All Forum Posts by: Ehab Shoukry

@Tim Harwick I only invest in Houston. The opportunities are plentiful so I haven't had to go anywhere else. The majority of my deals come through MLS. I really pick the worst properties and offer well below ask and get offers accepted.

@Matt Everling my lender is Jet lending. The Top Gun program is the one that you can do a single close at 75% ARV and turn into a long term loan.

This is my first post in a few years because frankly I've been on the grind learning how to become a better real estate investor and taking massive action.  I'll try to keep this brief and also share my latest strategies which may help others who are looking to fire their boss! 

Long story short, about 4 years ago I got serious about investing in real estate and quitting my job and hired a local mentor for $5k to teach me how to wholesale.  I was able to wholesale a few houses before I realized that it felt like another job and I really didn't enjoy the work itself.  Fortunately it did teach me how to find good deals and from that was able to buy several rental houses in C class areas.  I also partnered with a friend of mine to buy a couple of small multifamily properties.  I had about 20 rental doors in 1 1/2 years and this is all while maintaining a full-time job.

My approach was basically buy, fix up, raise rents, keep for a couple of years and sell which I did with many of my rental units. With some extra capital in hand from the home sales, I started focusing more on smaller multifamily units (A and B Class areas) but this time without a partner and with a strategy to use for Airbnb.  Last year I acquired a six-plex and four-plex that I bought, remodeled and put on Airbnb.  My current portfolio consists of 10 Short-term rentals and 10 long-term rentals that generate $40k a month in gross rent and about $20k in net profit (roughly half).  

I am using two strategies to buy and hold now which has allowed me to purchase these properties with little to no money out of pocket at the end of the day.  

Strategy #1 - buy at 70% ARV using a hard money lender and then once rehab is complete do a cash out refinance at 80% LTV at 20 years ammo and 5.5% interest. This approach can allow you to get back more money than you spend and you are actually getting paid to buy the property.

Strategy #2 - my hard money lender has a program that lends at 75% ARV and then converts the loan to a long-term note when the rehab is complete. It's a single close loan and avoids having to refinance, order another appraisal, pay closing costs twice, yada yada.

Bottom line unless you have unlimited funds, your strategy HAS to allow you to get your money back or else you will run out and have to wait a LONG time before you can buy another property.

In case you're curious my previous job was working in Consulting making a high six-figure a year salary.  The road to quitting your job is a grind but the combination of getting educated and taking MASSIVE ACTION will allow you to get there.

HAVE FAITH!

Ehab

I like the idea of the rental that makes $300 a month for the following reason. Let's look at it this way. Let's assume you pay down your mortgage so you don't have to pay PMI...now what? You don't have any money to invest. Now you are just waiting around still not investing until you save enough money to put a downpayment on a rental one day.

Conversely let's say you buy the rental that makes $300. You take that $300 and apply to the principal of your primary residence and pay down the mortgage faster so you're not paying PMI sooner rather than later. At least in x number of years when you have 20% equity in your home and are not paying PMI, you still have the rental that is making you $300 a month. And if you really wanted to, you could start saving that money to help you get that next downpayment to buy another rental.

Just my thoughts.

Ehab

I'm using the same lender to refi that I used to purchase the properties.  It's a small bank and they don't have a problem with seasoning.  My lender is the one who spoke with the appraiser--who was the same appraiser who did the purchase of these properties--and that appraiser is the one who said the values would go up $15k to $20k.

Thanks.

Hi all -

I've purchased 9 SFH houses in a Class C part of Houston that primarily rents to lower income tenants. All of the houses were purchased in the $53k-ish range and are older homes with window units and galvanized plumbing. Primarily my maintenance calls have been plumbing or AC issues. My biggest repair was a busted galvanized pipe which damaged sheetrock, cabinets, etc (roughly $2k repair).

I know there are mixed reviews on lower priced homes but I was thinking I would replace all of the plumbing in my homes with PEX plumbing and move to central AC/Heat.  PEX will cost me around $1700 and Central AC/Heat is $3900 for a 3 ton Linux unit with everything included (copper, blower, furnace, etc).  

After doing both of these upgrades I estimate the value of each house will increase around $15k based on my conversation with an appraiser and then I would be able to refinance to get most of my money out.  I'm already getting around $1k to $1050 in rent the way they are and based on the income of the area, my tenants would probably only be able to pay an additional $50 a month with the new upgrades.

Do you think this is a good plan or is this prematurely jumping the gun and a wasted expense?  I recognize it would take me a year of rental income to recover my expenses for this work and I would basically do every house this way to reduce maintenance headaches.  After refinancing I would probably only be out of pocket $5k on each house.

Thanks,

Ehab 

Hi all -

I thought I would put a quick update out there on how 2015 ended up for me. This was my first year really investing in real estate. I have another posted which talks about how I purchased 8 rental properties in just four months.

https://www.biggerpockets.com/forums/223/topics/22...

