All Forum Posts by: Roger Simons

Where would you go? Wouldn't people go to the place that issues the permits? Your municipality? They MIGHT know since they are the only ones doing it. What you want to do is very simple. It will be easy if its a straight forward process. Remember that the total people allowed to rent on your property my not change with this conversion. It would be much better if it did.

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Quote from @Nate Sanow:

It depends. Gotta make sure the energy efficiency and feel of the “3rd bedroom “ doesn’t feel like… a garage. Like if it’s still really cold or hot they won’t love paying for your premium rent. In my market it’s punitive in B class on up to not get a garage, but in the C class realm it’s common.

Its a self contained building, isn't it? Don't people love that? Its like having your own domain. I would do it up really nice and you'd get premium dollars for it.

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Quote from @Bob Stevens:

Just do the math, how long will the extra 100 a month take to pay off the cost of making the 3rd BR. I assume it will be about 5k, right? Heat, electric, flooring, sheetrock etc, So it will take about 5 years to breakeven, Me I would not do it. Not worth it.

What? $100 a month? I don't understand this number. You can rent a garage in most cities for $50-100 a month for simple parking. A bedroom brings in easily 5 times that much. If its plumbed/self contained, probably $750. Its always worth it! But the poster didn't mention how big it is. I would guess its a 2 car garage. So I would subdivide it into 2, 3 or 4 units, well sound proofed, maybe with a kitchen/bathroom in the center.

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Quote from @Jonathan Feliciano:

Hi BP Community!

Recently, I've been thinking about purchasing a 2/2 SFR with a garage, and converting the garage to a 3rd bedroom.

I think this is a good strategy because you can purchase a home at a cheaper price (compared to a 3/2), and you can increase your cashflow with the additional 3rd bedroom.

What are your thoughts on this strategy?

I am especially eager to hear from those that have implemented the aforementioned strategy. What was your experience like? And would you do it again?

If its legal I don't understand how anyone that cares about revenue would not do it.

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The smaller the storage area the more money people generally get. So that got me thinking about areas of a house that can't be rented to a tenant. Like if there are no windows, no air circulation, no fire exits, etc. Most houses have a few areas like this. Some people don't need a lot of storage space but they may want to keep some things private or simply away from where they are presently living. Your space could be their solution. All it needs is a solid door and a lock. If one wanted to take security further one could put video surveillance in that area that is motion detected, posted online for the renter with text notification. What do you think?

And what about being a mailbox for people? This way there is no Post Office box, no mailbox, not even a suite #. Just a name at a house address. The problem with this is probably neighbors seeing people come and go. They wouldn't like that. Of course the person using your mail delivery service would be notified when there is something there and who its from, minimizing traffic.

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When googling movable walls its clear that the vast majority of applications involve either the wall being there or not. That doesn't help us. https://duckduckgo.com/?t=ffab...

Another option that is easier to implement is to have a pivoting wall. This is really good for people that are making one room become a bedroom for instance. Like this:

But we need to be able to control the size of that room. Of course having a pivoting wall would mean that existing space could be far better utilized but that's for another discussion.

Here's a video showing a very sophisticated, motorized system (that probably cost a fortune).

What we need is something that doesn't move so far, is not motorized, at a reasonable cost. It would probably use wheels every few feet for the floor (no carpet would work) though tracks on the floor would be more stable, with a track every few feet on the ceiling. Obviously the lighter the wall the easier this is. Many people are moving thick, heavy walls. That just hugely magnifies the difficulty of this project.

Here Ikea is experimenting with a system whereby the wall floats without touching the floor. What about inevitable swinging? Maybe it doesn't matter if the wall is moved slowly. If it was moved manually it could be pushed from the middle minimizing swinging. Maybe a little swinging during moving the wall doesn't even matter. The great thing about this is it would work with any floor covering, even your priceless Persian carpets! Obviously the wall can't be heavy if it is suspended from the ceiling. As most people use hardwood floors these days it seems much easier to just use wheels on the floor. Then push it in the middle manually (and carefully).

https://www.mentalfloss.com/ar...

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Quote from @Chris Seveney:

@Roger Simons

And how will you control electrical/hvac and lighting?

Good question. I would think the most you'd move the wall would be about 1/3 of that total space. So as long as the air ventilation and lighting were in the correct area you'd be fine. For electrical as long as you have enough outlets you'd be fine. I'm glad you brought that up though. Its very important. Without air and light most tenants might get a little upset! You know.....the mamby, pamby ones that just HAVE to have air and light. Wusses! :)

Seriously, most light fixtures are in the middle of the ceiling. So the issue would mainly be with the positioning of the air duct for that room if it used forced air.

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Quote from @Andrew Postell:

@Roger Simons I personally don't like to pay for courses. That might fit some people's personality but it doesn't fit mine. I like to do it. However, I still get feedback and guidance from real estate investor groups. Bigger Pockets is a good group to me because I can learn a lot from this site and I can do a TON of learning 100% for free here. Also though, there are local real estate groups close to you. That meet in person. Some might be better than others but visiting with other investors who are doing this and being successful at it is a great way to get guidance....and it can be with no cost. Again, there might be some groups that you have to pay for but there are a lot that are with no cost. That's the kind of guidance I mean.

And the entire concept of the BRRRR is that we purchase with little to no money out of pocket...otherwise, why would we go through all of that hard work? Just to give a quick outline with some examples (don't hold me to the exact penny here, I just want you to understand the concepts):

1. We BUY off market properties in a state of disrepair - We've been having to buy off market to make this work for several years now. There could be exceptions here but this is the general rule of it.

