All Forum Posts by: Gavin Welch

I have the chance to buy a 3 bedroom and 1 bath rental house. It's in a decent neighborhood, near the university and would make a strong rental. The property can be purchased for $65K and would rent for $1000 to 1100 per month.  It is currently owned by a friend of mine and has been occupied by him for over 10 years.  Here is the problem:  The home has confirmed sinkhole activity.  I have a copy of the report.  This was an insurance loophole here in FL for a long time.  My friend had financial trouble and called in an insurance claim even though the property has no damage.  This means I will not be able to finance this property because of insurance.  This is a turnkey property that would make a great rental.  What are your thoughts?

I'm with Nathan, I manage nearly 100 properties and zillow is only a small portion of where our tenants come from.  We actually encourage our existing tenants to refer their friends.  Our software program automatically syndicated the ads everywhere.  I'm familiar with showmojo, but don't use it, because the new masterlock boxes do the same thing.

Investment Info:

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

Purchase price: $77,000
Cash invested: $300

A nice little triplex with two 1/1 and one 2/1 in a small town about 20 minutes away. The property came with one good tenant, one bad tenant and one vacant unit. This property was badly managed by the previous owners property management company. After review of the numbers I knew this property could be a nice income-producing property with some effort. Just to make this deal better I found a great way to finance it because all my investment capital ($$$) is tied up in a renovation project.

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

The numbers on this property are really good. With a $77,000 purchase the monthly $1650 cash flow is great.

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

I was sent this deal from a wholesaler I know. At first, I shopped this property to some investor clients of mine, but the more I looked into it, the more I fell in love with this deal.

How did you finance this deal?

I called my brother and asked if he had any free (not being used) cash laying around. He said he had a line of credit I could use for as long as I needed. (thanks Bro)

How did you add value to the deal?

I raised the rents and evicted a marginal tenant. Overall the property is a lot more stable now.

What was the outcome?

Not sure what I am going to do. I could use the cash from a sale right now, but I love long-term holds.

Lessons learned? Challenges?

Make the sellers get rid of their problem tenants before you purchase. This property was not properly managed and the tenants had gotten away with playing games for far too long and were not willing to abide by my rules.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a real estate broker and property manager.

Investment Info:

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

Purchase price: $77,000
Cash invested: $300

So I picked up a triplex from a wholesaler consisting of two 1/1 and one 2/1. When I purchased the property one 1/1 was filled at $450 per mo. The middle unit, the 2/2 was vacant and the remain 1/1 had a non-paying tenant. I filed the eviction and raised the rents on the 2 units. The 2/2 went from 500 per mo to $650 and the 1/1 went from $450 to $500 per month. The demand in this little town is great for rentals. I have a list of people ready to see the unit I was evicting the people out of. Matter of fact, I had the sheriff serve the eviction, changed the locks and my handyman and I removed all the large furniture then I showed it to the new tenant while we were cleaning it out. She agreed to rent it and start the lease in 4 days when I was done with the turnover.
I used a line of credit (not mine) to purchase this property. Here are my options. 1. Refi in a couple of months and keep long term. 2. Sell this property for $130,000 or so. Not a bad profit for a month's worth of work. I do hate selling properties that are cash machines.

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

The numbers on this property are really good. With a $77,000 purchase the monthly $1650 cash flow is great.

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

I was sent this deal from a wholesaler I know. At first, I shopped this property to some investor clients of mine, but the more I looked into it, the more I fell in love with this deal.

How did you finance this deal?

I called my brother and asked if he had any free (not being used) cash laying around. He said he had a line of credit I could use for as long as I needed. (thanks Bro)

How did you add value to the deal?

I raised the rents and evicted a marginal tenant. Overall the property is a lot more stable now.

What was the outcome?

Not sure what I am going to do. I could use the cash from a sale right now, but I love long-term holds.

Lessons learned? Challenges?

Make the sellers get rid of their problem tenants before you purchase. This property was not properly managed and the tenants had gotten away with playing games for far too long and were not willing to abide by my rules.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a real estate broker and property manager.

Investment Info:

Mobile home fix & flip investment in Lake Wales.

Purchase price: $18,000
Cash invested: $700
Sale price: $34,500

My friend Adrian Smood (also a BP member) called me about a distressed homeowner he met that had a couple of properties he wanted to sell. I purchased this property out of my self-directed IRA and then relisted it on the MLS. The property had marginal tenants and the septic system was overflowing on the ground. I had the septic system pumped and inspected, it was over-flowing from a leaking faucet they never bothered to fix and sold the property in little over a month.

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

Huge margin.

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

My friend Adrian called me with the information.

How did you finance this deal?

self-directed IRA.

How did you add value to the deal?

Just fixed a couple minor things and slapped it back on the mls

What was the outcome?

I made $15,800 profit in 30 days.

Lessons learned? Challenges?

The tenants were difficult to deal with. They had gotten away with murder with the previous owner. Instead of evicting them I left them in place for the new owner to deal with.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I am a real estate broker.

Investment Info:

Single-family residence buy & hold investment in Winter Haven.

Purchase price: $30,000
Cash invested: $30,000

Long term cash flow property.

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

Its was lakefront and inexpensive

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

An associate showed me this property.

How did you finance this deal?

Cash

How did you add value to the deal?

Same tenants since purchase

What was the outcome?

This is a turn key property that generates great income and and more the tripled in value.

Lessons learned? Challenges?

none

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No

Yes, you can buy a home occupy it, then rent it out and purchase another.  Be careful, that you don't over-improve the property as your residence then have a rental that gets trashed because you have high-end fixtures ect. Make it nice, have curb appeal, decorated nicely, ect. 
Be aware that when you go to buy your second property to live in the bank is going to most likely require you to put 20% down.  I have had some clients that moved out of house A, got a cheap rental, snowballed cash, and had good rental numbers on house A, so when they went to purchase house B they have good cash flow, proven rental history and a pile of $$$ to put in the loan.
Also, consider the "house hack".. Buy a duplex, live in one side rent the other, then buy a second property for yourself and rent both sides of the duplex.  

Good Luck
G

I'm an investor and broker in lakeland and polk county..

Justin, I'm not sure what you are buying to 40-50K in Tampa, but here in Lakeland, you are mistaken, off or on market.

anytime, but evenings or weekends will probably be better for most.