I ended the year buying 9 rental houses and a multi-family building. I have a total of 17 units and I'm looking to get to 40 units in 2016. I purchased all of my properties through a local bank putting 20% down. The purchase price on my houses were all in the low to mid $50k's and they rent for around $1k a month.

I know there are mixed views on this cheaper priced homes but they have worked out well for me. I've had normal maintenance issues but I've decided I'm going to make my houses as maintenance-free as possible. This year I'm replacing all of the galvanized plumbing in my houses with Uponor Pex plumbing to avoid issues with water leaks and improve water pressure. Total cost for a 3/1 SFH is $1600 with two year warranty. I think this is well worth the cost.

I'm also one-by-one converting my houses from window AC/Heat units to Central HVAC. Total price is $3,900 for a 3 ton unit with copper, furnace, compressor, ductwork and everything and 10 year warranty.

And best of all, I talked with my banker and we are planning on refinancing all of my SFH's so I can get my initial investment back and he is extending my ammortization from 15 to 20 years so my total monthly payment will stay the same. BRRRRR

The end result...

1. updated low maintenance rentals

2. stand out from the competition because of the central HVAC

3. no money out of pocket

Overall happy with how my first year turned out.

Best of luck!

Ehab

Hi all -

I thought I would put a quick update out there on how 2015 ended up for me.  This was my first year really investing in real estate.  I have another posted which talks about how I purchased 8 rental properties in just four months.

https://www.biggerpockets.com/forums/223/topics/22...

I ended the year buying 9 rental houses and a multi-family building.  I have a total of 17 units and I'm looking to get to 40 units in 2016.  I purchased all of my properties through a local bank putting 20% down.  The purchase price on my houses were all in the low to mid $50k's and they rent for around $1k a month.

I know there are mixed views on this cheaper priced homes but they have worked out well for me. I've had normal maintenance issues but I've decided I'm going to make my houses as maintenance-free as possible. This year I'm replacing all of the galvanized plumbing in my houses with Uponor Pex plumbing to avoid issues with water leaks and improve water pressure. Total cost for a 3/1 SFH is $1600 with two year warranty. I think this is well worth the cost.

I'm also one-by-one converting my houses from window AC/Heat units to Central HVAC.  Total price is $3,900 for a 3 ton unit with copper, furnace, compressor, ductwork and everything and 10 year warranty.  

And best of all, I talked with my banker and we are planning on refinancing all of my SFH's so I can get my initial investment back and he is extending my ammortization from 15 to 20 years so my total monthly payment will stay the same. BRRRRR

The end result...

1. updated low maintenance rentals

2. stand out from the competition because of the central HVAC 

3. no money out of pocket

Overall happy with how my first year turned out.

Best of luck!

Ehab

Hi all -

I am up to nine SFR rental properties and am starting to get maintenance requests from my residents. Some of them are very minor such as tightening an outlet that has come lose which is a 5 minute fix.

I inherited a maintenance man who does good work but likes to get paid $150 a day whenever I require his services.  This works out well when I need him to change out a couple of window units or do sheetrock repair but to tighten a plug it's not so great.

I'm interested in how folks with multiple properties have agreements in place with their maintenance crews/contractors?  What would be the best approach for me with 9 houses?  I'm not ready to hire a full-time maintenance person.

I was also thinking about buying a home warranty on all the houses as another solution.  I'm open to feedback on that as well.

Thanks,

Ehab

@JD Martin for starters I ran rental comps in MLS and found several units that rented for over $800 and were not all bills paid. I also happened to run into my future neighbor who rented her duplex across the street (literally 20 ft away). She remodeled them very nicely and is getting $750 and $780 and they are not all bills paid.

The seller's realtor told me that the owner was a nice guy who had long standing tenants and didn't want to "rock the boat" by raising rent.  He was happy getting what he got and having problem-free tenants.  Maybe that additional background info may help.

Thanks.

Hi all -

I'm looking at acquiring an 8-plex from a landlord who is motivated to sell.  Six of the eight units are currently renting for $550 a month and are all bills paid.  The other two units are gutted to the studs and I will be completely remodeling them after closing.

The 1/1s that are rented are nicely remodeled and in some cases are 1/1s with a large study that the residents are using as a second bedroom.  Based on market rents in the area, these units should be going for $750 a month and since they are all bills paid can easily get $800.

I'm interested in a intelligent approach to raise rent that isn't going to cause everyone to move out at the same time.  I know when they look around at other 1 bedroom apartments they will find that $800 is a great price for all bills paid.

One approach I considered is to remodel the two gutted units and rent them out for $800 to be sure I am right about market rents.  Assuming those two go for $800 what should be my next steps?

Thanks

Ehab