2. We BUY and REHAB at 75% of the ARV. Meaning that we have to fit BOTH the purchase price and rehab at 75% of the ARV. This is the limit because this is what my Hard Money Lenders will provide me. At these thresholds I am coming out of pocket for my closing costs.

3. We then RENT, REFINANCE into a 30 year mortgage, and REPEAT.

I can spend HOURS on each step here...but that's the quick and dirty to it. Hope that helps.

What mystifies me is why people would refinance at 80% or less when the property is worth so much more as a business. If you've doubled the typical rent that house is simply worth a lot more. Banks never see that as they assess it like a city would: By how much some clueless single family would buy it for. They're not acknowledging the huge increase in rental revenue that house now brings in. I can see for many, once they get going after a while, may be inclined to not bother with financing at all. Especially if they like the idea of an insurance free property. Insurance often puts a lot of requirements on an owner. I'm not talking about mortgage insurance. Rather insurance for things like fire. But I wouldn't do that unless I lived there of course. I know it sounds risky but there are many ways of minimizing fire. Non smoking tenants (smokers often break the rules and sneak a smoke inside) no candles and knowledge of electrical appliances throughout the house hugely diminishes risk. Also lots of fire extinguishers with full face respirators so people can see and breathe in smokey rooms! If people can attack the fire right away its so much safer. The real danger is structural collapse. Once its been going for a while its just too dangerous being inside. But in the beginning its fine if you can see and breathe OK in the smoke. Nobody can see anything in a smokey room. The smoke just burns your eyes. Its crippling.

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Quote from @Tracy Ross:

I just did a second home as an investment AirBnB. You can check it out on my profile. I was running number on it forever and getting stuck in analysis paralysis when I just decided to close my eyes and jump.

Per my numbers I figured it would break even every month but would be a great long term investment and also something I could enjoy when I wanted to go to the coast. That property is cash flowing anywhere between $500-$2000/month! And that is after I pay property management 22%. PM is worth every penny to me though as they take care of every detail and I just cash checks.

I'm sure the market in Oregon is different from that in the Carolina's but I have thoroughly enjoyed watching this property get full bookings and grow in popularity. I hope you go for it!

The problem with property management is they don't care how much repairs cost. They won't shop around like you would because its simply not their money. They don't care. Well....they certainly don't care nearly as much as you do. I can see it being useful when people first start and are maybe unfamiliar with things though I'd question anyone investing in an area they are not familiar with. It seems a lot of people are doing this that really shouldn't be. They aren't people persons, they don't do any repairs themselves, they don't understand construction, and they don't assemble a low cost, local team they can rely on to help them when needed. They're doing it like they would buy a mutual fund. As if real estate is passive. Well I guess it can be if you're lazy and detached from your investment. But that is surely a road to ruin. Investing in what you are interested in is key. We shouldn't let money sway us too much. Sure we need a profit but if the area you invest in doesn't interest you it will always grate at you when you need to spend time at it.

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Nobody seems to be addressing the elephant in the room. If you want good revenue you must maximize the space you have. Duh.
The more people you can rent to the more money you pull in each month and the more your property is worth. Duh.
Anyone with valuables isn't going to live with strangers with no security. Lots of people don't need huge amounts of space but they don't want to worry that anyone can easily take what they have there.
Another problem with people living closer together is noise disturbance.

The solution to both is to devise some sort of pod structure that uses a loft bed where the bed is over the desk, perhaps on a pulley system to raise it to the ceiling during the day. Even a single bed takes up quite a bit of space (about 40" x 78") so that means a large desk/storage area under that bed if the space is utilized well. The desk doesn't have to take up the whole length obviously. It could also be a wrap around design as most desks aren't 40" deep. Height adjustable, slideout shelves could be used for storage.

You want natural light obviously. So the (double) walls would need to let light in from the window. Light should come from above and inside the pod light colored finishes could be used to reflect/disperse the light well. If the light comes from above
The pod would need to be ventilated (HEPA filtered for superb air quality) from that same window. Realize that this means that person would sleep in dead silence meaning excellent sleep quality. This is the biggest problem with sharing: Sleep interruption because of noise. Most people use alarm clocks to wake up!

The challenge is how to make it secure. Glass can be easily smashed (plexiglass is strong but too expensive) but there could be a steel grid framework with glass panels. If the grid is small enough (say 12" x 12"?) no one could get in, even if the glass was smashed. Small valuables could be secured in a lock box. As long as someone can't reach the lockbox by sticking their arm in through smashed glass, you're safe. Plus realize that in a house like this someone is usually home. It could be alarmed. This makes it very secure. Rigging up a steel and glass structure wouldn't be cheap but it sure would make a huge difference to the quality of tenant you get. One plus would be the glass may be acquired as scrap as offcuts being we are using small panes! The steel would have to be welded, no getting around that. It would have to be able to be disassembled. This would compromise security a little but it would take a while to dismantle after drilling out the bolts.

One issue with basement dwellings is they often use a 7' ceiling. This makes it a problem for taller people and a normal thickness of mattress and the structure supporting it. For this it would absolutely need to be on pulleys but even this would challenging. Thankfully there are lots of shorter people that need accommodation too!

So if you have any ideas about a security pod, please respond.

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All Forum Posts by: Roger Simons

Roger Simons has started 18 posts and replied 64 times.

Post: Thoughts on converting a garage to a bedroom?

Post: Thoughts on converting a garage to a bedroom?

Post: Thoughts on converting a garage to a bedroom?

Post: Thoughts on converting a garage to a bedroom?

Post: For rooms without windows, do any of you rent them for storage?

Post: What if you could change the size of a room?

Post: What if you could change the size of a room?

Post: How did BRRR even come about? It encompasses so many things.

Post: Small Ocean front or larger offshore condominium!

Post: Security is a huge concern when sharing space.