether or not they feel they can continue to handle the properties that they manage on my behalf. 

Looking for advice. A property manager replaced a water heater at a single family home that I own in Kentucky without my permission. I found out about the replacement on the monthly statement summary from the management company. This monthly statement had no description of the work completed and I had to specifically ask what the charge was for. Only to find out that the property manager replaced the water heater without notifying me about any issue with it in the first place and without asking me if that was the preferred route of remediation. The water heater that was replaced was installed brand new in August 2019. The agreement between myself and the property manager states that any repair over $250 will be discussed with me before any action is taken. Now that the water heater replacement is already completed - how do I move forward with the property management company regarding this situation? 

1 - they violated our agreement regarding how repairs are handled 

2 - the water heater replacement was already done - so now what? 

Spot on @Andrew Kougl. Purchase (67.5K+3K to close) + rehab (15K) = total invested $85K. Planning for a cash-out mortgage for 80% of 95K - about $76,000 returned. 

Thanks @James Wilcox! I will definitely keep that in mind for the future. 

@Andrew Kougl - I don't think quite high enough to be a 100% BRRRR. I call projects like this one BRRRR "light". The neighborhood values are on the rise but still not great. The last duplex that I bought in the area appraised at around $85K before a complete renovation. I'm targeting a $95K ARV and leaving about $9,000 in this duplex. Not too bad - but certainly room for improvement :)

Thanks @Brandon Sturgill - it will do pretty well with monthly rents at around $650 per unit (total $1300 per month). The asset appreciation in this area isn't as high as other cities in central KY (like Lexington) but it is still a great buy. I was glad to help out the owner who needed some money quickly as well. 

Investment Info:

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

Purchase price: $67,500
Cash invested: $85,000

Duplex purchase direct from Owner.

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

Needs some improvements. Will have high cash flow for the price point. Own another property nearby.

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

Tipped off by a wholesaler.

How did you finance this deal?

Cash with intention to mortgage the property after tenants are in place

How did you add value to the deal?

The owner needed to sell quickly for cancer treatment costs so I did cash to expedite the sale. I split cost of new A/C & furnace on both sides with seller. I will improve the vacant unit to bring up to market rents.

What was the outcome?

Have a cash flowing property that will have many of the major capital expenses taken care of already

Lessons learned? Challenges?

Buying from afar can have some extra challenges if I don't have multiple people doing walk throughs. Definitely a few unexpected things that were seen after tenant vacated that were not anticipated repairs. All in all it will be cash flowing property but a little more money into repairs than hoped (shocker!).

Have you considered buying a duplex or a property with an accessory dwelling unit in the Bay Area and living in one unit and renting out the other? This would make a great first option if you know you'll be in the area for more than a couple of years. You will have home equity growth quickly and can eventually dip into that to buy elsewhere at a lower point of entry. If you're willing to go up to 80 miles away, consider a property somewhere like Sacramento where home values are rising quickly and the point of entry is still pretty manageable. 

Great news for Bay Area home owners and investors alike to get a little more bang for their buck before moving to a jumbo loan. 

You're on your way @Brandon Castillo! A house hack is a fantastic start and you'll be miles ahead of the game by doing that alone. As other's have said - using the 1% rule is a good barometer for a great deal in most cases. Lexington is a competitive market for investors. Kudos for getting a deal that most certainly will pay you in appreciation - even if the cash flow may not be substantial at the get-go. Rents will go up over time and so will the value of the property.