All Forum Posts by: Eric Lunsford

@Lee Burns I'm fairly new to the group and investing. I live in a pretty small area of about 50k people in north-central Idaho on the WA/ID border. In this area, the vacancy rate is about 0% and SFH are rented quickly. The problem is cash flow is hard to get so the LO is more attractive to me in order to get a bit more CF. It sounds easy enough with having two contracts and I'm sure some renters just won't exercise the option when it comes time but to the landlord that isn't necessarily the worst thing.

Anybody have experience, or even better a track record, of doing BRRRR process with a Lease Option for renters to ultimately purchase the SFH in 12-24 months?

Seems like there can definitely be some unethical ways of doing it, but I myself have been in a situation where I wasn't able to get a bank loan for 3 years and it killed me to not have my "own home. I think it could be a great strategy in my market to get better cash flow from SFH's while giving you the ability to, theoretically, churn a house in a couple of years and take the profits to duplicate efforts and buy 2 more houses to do LO.

Any thoughts, concerns, experiences?

@Joseph H. I have ran the numbers. Unfortunately, for the neighborhood, the 5 bed house with a shop would run significantly higher than most would like to pay for that area. That and the existing unfinished home is in the back of the lot so the shop being added to the 5 bed house would essentially be street facing...not ideal. 

I was thinking about a way to keep the ultimate structure of the unfinished home and just convert it to a shop. That way you can still side the house, keep the roof/windows and just empty the guts and reinforce. Not sure of the availability to do that, just an idea. 

I have an opportunity to buy a property that currently has a small 2 bedroom house currently being rented for 1000/mo. There is a large 5 bed 2 bath house directly behind it that has been sitting unfinished for a year or two. Essentially, studs, roof, tyvek, and that's it. The city will not allow both houses to be on the property when sold so one of them will need to be torn down. I live in an area where folks LOVE their shops. I'm thinking of keeping the smaller home and keeping it rented and then tearing down he unfinished house while eventually putting a shop up. 

My question is this - who has experience tearing down an unfinished home? Is it something you get charged for, charge for, etc? In my head, I'd love to say whoever comes and tears it down gets to keep the lumber, windows, basically anything they can keep. Of course, I don't know if anyone would do that. If not, then I'd pay someone to tear it down while keeping things like windows for me for later use. 

Any suggestions? 

Thank you,

Eric

 

@Wayne Snyder this is invaluable! Thank you! I’ve definitely thought about making the drive to cda for that meet up. Thanks for confirming my hopes. I agree with you that Washington and Idaho are very different - great idea on sticking to one before the other. I’ve checked out RE a bit in Moscow and you’re right...it’s nuts compared to lc valley. :) 

@Jennifer OBrien I’ll have to see if I can find that property! I do know a few agents down here and one that is an investor so I’ve enjoyed working with her. If you know of any local meet ups (even in Moscow) please let me know. I’m excited to meet new folks and network some. Thanks!

Thank you all for the responses. I would want this to be as passive as possible for me. The current owner lives in this building and runs the tavern and liquor store. I would not be living in the building (freeing up a rental) and I would not want to run the tavern or liquor store. The tavern could be leased, possibly even to the current owner. If not, I would need to find someone wanting to run their bar/restaurant out of there. The liquor store is a different story. I would want to run that but not the day to day so I’d likely need to hire someone. Leasing the tavern out would cut my income down some but would also cut her existing expenses she cites out of my equation as those are business expenses. I have yet to offer her, but I most definitely will offer seller financing. 

@Dion McNeeley thank you for the insight. You make a good point about all of the different regulations. I would intend on purely being a landlord and leasing out the bar/retail but I’m sure I’d still need to be knowledgeable about laws and such. I understand the cash flow. This property has had decades of stable rents and cash flow but still doesn’t mean I wouldn’t need some reserves. 

Hey all - I'm brand new to real estate investing. I've been doing a lot of research and have primarily been focusing on single family and multi family homes. That said, I have a family member who is a realtor and brought this commercial, multi use building to my attention. Here's some important details. 

- Original hotel (built in 1898) in a small town of <1000 people about 15 minutes from two university towns with population >50,000. The town itself is slowly becoming a place university employees are living due to the proximity to work but rural space and small town feel. 

- Currently has 7 rental units (1 studio, 5 1 bed, 1 2 bed) all grossing about $2775/mo currently all with tenants and a waiting list. 

- Has the towns only liquor store with liquor license

- Has an attached tavern with kitchen space and billiard table 

- Has 1200 sq ft. of extra space outdoor and indoor for whatever you heart desires (tasting room - we have some wineries and breweries local, retail space, etc.) 

Some of the #'s:

- Sale price is $375k

- Current gross monthly income for liquor store is $3579, apartments is $2775 and tavern is 2175-4275. 

- Total expenses is $3317

- Total net profit recorded is $5211- $7311/mo

- Cap Rate = 22.35%

I haven't looked at the building. It's a historic hotel made of brick and I'm sure needs some work but looks as though it's functional from day 1. Really up to the owner at how nice they want to make it. 

What else should I be looking for/at? What am I missing? Any major things I should be on the look out. This is a huge bite for a new investor to take, I realize that, but on paper seems to be a great deal if the income streams could stay (current owner has owned and operated the place for the past 40 years and is "retiring" at age 60.) 

Any thoughts and ideas would be greatly helpful. 

Thank you!

Eric

@Sarah Brown thank you! I'm in McCall often so almost all the way down there :)